Central counterparty (CCP)
FSB sees flaws in OTC derivatives reforms
Despite greater clarity emerging from the range of regulatory initiatives, there are still considerable differences in implementation between jurisdictions
Swiss paper examines cost of different clearing set-ups
Research finds more sophisticated clearing arrangements for OTC trades can improve welfare – in a Pareto sense – but require more collateral
BoE researchers flag potential flaws in CCP default funds
Paper asks whether ‘cover two’ standard for central counterparties is tough enough to prevent ‘disaster’; some distributions of risk give cause for concern
Barnier hints at longer pensions clearing exemption for OTC derivatives
The EC's outgoing head of internal markets, Michel Barnier, has hinted the Commission will extend a pension funds derivatives clearing exemption beyond 2015
Payments achitecture fit for the 21st century
Globalisation, changes in FMIs and the emergence of new payment schemes will require ever closer co-operation to ensure the safety and efficiency of the underpinnings of the financial markets
Macro-prudential policies could ‘become part of the problem’, says BIS’ Borio
Weight of expectation on macro-prudential policies to address financial system stresses may be too great, says BIS economics head Claudio Borio; stress tests ‘woefully deficient’ in predicting crises
Fed official reiterates forex options clearing guidelines
Lawrence Sweet highlights industry discussions around forex options clearing as key component of a private sector solution
EC tackling final questions on CCP resolution
The European Commission is drawing up proposals on the recovery and resolution of CCPs, but a number of tricky questions still have to be answered
Canada deputy urges pension funds to join clearing service
For repo and derivatives transactions, central counterparties reduce common counterparty exposures and systemic risk, Lawrence Schembri argues
Central bank support for CCPs and TRs
The wider use of central counterparties and trade repositories may pose challenges for central banks. Carlos León, Clara Machado and Ricardo Mariño explain the tactics central banks are adopting.
Ingves touts simplicity of final Basel CCP rules
Chairman of the Basel Committee says final rules for banks’ exposure to CCPs show success of ‘relatively simple solutions’, which includes single approach for calculating capital requirements
ECB’s Cœuré warns CCPs could become ‘too big to fail’
Benoît Cœuré says the systemic effects of central clearing are ‘undoubtedly positive’ on aggregate, but raises concerns over the concentration of risk in a few large global CCPs
BoE praises implementation of new loss-allocation rules for clearing members
Bank's first annual report on supervision of financial market infrastructure since assuming oversight responsibilities for central counterparties last April
EU banks fear capital hit from CCP approval delays
For banks to apply a 2% risk-weight, non-EU CCPs must be approved by Esma and their home-country rules by the EC; banks fear that will not happen by June 15 deadline in some cases
UK banks win tax exemption for client clearing
UK tax authorities exclude client collateral received as a result of clearing activities from bank levy, after complaints it would act as a disincentive to clearing
Frontloading fears remain despite Esma guidance
Uncertainty has been narrowed by Esma Q&A, but dealers say they will still face pricing headaches
RBA bulletin considers CCP resolution
Reserve Bank of Australia quarterly bulletin features an article on the recovery tools and resolution regimes that could be employed when central counterparties suffer losses
BoE's Carney: liquidity support for CCPs is a 'last-resort option'
Bank of England governor insists clearing houses must have enough liquidity to cope with the default of two big member firms
Initial margin to significantly impact development of Asian derivatives markets: Asifma
Asifma head Austen wants exclusion of initial margin from Asian jurisdictions’ derivatives market regulation
CCPs face $161 billion liquidity shortfall to clear FX options, GFXD finds
Results of an industry study reveal the scale of the liquidity burden that would fall on CCPs clearing physically delivered FX options – but a net settlement mechanism could reduce the number by 73%
OTC derivatives reform contains ‘real world challenges' says Fed governor
Jerome Powell says worldwide reform efforts will turn OTC derivatives market infrastructure into a ‘pillar of strength in the next crisis' if implementation challenges can be overcome
BoE economists build model to assess CCP backstop
Bank of England financial stability paper presents a ‘top-down’ statistical model for assessing the risk CCPs are exposed to, and the likely adequacy of their default resources
BoE official calls for greater transparency on CCP margin modelling
Central counterparties should compete on quality of risk management, rather than a race to the bottom on margins, says Bank of England's head of payments and infrastructure
RBA paper supports CCP interoperability
Researchers weigh the benefits of increased netting across linked central counterparties against the potential costs arising from the bilateral exposures each link creates