From the middle of next year, a great many derivatives trades will have to go through a central counterparty (CCP) as regulators push to make such transactions safer. But some will still remain beyond the remit of centralised clearing, and will continue to be negotiated bilaterally in so-called over-the-counter deals. Exactly what to do about these, and how to strip out credit risk, is proving a particular headache for insurance companies.
To a large extent, life insurers have no choice. The Dod