MF Global: lessons for OTC from a futures clearing calamity

MF doom

duncan-wood

Writing to the Commodity Futures Trading Commission (CFTC) in November 2010, the general counsel of MF Global highlighted what the firm saw as a key risk in the shift to central clearing for over-the-counter derivatives – the danger that smaller firms would be shut out of the market by clearing house membership requirements. MF Global was, at that point, unable to join two unnamed OTC clearers in the US because of “grossly excessive capital requirements”, the letter complained.

A month later, Th

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