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.
Sizeable portion of banks not planning to become clearing members
Battle for client clearing business set to heat up, reveals Risk interdealer poll
Confusion reigns over the US Dodd-Frank Act
Section 716 of the Dodd-Frank Act will force swap dealers to hive off certain derivatives businesses into separate affiliates. But the legislation is fiendishly complicated, riddled with oversights and requires daring interpretative leaps, which has left…
Euro debt crisis prompts questions over collateral
European financial markets have been turned upside down by the sovereign debt crisis, with eurozone government bonds no longer regarded as completely risk-free. As a result, dealers are more wary of the correlation inherent in collateral denominated in…
Asia Risk 15: Derivatives regulators ask the wrong questions and get the wrong answers
Regulators globally are grappling with legislating the derivatives sector, but the first hurdle to overcome is to understand how exactly the industry works. Satyajit Das argues it is important to first come up with the correct definitions before…
The end for one-way CSAs
Sovereign derivatives users have been able to avoid posting collateral to their dealer counterparties in the past, but pending reforms to bank capital and funding rules are changing the equation. If sovereigns refuse to budge, they will have to accept…
Lufthansa wary of OTC regulations
Corporates across the globe have lobbied to ensure end-users are not subjected to new clearing requirements for derivatives. For Lufthansa’s treasury department in Frankfurt, ensuring it is able to continue to hedge its foreign exchange and interest rate…
Clearing dilemma for CCPs
Dealers have made progress towards clearing swaths of the over-the-counter derivatives market. But market participants are likely to have to clear more awkward products to satisfy regulators’ demands. Mark Pengelly investigates
Central clearing a tricky fix for over-the-counter derivatives
Central clearing might solve some of the problems with over-the-counter derivatives, but it is by no means a straightforward solution, and could raise some additional problems
Dodd-Frank Act signed but uncertainty remains
New legislation means more study and rule-makings needed, creating operational risks for banks
Basel counterparty risk charge to be reworked
Several aspects of Basel counterparty risk charge up for revision, including calibration and index hedges
LCH.Clearnet may offer 'lite' membership to sovereigns
Clearer's plans to create a special membership category for central banks and other sovereigns could undermine CCPs' risk-mutualisation model, rivals claim
Partially protected: Dodd-Frank Act spares structured products
Registered advantages
15 minutes with: Eraj Shirvani, Isda
Isda's chairman discusses some of the changes in the regulation of the over-the-counter derivatives market
Portuguese debt office agrees to post collateral to its dealers
Agency becomes one of first developed-market sovereigns to succumb to dealer pressure as costs of one-way collateral postings grow
Dealer-led market may be disrupted by Dodd-Frank
Banks could lose margins and competitive edge as a result of derivatives reforms in Dodd-Frank Act
NY Fed pushes for a more open OTC derivatives market: Theo Lubke profile
The head of the financial infrastructure group at the New York Fed tells Mark Pengelly why transparency is key to the functioning of the derivatives market.
Questions raised about CCP collateral
Bank collateral managers raise concern about wrong-way risk in clearing house collateral
Overview of US regulatory reforms
US legislators are shoring up a range of sweeping financial regulations to tighten derivatives trading. Pauline McCallion provides an overview to the regulatory changes in the pipeline
Energy firms face capital adequacy squeeze
Impending regulation changes will have a profound impact on the operational side of the energy markets as energy companies face capital adequacy issues. Lianna Brinded investigates how companies will cope and what repercussions the changes will have on…
US regulatory reform reaches tipping point
It's not quite over yet, but the text of the Dodd-Frank bill has been agreed and derivatives users have cause for both celebration and concern.
Are the CFTC, SEC and Fed equipped for their new powers?
Despite a last-minute hitch, the final text of ambitious financial regulatory reform legislation was agreed last month, which would hand supervisors sweeping new powers over financial institutions. But are regulators equipped for their new…
Nordic markets warm to central clearing
Regulators across the globe are intent on forcing over-the-counter derivatives through central clearing. How are supervisors in the Nordic region responding, and could the relative lack of liquidity in domestic markets hamper their efforts? By…
Profile - Federal Reserve Bank of New York's Theo Lubke
The Federal Reserve Bank of New York has been shepherding global efforts to improve the over-the-counter derivatives market since 2005 and continues to push dealers to improve in areas such as transparency and central clearing. Theo Lubke, senior vice…