Pensions regulator plays down LDI risk to EU
Eiopa doubts UK gilt market chaos could occur to same degree in Europe
The European Union’s top pensions and insurance regulator is cautiously optimistic that the chaos suffered by UK pension funds will not be crossing the Channel any time soon. When government bond prices moved against them in late September, the funds were left scrambling to meet large margin calls on derivatives and leveraged repo positions.
“Our insurance and pension funds make use of hedging, [but] we see they do it to a lesser extent than the UK ones. All-in-all, you cannot exclude the risks
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