Regulators want to make uncleared swap trades more expensive to trade than cleared swap, writes Dan Barnes
The margin payments applied to a
derivative trade can significantly affect its value for an
investor. Therefore getting the technology in place to provide
comprehensive picture of these and other components of cost
that might improve or reduce the value of a derivatives trade,
is crucial to the trading desk.
Ricky Maloney, business manager for rates
& absolute return at Old Mutual Global Investors, said:
"Total cost analysis should be the norm across the buy-side
ahead of any regulatory pressure to make firms use it."
Since the 2009 G20 agreement, regulations
have been pushing over-the-counter (OTC) derivatives contracts
towards being cleared via a central counterparty (CCP) in the
US, Europe and Asia. The clearing model takes capital buffers
from each side of a trade that are held with the CCP in order
to cover the initial value or variations in the value of the
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