Asset managers are assessing the best way to manage the increased collateral obligations for OTC derivatives trades. However, incomplete regulation is hampering their ability to assess the suitability of systems on offer, finds Dan Barnes.
In the US,
under the Dodd-Frank regulation, and in Europe, under the
European market infrastructure regulation (Emir), clearing for
all standardised OTC derivative contracts is to be carried out
via central counterparties by end of 2012 at the
Martin Loxley, commercial director, collateral management, at
software provider Omgeo says that the value that CCP clearing
provides in the situation of counterparty default was proven
when Lehman Brothers
collapsed in 2008.
process that took place at LCH.Clearnet, in terms of the
transfer and the auction of the Lehman's positions, happened in
a matter of weeks; however some of the bilateral positions held
between Lehman and its counterparties are still in dispute,
even today," he
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