New into the chart in this edition is BME and Shanghai clearing. BME covers rate swaps, OIS and FRAs, Shanghai cover rate swaps. Leaving the chart is SwapClear LLC, reported as wound down in the last edition. Overall most CCPs have gained notional, with reductions in IRS at CME and SwapClear, assumed to be a result of compressing gross notional to reduce capital requirements. If you take out the figures in Rates from CME and SwapClear, the total increase in cleared interest rate products is $6.5trn, a big increase, showing that the market continues to turn over large amounts of rate risk globally.
Bank Underground is about to take a hard-earned festive break. But before the blog goes off on its Christmas holidays, it’s time for the now annual tradition of the Bank Underground Christmas Quiz. Test your knowledge on our ten festive themed q
Did you know that a group of senior buy- and sell-side people meet in private each year to freely debate the state of the OTC market, and hear from regulators on the future direction of regulations?
CCPs were recently introduced for standard derivatives to remove counter-party risk from trades. Should the buyer or seller default, then the CCP will take over his trade commitment. CCPs thus effectively insure counter-party risk. Traders are therefore expected to continue to trade at times of elevated counter-party risk. A liquidity dry-up is thus avoided and, with it, the potential for an all-out crisis.
Bill: The ClarusFT article covers the fine detail of intra-day topups to SwapClear and why timing changes were necessary. If you have never looked at the detail of intraday margin calls then this is the article to read.
by Alan McIntyre
The December 8, 2016 Article in TheTradeNews entitled “Out Of The Shadows” keys in on the impact of MiFD II reporting that will be felt by Buy Side firms that have been reliant on Delegated Reporting under EMIR.
This is the second white paper in our series addressing the margining and collateral challenges facing the banking industry. The first paper examined the regulatory timelines and emerging vendor utility ecosystem. In this paper we look at potential disruption to the business operating model facing sell-side and buy-side firms caused by BCBS/IOSCO regulations relating to the margining of non-cleared OTC derivatives. We provide a framework for understanding which areas will be impacted and suggest an approach for planning your response.
Those of you who have come to an ISDA conference, read our comment letters or, indeed, read this blog over the past several years know that cross-border harmonization matters a lot to us and our members.
Clarus tools calculate margin under LCH, CME and ISDA SIMM™. It is a natural question to compare the three models. There are interesting differences across currencies and tenors. We find that SIMM is up to 37% higher than at a CCP. At last….!
MessageAutomation grows their engagement with Andile in South Africa.
Build a car engine from scratch, and it’s a fair bet that it won’t be purring the first time it’s switched on. That doesn’t mean the engineer has failed, and it doesn’t mean the whole thing needs to be smashed up.
In the second part of Karl Wyborn's article on The Future of Collateral Management, he forecasts the type of solutions firms need going forward. Collateral Management is moving from being a necessary function to a regulated compliance task, hence a greater level of focus on how firms carry out their risk mitigation role.
The incoming Trump administration has promised to “dismantle the Dodd-Frank Act.” In previous posts, we’ve described the technical mechanisms that an incoming administration can use to undo regulation put into place by the previous administration (see How Regulatory Rollback Works and More than Just Midnight Regulations).
The team here at The OTC Space are pleased to announce the availability of the downloadable PDF edition of Rocket 8.
The time has come to hold another PTF meeting, and according to your survey feedback Trade Reporting is the topic to talk about.
Bill: The R3 consortium has support from a large number of banks and has momentum in this space.
In order to buttress financial markets against another 2008 crisis, mandatory margin rules are being introduced across the globe. This article explains the timelines, gives a global settlement timing cycle chart, checklists for Legal, Operations, Risk, Tech, and Front Office.
An excellent piece by DRS on the difficulties of the VM protocol. It appears that the legal world lives in the parallel universe occupied by Captain Kirk and Scottie, read on for more. Bill.