Skip to main content

Is Collateral OTC Clearing’s Double-edged Sword?

By 3 Feb, 2014November 18th, 2019Insights, Sellside Trends
New capital markets regulations in the EU and US impose limits on the ability of investment banks to post high-yield fixed income securities to central counterparty clearinghouses (CCPs) as collateral against both proprietary and buyside client OTC derivatives trades.
Limits on the use by banks of only high-grade collateral to novate derivatives trades at CCPs raises the question: Is there enough long-term supply of high-grade collateral available in the market to match capital markets demand for the fixed income securities?
GreySpark Partners consultant Malavika Shekar explores issues related to the pro-cyclical nature of collateral in the clearing world.

This content is restricted to site members. If you are an existing user, please log in. New users may register below.