Rethinking investor protection in central clearing revolution
Central clearing is seen as the cornerstone in drives to reduce systemic risk and take investor protection to new heights. However, fresh thinking, continued innovation and much greater collaboration across the industry will all be required if central clearing is to deliver what it promises, says Hans-Ole Jochumsen, president of global trading and market services at Nasdaq
It is time for buy-side firms to make the crucial decision about where to clear over-the-counter flow. Protecting clients takes priority, so they will have to pay close attention to two factors: segregation models and recovery plans.
If a clearing member defaults, investors want to be able to quickly transfer their positions, along with any collateral held, to a new member. Asset segregation models are vital for this, and the European Market Infrastructure Regulation (Emir) has mandated them to
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