More sovereigns edge towards two-way CSAs - and clearing

The vast majority of over-the-counter trades will be cleared or collateralised in future – but sovereign derivatives users have been digging their heels in, generating increasingly painful funding and capital obligations for dealers. Quietly, though, some progress is being made. By Matt Cameron

On the face of it, dealers have had little success persuading sovereign derivatives users to sign two-way collateral agreements. The Cypriot, Danish and Latvian debt offices all say they are considering it – which would bring them in line with their counterparts in Hungary, Ireland, Portugal and Sweden. But of that group, only Portugal and Ireland made the switch in the past two years, and the world’s biggest sovereigns remain staunchly opposed to the practice – a policy that leaves their