12 Jan 2011
Read our latest 'Point of View' OTC derivatives - making it clear; summarising the evolution of the OTC derivatives market and the impact of using a central counterparty.....
Since 2009 there has been a growing interest among international regulators, hedgers, investors, dealers, clearing members, clearing houses and exchanges in the devlopment of a central counterparty (CCP) or central clearing house (CCH) for credit default swaps (CDS) and other OTC derivatives.
The paper summarises the evolution of the OTC derivatives market and the impact of using a CCP. Particular attention is paid to the impact of the regulatory framework for OTC derivatives, which recently changed with the adoption in the US of the Dodd-Frank Wall Street Reform Consumer Protection Act and the introduction in Europe of EU regulations, known as European Market Infrastructure Regulation (EMIR) covering OTC derivatives, CCPs and trade repositories. Under these new reforms, the clearing and settlement of many OTC derivatives through a CCP will be an imperative for banks and other market participants.
