Neal Wolkoff: OTC market faces break-up blues

Dealers fear multiple CCPs will fragment netting sets, resulting in increased margin and capital costs - but there could also be an impact on liquidity, with swap trading platforms forced to list prices for each clearing house, US exchange veteran, Neal Wolkoff tells Matt Cameron

It's not a million miles from the truth to describe the Dodd-Frank Act as a giant hammer, which is being used to break the over-the-counter derivatives market into bits. There will be three big pieces – execution, clearing and reporting – with a host of new entrants to the market competing in each segment, further fragmenting it. Market participants will be able to choose a clearing venue from a number of central counterparties (CCPs) and an execution venue from a number of swap execution