The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

EACH Supports the Introduction of a CCP for OTC Derivatives

The European Association of Central Counterparty Clearing Houses (EACH) has published a paper that indicates its support for the introduction of central clearing counterparties for the OTC derivatives markets. The industry association believes a CCP can serve as part of the blueprint to effectively mitigate counterparty risk and improve operational efficiency in the OTC derivatives market across asset classes and products.

The paper explains the reasons behind EACH’s support of the industry initiatives to establish a CCP for the credit default swap (CDS) market and a number of recommendations for the “sound market organisation” of OTC derivatives in general.

The main benefit of CCPs in this market is to ensure market integrity, says the paper. This can be achieved via: “the mitigation of counterparty default risk through interposing itself as counterparty to each trade as, the market counterparty of unquestioned creditworthiness; the multilateral netting of gross market risk down to significantly lower levels of net market risk; the neutral, transparent valuation of open positions; and the daily full collateralisation of the remaining net market risk.”

Related content

WEBINAR

Recorded Webinar: Sanctions – The new pre-trade challenge for the buy-side

Sanctions screening at the security level is a relatively recent requirement for the buy-side. It dives deeper than traditional KYC and AML screening and is immensely challenging as firms must monitor frequently changing sanctions lists, source up-to-date sanctions data and beneficial ownership data, and integrate these to screen growing lists of potentially sanctioned securities. As...

BLOG

How to Implement Strategies, Standards and Technologies for Best Practice Customer Data Management

Getting customer data right has been a problem for financial institutions for many years, but it is beginning to ease as regulation drives data aggregation underpinned by data governance, data standards emerge, and technologies replace manual processes. Getting management buy-in to improve customer data has also moved on and become more persuasive as conversations about...

EVENT

ESG Data & Tech Summit 2022

This summit will explore challenges around assembling and evaluating ESG data for reporting and the impact of regulatory measures and industry collaboration on transparency and standardisation efforts. Expert speakers will address how the evolving market infrastructure is developing and the role of new technologies and alternative data in improving insight and filling data gaps.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...