CCP
WHAT IS THIS? A central counterparty (CCP) manages default risk by collecting initial and variation margin from both parties to a trade. Spill-over losses are absorbed via a default fund to which all members contribute – introducing a degree of mutualised risk – and by the CCP’s own capital. The concept is an old one that was extended to over-the-counter derivatives in the aftermath of the financial crisis.
FX could move to financial settlement under clearing pressure – GFXD’s Lam
Addressing the challenges of clearing deliverable foreign exchange products, Mandy Lam of the Global Financial Markets Association suggests more products could become financially settled in the future
Basel tries to create clearing pull with new capital rules
Dealers say rules for default fund exposures are an improvement, but risk weights are not tied to "real default probabilities"
Lack of local currency OIS markets problematic for Asia banks
The move towards OIS discounting is proving difficult enough for banks in US and European markets but firms in Asia are facing the added difficulty of a dealing with multiple currencies
ASX and LCH battle for Australian clearing market
Two's a crowd?
Banks tout alternative to calculate CCP default fund capital charge
Dealers push for a more risk-sensitive model, but regulators may opt to incorporate a new non-internal modelled approach into the existing hypothetical capital method
OTC Derivatives Clearing Summit: Bank examiners will push dealers away from bespoke trades, says Fed
Supervisors should ask dealers to prove they are favouring standardised products, says Fed official
IASB eases fears over hedge accounting for CCP novations
Standard-setter decides trades can still qualify for hedge accounting when voluntarily novated to a CCP, but experts warn wider stance on novation could cause trouble
Risk’s OTC clearing survey
In this video, Nick Sawyer talks to Risk’s editor, Duncan Wood, about clearing mandates in the US and a new Risk survey on client clearing
The end of the waterfall: Industry faces up to CCP recovery and resolution
The end of the waterfall
OFI Asset Management: Cutting the costs of clearing
Early adopters of over-the-counter derivatives clearing tended to be the big beasts of the buy-side universe, but smaller firms – such as France’s OFI Asset Management – are coming on board as well. By Tom Osborn
US-European divergence over default funds
Quotes of the quarter
Editorial: Clearing the way
Banks have focused their attention on central clearing – but trade reporting could prove even more problematic
China onshore OTC clearing postponed until 2014
OTC clearing onshore in China will be delayed until at least the end of 2013 or early 2014 according to an official at Shanghai Clearing House
Too much choice: The problems with Europe's plethora of segregation models
In the US, segregation of client assets is a simple matter – only one approach is allowed for over-the-counter trades. But in Europe, where there are more clearing houses, and no prescribed approach, things are messier. And it could be dealers, not…
Clearing chaos: US OTC industry braces for June deadline
Clearing – and present danger
Isda AGM: CCP ‘Armageddon’ could lead to sovereign default, warns HSBC exec
Single bank default could affect multiple CCPs, leading to crippling default contribution for existing members and a chain of bank failures
Isda AGM: Asia clearing houses to dominate, says survey
Many derivatives users in Asia expect to clear through local CCPs, creating the potential for liquidity fragmentation and higher costs
Libor/OIS spread challenges insurers' risk management programmes
Spread carefully
Op risk fears as OTC clearing gathers steam
The OTC market's complex new structure will lead to operational glitches, conference participants warn
Singapore positions itself as OTC clearing hub for Asia
Clearing link with KRX will lead to larger volumes and efficiencies at SGX