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Industry seeks urgent clarification on frontloading 

April 2, 2014
Paloma Migone, The Trade News

Market participants are seeking answers from European regulators on a frontloading obligation for OTC derivatives after it was recently triggered by the approval of the first central counterparty (CCP).

In a joint letter to the European Securities and Markets Authority (ESMA) last week, the International Swaps and Derivatives Association (ISDA) and FIA Europe called for “swift action” on guidance for the industry on frontloading.

Nasdaq OMX Clearing last week became the first clearing house to get the green light by regulators under the European market infrastructure regulation (EMIR), sparking a countdown to mandatory clearing of OTC derivative trades, now expected to take effect in 2015.

But Barry Hadingham, head of derivatives and counterparty risk at Aviva Investors, told theTRADEnews the approval of Nasdaq OMX has also caused confusion. The frontloading window is now open, meaning any eligible swaps entered into after CCP authorisation may also need to be cleared once rules kick-in.

Read more: The Trade News

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