Block trade allocations: FCMs and CCPs prepare for new regime

Big asset managers face some challenges in the move to central clearing – specifically, executing block trades and then allocating them across tens of sub-funds. Not all clearing members or central counterparties are set up to facilitate this, but progress is being made. Ramya Jaidev reports

In a world where central clearing of over-the-counter derivatives is mandatory, and where client clearing businesses need volume to thrive, big asset managers will be a star client – generating huge, regular clearing flows. But, like stars in many walks of life, they can also be pernickety, demanding and difficult to please, as dealers are now discovering.

Many asset managers execute block trades almost exclusively, on behalf of anything from four to 50 sub-funds at a time. These blocks