EU trading obligation threatens packaged trades
Banks warn they will have to break up packages and face higher costs for hedging
European Union rules requiring certain derivatives to trade on multilateral platforms could result in market participants being unable to execute packages, thereby increasing the costs of hedging.
“It may mean our clients can’t execute their hedge trades, or they execute them in a way that each component is separate from each other, and then they incur basis risk on that,” says a regulatory change manager at a US investment bank.
On January 3, 2018, the second Markets in Financial Instruments
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