What will clearing cost?

Many end-users will have to clear over-the-counter derivatives using services provided by clearing house members – currently, that means the big dealers. But changes in default fund calculations and regulatory capital requirements mean the fees they will be charged for this service are uncertain. If too high, clients might be prevented from clearing, argues Mariam Rafi

With the start date for mandatory clearing quickly approaching, dealers and clients are focusing on preparation. Work is under way to finalise legal documentation and test operational capabilities, but a key question remains unanswered: the cost for clearing members to provide clearing services to clients. Evolving regulatory requirements are causing the economics of the clearing business to change drastically, particularly as a result of increased default fund costs and changes in capital