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Tag Archive: Counterparty


Here are 10 questions that you should know if you are based in the European Economic Area and trade in derivatives, whether on-blogexchange or “over-the-counter” (OTC), then you will be impacted by EMIR. This could include real estate investors who use derivatives and swaps (e.g. hedging interest rate and currency risks) to reduce risk rather than for speculative purposes. The exact impact of EMIR will depend on the type of firm, as well as the level and type of derivative exposure of the particular firm.

  1. Should I care about EMIR? (I should hope so)
  2. What are the requirements under EMIR? Continue reading
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Here are 10 questions that you should know if you are based in the European Economic Area and trade in derivatives, whether on-exchange Googleor “over-the-counter” (OTC), then you will be impacted by EMIR. This could include real estate investors who use derivatives and swaps (e.g. hedging interest rate and currency risks) to reduce risk rather than for speculative purposes. The exact impact of EMIR will depend on the type of firm, as well as the level and type of derivative exposure of the particular firm.

  1. Should I care about EMIR? (I should hope so)
  2. What are the requirements under EMIR? Continue reading

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

The Bank of England has released two papers on CCPs, which explain lossallocation rules, and how to balance the costs Aof default resources with the expected losses.
Paper 19, titled: “Central counterparties and their financial resources—a numerical approach”, maintains that new regulatory standards have required central counterparties to have robust processes in place to mitigate their counterparty credit risk exposures.
“At the same time, the standards allow CCPs to tailor their risk management models. This paper considers how CCPs can optimally determine the relative mix of initial margin and default fund contributions in a stylised setting, by balancing the costs of default resources with the expected losses they protect against,” .  Continue reading

Novation Agreement: School-To-College

1ASSIGNMENT” This word is familiar to all of us but, only with generic meaning. To most of us, the word Assignment is known either as school or office work 😉 . But, Have you ever given a thought to “Assignment Agreement” in relation with Capital market. Well, Assignment Agreement is a profound term in capital market and this is also known as “NOVATION AGREEMENT”.

In our previous posts, we have discussed about Exchange, OTC market, different derivative classes, structured derivatives etc. and today continuing to that we will discuss about Novation Agreement.  Continue reading

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