Clear warning on escape hatch for optimisation trades

CCPs fear Emir clearing mandate carve-out for portfolio rebalancing could be abused

When a trade is labelled risk-reducing, it seems natural to assume that’s what it does. Yet some clearing houses are claiming new legislation in the European Union might permit the label to be used for a more nefarious purpose: to extract derivatives trades from central clearing altogether.

Other market participants – including some central counterparties (CCPs) – are sceptical about the claim. They point out there are few incentives to employ portfolio optimisation trades as a way to evade the

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