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Banks shake up clearing 

July 12, 2014
Christopher Whittall, International Financing Review

Leading investment banks are set to raise the price they charge to clear derivatives trades on behalf of clients, as two high-profile exits in the space of six months have highlighted the shake-up needed to make OTC client clearing a viable service under Basel III.

Derivatives dealers engaged in a price war on clearing services when the Dodd-Frank mandate went live last year as they vied to get client trades whizzing through their pipes, but some are thought to have over-stretched themselves ahead of the finalisation of rules regarding capital and leverage.

RBS recently shuttered its client clearing service citing the cost of capital, while BNY Mellon closed its US business late last year. And now Barclays – currently the largest clearer of OTC swaps, which was at one time reported to have captured 70% of clearing business – has signalled that the service needs to evolve in order to survive.

Read More: IFR

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