Margin models converge as CCPs battle for dealer support

Dealers say they won’t join clearing houses that are not robust – and have already blackballed one central counterparty. As a result, the initial margin methodologies employed by the big rates clearers have begun to converge. Matt Cameron reports

3-little-pigs

The children's story of the three little pigs extols the virtues of hard work and a healthy aversion to risk: two pigs build rickety homes from straw and wood, and pay the price as their houses are blown in by a big, bad wolf. The third pig builds his house using bricks, which stands firm despite the wolf’s huffing and puffing.

It’s a fable to which derivatives dealers can probably relate: huge volumes of their capital and assets will be tied up at central counterparties (CCPs) after the bulk of

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Switching CCP – How and why?

As uncertainty surrounding Brexit continues and the impacts of Covid-19-driven market volatility are analysed, it is essential for banks and their end-users to understand their clearing options, and how they can achieve greater capital and cross…

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