GreySpark’s research paper on OTC Clearing – “OTC Derivative Clearing: Navigating the New Regulatory Landscape” – was launched at a media roundtable event recently, attracting key titles from buy-side and sell-side publications.
The main emphasis in the media was on the operational complexity and regulatory uncertainty that the buy-side and sell-side will face during the reform of the OTC derivatives market. It is clear that market participants have little understanding around the number of central counter parties (CCPs) that will exist, and what the key changes to CCPs. Additionally, increased operational costs associated with central clearing was highlighted as a key issues, particularly for the buy-side.
Clearly, on both sides of the capital markets, the impact will be felt. One notable change will be the cost of collateral. Whereas before you could net off exposure, with multiple CCPs, this won’t be possible,” he explains.