CCP
WHAT IS THIS? A central counterparty (CCP) manages default risk by collecting initial and variation margin from both parties to a trade. Spill-over losses are absorbed via a default fund to which all members contribute – introducing a degree of mutualised risk – and by the CCP’s own capital. The concept is an old one that was extended to over-the-counter derivatives in the aftermath of the financial crisis.
LCH to clear BSBY swaps from November 29
Addition of much-maligned benchmark follows methodology enhancements and jump in SOFR trading
US megabanks lead push for agency clearing in Europe
Clearing through agency model would cut US lenders’ G-Sib capital surcharges
Rate of centrally cleared CDSs hits record high
Multi-name products drove increase in first half of 2021
LCH to clear swaps linked to embattled BSBY rate
Risk USA: SOFR surge eases concerns over Bloomberg’s credit-sensitive Libor alternative
Funds brace for higher costs, worse terms after CS prime exit
Largest banks set to win business; others fear regulatory scrutiny of highly concentrated market
How ‘open’ became ‘random’ in Mifir open access CCP rule
EU clearing monopolies endure as share trades are rarely cleared at end-users’ chosen CCP
Eonia trading shuts down as CCPs make €STR switch
Dealers and venues step back from Eonia swaps after contracts become unclearable
Defiant ECB urges ‘further work’ on clearing relocation
Policymakers moot changes to Emir to tackle systemic risks of third-country CCPs
Buy side divided on euro swap clearing move
With eurocrats dithering on extension of LCH waiver, asset managers mull when – or if – to jump ship to Eurex
CME boosts liquidity buffers by 5%
Central bank balances accounted for 68% of the CCP’s total liquidity buffer in Q2
Mifid’s derivatives open access poses ‘dire consequences’
Diminishing support for CCP open access ahead of European Commission review
Energy vol puts spotlight on Ice’s TTF futures margin
Clearing firms say exchange was slow to react as natural gas prices spiked
Barclays looks to woo CCPs with CDM prototype
Plan to save billions in post-trade costs relies on the creation of central data utilities
Citi reorg the final note in failed swaps clearing model
Strategic shift from OTC clearing powerhouse to client support function marks the end of an era
Initial margin at LCH Ltd rose in Q2
RepoClear and ForexClear saw biggest increase over the quarter
OCC increases skin in the game in Q2
Own funds to handle a participant collapse amounted to $313 million
NSCC caught $5 billion short in June
Worst-case losses would have wiped out the CCP’s available liquid resources on two separate days in Q2
Ice Clear Credit member default fund contributions climb 6%
Total pre-funded required participant payments hit a record high in Q2
Synthetic Libor gets cautious approval as swaps fix
‘Tough legacy’ solution could mop up $2.7trn-equivalent of non-cleared sterling and yen derivatives
Euro swaps relocation stalls as equivalence deadline nears
Nine months before equivalence deadline, over 70% of EU euro swap trades still clear in the UK
Interest rate ETD volumes up 40% from 2020 nadir
Shorter-dated contracts push total open interest higher
JSCC turns to commercial banks in rejig of liquidity reserves
Funds stashed at the Bank of Japan down 31% on the previous quarter
OTC derivatives clearing: no turning back
Clearing advocates have plenty of reasons to feel optimistic about the future
How Brexit split Aegon’s euro swaps book
Years-long effort saw trades quietly move to Frankfurt – but firm wants continued access to LCH