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Published on 02 Jul 2012
Posted by: Steve Grob,Director of Group Strategy,Fidessa
This was evident during the exchange leaders’ panel where the CEOs of the major derivatives exchanges were enjoying the views from the moral high ground and basking in the warm glow of the regulators’ approval. Let’s hope they’re right, as the finance industry really can’t afford any more bad publicity. Two points in particular strike me. The first is that for some large buy-sides that trade mainly with other large risk averse institutions, a bilateral relationship is actually safer. They know exactly who they are dealing with and don’t have to worry about the creditworthiness of the other firms their collateral might interact with on a CCP. The second is that pretty much every exchange in Europe is seeking to set up a clearing venue for OTC products and engineer ways in which this can be used to offset margin against exchange-traded products.
But what happens if we ever do actually have to pull the clearing rip cord? Andreas Preuss (CEO Eurex) was asked if a “living will” existed for Eurex Clearing. He confirmed that yes, such a plan does exist showing that, in his mind at least, he and his colleagues are prepared to think the unthinkable. Let’s just hope the rest of us never have to read it.
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