The clearing revolution
New rules on over-the-counter derivatives are set to have a significant impact on the insurance industry. The rules, the European Market Infrastructure Regulation in Europe and the US Dodd-Frank Act, will require certain OTC derivatives to be centrally cleared and high-quality collateral posted upfront and during the contract to cover counterparty exposure.
Insurers, as significant users of derivatives to hedge risk, will need more high-quality assets – cash or liquid securities – to post as
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