May 13, 2024 (NO COMMENTS)

CCPs fear Emir clearing mandate carve-out for portfolio rebalancing could be abused

 

When a trade is labelled risk-reducing, it seems natural to assume that’s what it does. Yet some clearing houses are claiming new legislation in the European Union might permit the label to be used for a more nefarious purpose: to extract derivatives trades from central clearing altogether. Other market participants – including some central counterparties (CCPs) – are sceptical about the claim. They point out there are few incentives to employ portfolio optimisation trades as a way to evade the