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The Trading Mesh

September 2014

Clear danger ahead

September 29, 2014 Comments (0)           

This article was originally published at the Fidessa blog, and is reproduced here with permission. By Steve Grob

As the regulators push us towards centralised clearing for OTC derivatives they may actually be making the world distinctly less safe. At face value it makes obvious sense; if one party defaults the CCP steps in. As always, though, the problem lies in the detail but this time not too far below the surface.
The first problem concerns the efficient use of margin....