Wanted: CCP Services for OTC Derivatives, Now
The buy side and regulators alike are clamoring for centralized clearing
Although "OTC R.I.P." was the title given to a panel discussion at Swift's recent Sibos conference in Vienna, the death sentence as applied to over-the-counter derivatives was clearly premature. The instruments are complicated, hard to deal with and-for better or worse-here to stay, agreed panelists.
Several factors weigh against the longevity of the OTC derivatives market. Regulators don't like the complexity and risk, and exchanges--eager for new business--would like to handle more derivatives contracts. In addition, transparency is lacking, and fund managers don't want to spend millions of dollars on hardware and software to process the products.
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