Questions raised about CCP collateral

With more over-the-counter derivatives trades set to be centrally cleared, some bank risk managers are raising questions with central counterparties (CCPs) about the wide range of collateral they accept.

The questions come amid worries about the correlation risk of derivatives collateral denominated in domestic currencies. Dealers say it is relatively common for counterparties to post sovereign debt issued by their own country in derivatives collateral agreements. If the client and the sovereign