In the second of the series of unanswered questions on OTC clearing, William Mitting asks who should decide what is eligible for clearing.
From the moment the mandate was passed down, the debate over
who should decide what can and can’t be cleared
raged. On the one hand, regulators are keen to ensure that the
market does not obfuscate contracts in order to exempt them
from central clearing, however there are concerns over how a
regulator can force a clearing house to clear a product without
assuming some responsibility for the viability of that clearing
WMBA chairman David Clark outlines the problem: "One of the key
questions is should or how can the regulators play God on what
can and can’t be cleared? From a European
perspective, it might be suitable to clear a product in one
country and not in another.
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