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Coping With Dodd-Frank Clearing Headaches 

February 21, 2014
Mary Schroeder, Traders magazine

New rules like the Dodd-Frank Act in the U.S. and EMIR and Basel III in Europe are presenting buyside and sellside professionals with a unique challenge: How do they clear their executed trades in a post-regulatory financial landscape and mitigate their own risk? Traders spoke with the head of American business of LCH.Clearnet for his take on what firms need to do now.

Change is here. With the rollout of the Dodd-Frank Act’s mandatory clearing requirements for parts of the derivatives market—which force traders to post collateral known as margin—broker-dealers, futures commission merchants (FCMs) and clearinghouses have had to adapt to profound changes to the way they do business in a very short period of time.

Mandatory clearing of interest rate swaps and index-based credit default swaps, both regulated by the Commodity Futures Trading Commission (CFTC), was gradually rolled out last year. The Securities and Exchange Commission, which regulates single-name credit default swaps, has not yet set a timetable for mandatory clearing for those instruments.

Read more: Traders Magazine

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