March 2015

'Articles' Targeted clearing mandate exemptions could reduce systemic counterparty risk 31 March 2015 | Jon Skinner

With regard to systemic counterparty risk reduction the bank regulators' minimum capital, liquidity reserve and margin levels are a major incentive.  The current fine-tuning debate and regulatory rule adjustment are understandable given the financial implications.  

By contrast the lack of discussion of clearing mandates might imply they are a straight systemic counterparty risk win through promotion of consolidation, netting and margining in CCP facing portfolios.  Unfortunately it is not that simple - clearing mandates also entrenching bilateral counterparty risk by limiting key risk reduction techniques.

Here I explore these limitations and suggest some solutions.

'News' ESMA publishes updated EMIR Q&A - No 12 31 March 2015 | ESMA Feed

The European Securities and Markets Authority (ESMA) has today issued the 12th update of its Q&A document on the implementation of the European Markets Infrast

'News' Comet 1 | The Photos 27 March 2015 | Bill Hodgson

See what you missed

'Events' 4th Annual Risk EMEA 2015: Risk & Regulation Congress - 15% Discount for OTC Space Users 26 March 2015 | Samantha Hodgson

With financial institutions increasingly adapting to regulatory demands and expectations, risk professionals face additional burdens to ensure industry standards are upheld alongside further challenges with emerging risks.

'Articles' The Systemic Risk, or Not, of Commodity Trading Firms 23 March 2015 | Streetwise Professor Feed
'Articles' SA-CCR: risk-sensitive FCM capital but still no IM offset 21 March 2015 | Jon Skinner
Regulators have declared their intent to implement the Standardized Approach for measuring Counterparty Credit Risk (SA-CCR) in critical parts of Basel III capital rules.  This starts to go live at the beginning of 2017 for default fund capital and the leverage ratio implementation will follow.  
Here I take a high-level view of the effects on capitalization of clearing members house and client portfolios and whether capital rule changes are likely to make client clearing a commercially sustainable business.
'Articles' The SEC Weighs in on Swaps Reporting – Part 2 19 March 2015 | George Bollenbacher

In my last article I reviewed the SEC’s final and proposed rules on transaction reporting by market participants. In this article I will look at the final rule on SDRs, and make some observations on the effectiveness of current and future reporting regimes.

'Articles' OTC Clearing & posting Eligible Collateral for Initial Margin Requirements 18 March 2015 | Byron Baldwin

One of the biggest challenges for both the Buy Side and Sell Side with the introduction of mandatory OTC Clearing is the posting of the required collateral for initial margin requirements at the clearing house on a daily basis.

'News' Bilateral Margin Rules Move to 2016 18 March 2015 | BIS Feed

The timing of the Bilateral Margin rules has moved to September 2016, along with a phase in period for the requirement to exchange Variation Margin.  

Key changes:

'Articles' Top tips to turbo-charge your personal productivity 18 March 2015 | Penny Davenport Feed

From London Loves Business, 10th February 2015

'News' New Paper from Albert Menveld at VU University Amsterdam | IM May Not Be Sufficient For Crowded Markets 17 March 2015 | Bill Hodgson

Research paper on 'crowded trades' suggests under-margining in certain cleared market scenarios.