Regulations Making Non-Cleared Derivatives Less Financially Appealing

Over the counter (OTC) swaps, those non-cleared derivatives products at the center of causation of the 2008 financial crisis, may see operational costs that become “unsustainably burdensome,” states a white paper from the DTCC-Euroclear Global Collateral and consultant PricewaterhouseCoopers. The cost of complying with new regulations could significantly the overall risk exposure of the derivatives that sell-side banks currently have, all resulting from a patchwork of U.S. and international regulations.

Sell-side firms, including many large banks who underwrite swaps, face a $27 billion risk exposure factor

As a result of regulatory changes, there is a $27 billion derivatives risk exposure...