Unclear incentives: do capital and margin rules support CCPs?
Five months after a regulatory study concluded capital and margin rules support mandatory swaps clearing, those findings are under fire. The analysis was plagued with data problems and ignored the impact of the leverage ratio – but that was not mentioned in a summary report to Group of 20 finance officials
The mandatory clearing of over-the-counter derivatives rests on a promise of economic legitimacy that has been repeated time and again by regulators since leaders of the Group of 20 (G20) nations agreed the policy in 2009. Simply put, it will be cheaper to clear an OTC trade than to execute it bilaterally.
So, is it? In April 2013, regulators set out to test the proposition, convening a group of 22 economists from 13 central banks and regulators – the OTC Derivatives Assessment Team (DAT) –
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