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.
CFTC correct in row over US Treasury liquidity - Risk.net poll
A poll of Risk readers finds that 56% agree the CFTC should require CCP holdings of US Treasuries to be backed by committed liquidity facilities
'Don't make us clear inflation swaps,' dealers plead
Market is too concentrated to cope with a default, participants warn
Nigerian financial infrastructures increasing cooperation
If you build it, they will come
Europe looking 'dysfunctional and extreme' over Esma equivalency procedure
No guarantee of equivalence being granted to Asian clearing houses
Pension funds and the collateral crisis
Rising interest rates could leave pension funds facing huge margin requirements, creating an acute liquidity crisis
Footnote 513 exceeds CFTC's statutory brief: O'Malia
Failure to define a "significant or direct" threat to the US economy has brought regulatory overreach
More firms expect technology spending increase in 2014
Rising expectations
'Patchy' liquidity in FX a concern for the future
Concentration in the number of liquidity providers and the reliability of HFT market-making raises concerns for senior industry officials
PRA protects clearing from leverage ratio hammer-blow
Banks say leverage exposure "could be halved" after PRA acts to safeguard business
Nigerian CSD: derivatives, CCP and securities lending in 2014
At Nigeria's third Capital Market Committee retreat this week, the head of the country's central securities depository reports on progress liberalising the market - and dealing with unclaimed dividends
BoE's Carney: liquidity support for CCPs is a 'last-resort option'
BoE governor insists clearing houses must have enough liquidity to cope with default of two big member firms
Iosco outlines concerns over Esma assessment of Asian CCPs
Ashley Alder says European cross-border CCP regulation is not relevant to Asian markets
Standard Chartered to offer client clearing for non-US persons
UK bank looks to offer clearing option outside US regulatory requirements
Ucits derivatives use hamstrung by collateral rules
Asset managers call on regulators to amend Ucits rules
Initial margin to significantly impact development of Asian derivatives markets: Asifma
Asifma head Austen wants exclusion of initial margin from Asian jurisdictions’ derivatives market regulation
CCPs face $161 billion liquidity shortfall to clear FX options, GFXD finds
Results of an industry study reveal the scale of the liquidity burden that would fall on CCPs clearing physically delivered forex options – but a net settlement mechanism could reduce the number by 73%
Cross-currency margining can bring savings, says SwapClear's Michael Davie
Margin efficiency will be the main driver of success in the OTC clearing world and while cross-margining with futures has been touted as a potential game changer, the gains from this may be illusory, says Michael Davie, head of SwapClear, and chief…
European clearing mandate likely to start in 2015 – Risk.net poll
Clients aren’t expected to be subject to a clearing mandate until 2015, according to a Risk.net poll
Mandatory clearing in Korea slated for June 2014
Korea confident of achieving recognition from Europe and is readying to apply for similar status from the US
Fed discount window could resolve CCP collateral liquidity concerns, say clearers
US regulatory concerns about liquidity of government securities collateral could be resolved by access to the Fed’s discount window, CCP officials say
Sefs cause two-tier market as Asia OTC liquidity splits
Divide and rule
Bank of England calls for greater transparency on CCP margin modelling
CCPs should have complete transparency on risk to prevent margin-related failures
Isda – understanding the impact of Emir/Dodd-Frank protocols on Asia
Europe and the US have launched a number of initiatives as part of their drive to regulate the OTC derivatives markets. Jacqueline Low from the International Swaps and Derivatives Association explains how the organisation has responded with a series of…
Timing tension – Europe clearing deadline set to slip
Mandatory clearing in Europe is widely expected to start from next year, but the complex authorisation process, combined with the variety of collateral segregation models, means the start date for some clients could be much later. Tom Osborn reports