• 218

    CALCULATING THE CLEARING THRESHOLD: challenges for non-financial counterparties in the european union

    While EMIR mandates clearing and reporting requirements on over-the-counter (OTC) derivatives for Financial Counterparties (FCs), it exempts Non-Financial Counterparties (NFCs) from parts of reporting and clearing requirements only until their positions in proprietary trades remain within a pre-defined clearing threshold (defined for each asset class by ESMA). In order to avoid the infrastructure and process costs for the increased EMIR reporting and risk management responsibilities, every NFC has to closely monitor its vulnerability to breach the mandated clearing threshold. For many, however, this is no small task. In this article, Mahima Gupta and Shashin Mishra review the challenges involved for [...]
  • 628

    THE CLIENT CLEARING OFFERING: balancing cost, risk and client service

    Financial institutions are facing pressure to offer clearing services to their clients. This is a costly endeavor that offers little financial upside for firms: It is a low-margin service that requires a large capital commitment to clearing houses as well as a heavy investment in technology. Phil Matricardi and Adam Kott discuss the costs and risks of offering client clearing as well as how firms may begin collaborating in the future to meet their clients’ needs. High-cost, high-touch banking and advisory services, such as over-the-counter (OTC) derivative brokerage, mergers and acquisitions advisory and fixed income capital markets, have been either [...]
  • 524

    REGULATORY REPORTING: how do capital market participants assure ongoing compliance within an ever-changing regulatory landscape?

    The investment banking industry is undergoing a monumental transformation as the world’s regulators shift their focus away from exchange-traded instruments to the strict enforcement of a new regulatory regime in the historically unregulated and opaque OTC derivative market. Nowhere is this shift more apparent than in the US where the Commodities Futures Trading Commission (CFTC) is pushing ahead of the other global regulators with all four of the G20 commitments: mandated execution (trading), clearing, capital and reporting obligations. These requirements are certain to transform the investment banking industry altogether. As the industry is currently implementing a number of tactical fixes [...]