The Impact of OTC Clearing by Jon Gregory

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The Impact of OTC Clearing

Presenter: Jon Gregory: Partner, Solum Financial Partners


Central Counterparties (CCPs) have existed for many years to guarantee performance in exchange traded derivative markets. However, they also offer a similar role in reducing counterparty risk in bilateral over-the-counter (OTC) derivative markets. Regulation stemming from the global financial crisis of 2007 onwards has mandated that many standard OTC derivative transactions must be cleared through a qualifying CCP. This move towards central clearing is therefore going to create a dramatic shift in the topology of financial markets together with a significant reallocation of counterparty and systemic risks and is an important consideration for all financial institutions whether they may be CCP members or alternatively clear trades indirectly.

  • History of clearing
  • Mechanics of OTC clearing
  • The default waterfall and loss allocation
  • The risks of OTC clearing

Published date

Monday, 10 November, 2014