Asset managers are looking for new solutions from their service providers to answer the growing cost of swap clearing
The prospect of higher swap clearing costs for asset
managers is raising questions over established clearing models
and fuelling interest in alternatives, according to industry
The European Markets Infrastructure
Regulation’s (Emir) mandatory clearing of interest
rate swaps by asset managers is set to take effect in 2016,
meaning many firms are now required to establish systems and
connections with clearing brokers to ensure they are ready for
Yet Emir and other related regulatory changes have combined
to put smaller and medium-sized firms at a disadvantage.
"In the pre-Emir futures clearing model, the more volume
banks put in the system the more revenue they could generate,"
said Lee McCormack, over-the-counter clearing business
development manager at Nomura.
"With Emir that old model is no longer viable. Capital
charges and leverage ratios are resulting in clearing being
seen less as a higher volume network-type business that you can
provide for everyone."
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