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Derivatives clearing diverts capital from long-term investing – PensionsEurope 

June 25, 2015

Jonathan Williams, Investment & Pensions Europe

Mandating central clearing of derivatives trades would only serve to increase profits for clearinghouses and could increase risk, PensionsEurope has warned. 

In a discussion paper on the Capital Markets Union (CMU), published to coincide with the industry group’s annual conference in Brussels, the association warned that a more coherent capital market could be undermined by regulatory requirements diverting funds away from investment opportunities.

It said the CMU would only be a success if it truly facilitated long-term investment by pension funds, and the sector were not hampered by existing prudential regulation that “excessively” limits exposure to long-term projects.

The association said it accepted that central clearing of derivatives, from which the sector recently won a further two-year exemption, was an important piece of the financial reform decided upon by G20 nations in the wake of the financial crisis.

Read more: IPE

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