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Buy side takes control of capital in new world of swaps, says TABB research 

March 24, 2014

TABB Group estimates buy-side firms need to deposit approximately USD2trn in cash and other eligible assets at central counterparty clearinghouses (CCPs) to comply with the new clearing requirement for swaps. 

“Capital is a scarce resource that cannot be squandered by overestimating a margin call,” says Will Rhode, director of fixed income research at TABB, who co-wrote “Margin Call: New Risk Tools for the Buy Side,” with contributing analyst Sol Steinberg. “Efficient collateral usage will become an integral, growing factor in a firm’s investment and hedging strategy as improved risk analytics come of age.”
Across 50 one-to-one conversations with US-based asset managers, hedge funds, banks and insurance companies dealing in interest rate swaps (IRS) and/or credit default swaps (CDS), TABB identified industry leaders gaining a competitive advantage by using new, improved back-office technology, specifically risk analytics, collateral optimisation and faster trading processes.

Read more: Hedgeweek

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