Buy side steers clear of CCPs
Regulators have pushed hard to ensure buy-side firms are able to access central counterparties since the crisis began. But despite the launch of several new services, very few buy-side participants are actually using them. By Mark Pengelly
Central clearing has been one of the major policy initiatives by regulators since the crisis began. Following the bankruptcy of Lehman Brothers in September 2008, escalating market fear made central clearing for over-the-counter derivatives look like the perfect solution to counterparty risk. While market participants would retain the ability to execute trades in the OTC market, clearing them via a central counterparty (CCP) would reduce the risk of a major dealer going under, many believed.
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