US counterparty limits threaten OTC clearing push

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Businessman with a ball and chain

When being pursued by a cat, coyote or other foe, cartoon characters often resort to a tried-and-tested defence: turning a road sign round so it points in the opposite direction. Viewers know what’s in store – the pursuer runs full-tilt into a brick wall, or off the edge of a cliff.

The US Federal Reserve Board seems to have adopted the tactic for one of its Dodd-Frank Act rules. The road sign is the Group of 20 nations policy requiring all standardised over-the-counter derivatives to be

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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