Research suggests that central counterparties do not have the capacity to deal with the increase in volume of OTC derivatives processing that Dodd-Frank and EMIR will bring. Dan Barnes looked at what they were doing to meet demand.
The technology infrastructure underpinning central
counterparties (CCPs) is being reinforced or replaced to
support a jump in workload. CCPs are now building the capacity
to process approximately seven million trades a day per asset
class, up from 2000-3000 a day currently, according to Kevin
McPartland, senior analyst at research firm TABB Group.
The increase in the volumes will stem from regulations being
put into place across the Group of 20 countries (G20), such as
the Dodd –Frank Act in the US and the European markets
and infrastructure regulation (EMIR), which mandate central
clearing of trades for standardised OTC derivatives
In Asia, Hong Kong Exchanges and Clearing, the exchange and
infrastructure operator for the special administrative region,
has plans to launch an OTC clearing facility in late 2012,
while Singapore Exchange (SGX) set up its clearing facilities
in November 2010.
"There is clearly quite a race on from a CCP point of view
to implement the systems that are required," says Keith Bear,
worldwide sales leader for financial markets at IT provider
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