What if the Doctors of OTC Derivatives themselves fall Sick?

After the 2008 financial crisis, more emphasis was given to OTC Derivatives market in order to make it more transparent and fail proof. To achieve the same, new laws and regulations were introduced and implemented in various parts of the world. One of the main requirements was central clearing of OTC Derivatives via CCPs. Though the objective was to avoid counterparty risk of default, no emphasis has been made till now to handle the situation if a clearing house itself defaults.

Who's Picking up the Tab? | CCP Investment & Operating Costs

A recent Risk Magazine article describes an alarming piece of legislation came into force last month.

CCP account structures | Macfarlanes' briefing

Law Firm Briefing on EMIR Account Structures

CCP Feature Comparison Matrix | SIFMA AMF

I am quite swamped these days trying to gather all sorts of data on CCPs and their offerings and to my surprise I came across this pretty useful matrix in XLS format, a comparison analysis actually, on this page on the SIFMA site under the heading "Central Clearing Counterparty (CCP) Matrix" . It is supposed to be a tool for asset managers but I would say it can prove very helpful to all Buy - Siders. 

Ten (10) Tips to understand credit risk to Central Counterparties (CCPs)

HanMag Securities recent default has shown that clearing can mitigate credit risk, but is not perfect. Managing and valuing credit risk to Central Counterparties (CCPs) is a must, particularly with new regulations. This article lists 10 checking points to analyse credit risk to CCPs.

CCPs Revise Margin Models | Esma

According to a Risk Magazine article (subscription required), some European CCPs are revising their margin models in order to comply with Esma regulations regarding the effects of procyclicality on margin requirements.

Could US CCPs pay 25bps on cash collateral at today's interest rates? The plot thickens

Josh at SFM / Finadium has uncovered a potential competitive advantage for US CCPs, click to read more (free registration may be required) Could US CCPs pay 25bps on cash collateral at today's interest rates? The plot thickens.


OTC equivalency: A regulatory tug-of-war?

On 1 September, ESMA issued its advice to the Commission on declaring countries outside the EU to be equivalent under EMIR.  The good news is that at long last we should have some certainty on what approach to expect.  The bad news: we are in for years of frustration as practitioners attempt to nit-pick their way through the new cross-border requirements.

Survey of CCP Progress Since the US Clearing Mandate Kicked In

It's been a few months since we last updated the CCP chart, and in that time clearing has become mandated in the US. In most cases the quantity of trades in each CCP has increased, but the effects of netting and tear-ups might be behind the reduction in others.

ESMA CCP front-loading - problem waiting to happen? | Risk article

ESMA rules deem that once one CCP is authorized to clear a given product, non-exempt participants have to clear every trade executed after that date - even if the clearing mandate for new trades is not live yet.   Participants can either clear the trades immediately on execution or more likely by catching up or "front-loading".