More clarity sought on central clearing plans

Feb 8, 2010

Corporate and financial firms want to know more about the likely impact of central clearing of over-the-counter derivatives, according to Greenwich Associates. A big issue among Asian firms is that of local-currency contracts.

There seems to be a broad consensus that moving over-the-counter (OTC) derivatives to a system of centralised clearing would help manage both individual counterparty risk and market-wide systemic risk. Less widely agreed upon, however, is the effect such a system would have on trading liquidity, costs, spreads and volume.

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