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…
Regulations Making Non-Cleared Derivatives Less Financially Appealing
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.