Global dealers have some tough choices to make. As mandatory clearing requirements start to be rolled out, derivatives users will need to decide where they want to clear. For would-be clearing members, it boils down to what looks like a simple choice: accept every request to clear, at every venue – an operationally intensive and expensive option – or focus on a select band of clearers that cover multiple currencies, maximising the potential for offsets and reducing costs. The reality is that choice might be restricted in practice.
A number of central counterparties (CCPs) that aim to cater to local currency markets have already sprung up – some backed by explicit domestic clearing mandates, and some backed by less obvious regulatory pressures.
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