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No consensus over stopping clearers becoming 'too big to fail' 

September 23, 2015

Huw Jones, Reuters

Banks and mutual funds have no way of comparing the health of clearing houses for derivatives just months before their use becomes mandatory in Europe, an industry conference heard on Tuesday.

The financial crisis prompted reform of the $630 trillion derivatives market, forcing many contracts in the United States to pass through a clearing house, with the European Union following suit next year with similar rules.

This involves a trade passing through a third party to ensure completion, even if one side goes bust, like Lehman Brothers bank did at the height of the financial crisis in September 2008. New York and London are the main centres for derivatives trading.

Divisions over how clearers should publicly demonstrate their ability to withstand market shocks were underscroed by officials speaking at an International Swaps and Derivatives Association (ISDA) conference in London on Tuesday.

Read more: Reuters

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