The practice encourages better risk management and efficient collateral allocation
LCH.Clearnet, the London Stock
Exchange-owned clearing house, has called for more uniformity
in regulatory standards over portfolio margining, as part of
plans to boost debate amongst firms and regulators on how to
deal with the issue.
In a new white paper released Monday, the
London-based firm said while current regulatory standards allow
portfolio margining across assets that are significantly and
reliably correlated, they do not, "specify the meaning of
significance and reliability in exact quantitative terms."
Large banks have grown increasingly
interested in portfolio margining as it has the potential to
dramatically lower clearing costs as exposure is calculated
across a range of correlated assets. With capital charges being
imposed by regulators in the wake of the financial crisis in
2008, banks are keen to reduce their clearing costs to offset
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