Central Counterparty Clearing: Where we are today.

26-01-2011

Developments with CCPs and OTC derivatives regulation are vitally important in our market and seem to be constantly changing.  It is truly difficult to keep up to date with what is going on.
 
Paul Harding has recently written an article on these subjects which he would like to share with you.  This article is available by clicking on the link below.
 
Central Counterparty Clearing: Overview of current position and likely future changes

He hopes you find it useful.

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CENTRAL COUNTERPARTY CLEARING: OVERVIEW OF CURRENT POSITION AND LIKELY FUTURE CHANGES

The contents of this article are descriptive only. The clearing of OTC derivatives on the platforms of central clearing counterparties is evolving as is its documentation. This article reflects the position according to the author’s understanding as at 21st January 2011. Much finalisation work remains to be done.

Traditionally OTC derivatives have traded on a bilateral basis between counterparties who set their own collateral requirements without regard to the ramifications that a default could impose on the financial system as a whole.

Clearing became a big issue following the demise of Bear Stearns and the bankruptcy of Lehman Brothers in 2008. This was because of the risk exposure banks had to each other through billions of dollars of interconnected OTC derivatives contracts... [read more]