In a recently concluding submit at Risk‘s OTC Derivatives Clearing Summit in New York. Representatives from Goldman imagesSachs argued that :

“Regulators want capital and margin rules to encourage central clearing, but analysis suggests costs may currently be higher in the cleared world”

So what does he mean let’s try to look at the existing capital and margin rules may not encourage market participants to centrally clear their over-the-counter derivatives trades. The capital regime for both cleared and uncleared trades is still unsettled, as is the margin regime for transactions that remain bilateral, but regulators are keen to ensure the framework pushes trades towards central counterparties (CCPs). As things stand,costs may be higher in the cleared world, particularly for market participants that have a directional book of trades. Continue reading

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