The buy-side say there is a case for exempting them from the obligation to centrally clear OTC derivatives trades. Now the dealers are backing them finds Dan Barnes.
On 13 September, Conrad Voldstad, chief executive of the
International Swap and Derivatives Association (ISDA),
informally proposed an idea to his Association’s
New York regional conference, "First, dealers should be
required to clear trades with one another. Second, no other
counterparties should be forced to clear. I hope that gets your
It did; the buy-side has long argued that applying the same
central clearing obligations to traditional investment managers
as were applied to the sell-side was unfair. Dealers had not
shown any real support for the buy-side’s view,
"The aim of central clearing is ridding the system of
systemic risk," says Jane Lowe, director, markets at buy-side
trade body the Investment Management Association.
"To my knowledge that systemic risk appears to rest in the
banks. I don't want to criticise ISDA, but we have been saying
this right from the beginning. We have not said don't bring the
buy-side into clearing entirely, but rather do so on a
completely separate timeline to the dealers."
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