OTC Derivatives Clearing Summit: Capital burdens could weigh on swap futures
Lower margin levels for swap futures could drive up risk-weighted assets for dealers, and erode the product's advantage, panellists argue
The margin advantage enjoyed by swap futures contracts will be short lived, panellists predicted at Risk's OTC Derivatives Clearing Summit yesterday - either being reined in by risk and capital considerations, or as a result of the product's own success.
The instruments are controversial because they promise to replicate the economics of an over-the-counter interest rate swap, but the versions offered by CME Group and Eris Exchange are margined on the assumption it will take no more than two
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