OTC MARKET NEWS Powered By Quantifi

Frontloading still a thorn in industry's side 

September 3, 2014
Automated Trader

Despite a phased-in approach for the clearing obligation, frontloading continues to present major operational challenges for buy side firm caught in the "category 2" net. AT considers the responses from ESMA's clearing obligation consultation for this and other issues.

Published responses to ESMA's clearing obligation consultation show an industry still grappling with the potential fallout of implementation.

Under the European Market Infrastructure Regulation, firms will be clearing interest rate and credit default swaps through central counter parties. For IRS, four classes of swaps are up; basis swaps, fixed-to-float interest rate swaps, forward rate agreements and overnight index swaps on a range of currencies and maturities.

Frontloading, which is a bit of a misnomer, means that users of OTC derivatives transactions may be required to clear transactions that are entered into after a central counterparty has been authorised to clear transactions of that class.

Read more: Automated Trader

Comments are closed on this post.


Submit your email to receive our newsletter