Quantifi Whitepaper Explores Cost of Trading and Clearing in the Wake of Margining
Quantifi today announced the release of their whitepaper ‘The Cost of Trading & Clearing OTC derivatives, in the Wake of Margining’.
7 Jun, 2016

Quantifi, a specialist provider of risk, analytics and trading solutions, and today announced the release of their whitepaper ‘The Cost of Trading & Clearing OTC Derivatives, in the Wake of Margining’. This whitepaper explores how recent regulations are affecting the OTC derivative markets in complex and interrelated ways, which in turn have changed the way firms do business.

Over-the-counter (OTC) derivatives markets continue to be impacted by regulatory changes. These changes are increasing clearing costs and consequently trading costs, to an extent that could not have been anticipated by the market. Rising capital requirements are impacting profitability and return on equity. Market participants are now being forced to clear standard OTC trades through Central Counterparties (CCPs) and will soon face margin requirements for the remaining, nonstandard, uncleared derivatives.

“New financial regulations including Dodd-Frank, Basel, MiFID and EMIR are unbundling traditional OTC derivatives markets and consequently creating threats and opportunities for different market participants. These rules are increasing the cost of capital and driving the need for firms to more accurately measure the risks and profitability of OTC Derivatives. For firms to maintain their profit margin, it is important to understand the cost of clearing.”

Dmitry Pugachevsky, ResearchDirector, Quantifi

These changes are not just impacting sell-side firms. Central clearing and margin requirements for non-standard, un-cleared derivatives are also impacting buy-side firms across several dimensions including funding, risk management valuation and operations. This is prompting firms to better assess and manage costs (funding, collateral, capital) in a consistent fashion at a trade, desk and business unit level. The question is how much of these costs can be passed on to clients.

“New financial regulations including Dodd-Frank, Basel, MiFID and EMIR are unbundling traditional OTC derivatives markets and consequently creating threats and opportunities for different market participants. These rules are increasing the cost of capital and driving the need for firms to more accurately measure the risks and profitability of OTC Derivatives. For firms to maintain their profit margin, it is important to understand the cost of clearing.” comments Dmitry Pugachevsky, Research Director, Quantifi.

Related Insights

Whitepapers

Cost of Trading and Clearing OTC Derivatives in the Wake of Margining

Over-the-counter (OTC) derivatives markets continue to be impacted by regulatory changes. These interrelated changes are affecting financial institutions and their business operations. For example, rising capital requirements are impacting profitability and return on equity market participants are now being forced to clear standard OTC derivatives trades through Central Counterparties (CCPs). Soon, there will even be margin requirements for the remaining nonstandard, uncleared derivatives (MRUDs). This is prompting firms to better assess and manage costs (funding, collateral, capital) in a consistent manner at a trade, desk and business unit level. The question is, how much of these costs can be passed on to clients?

News

Quantifi Wins Best New Technology Product – Collateral Management at FOW Asia Awards

Quantifi today announced that it has been awarded ‘Best New Technology Product – collateral management’ at the FOW Asia Awards.

News

Quantifi Survey Reveals Challenges in Managing The Cost of Collateral for Clearing

Quantifi today published the results of a short survey conducted as part of its recent webinar on the Cost of Collateral for clearing.

Let's Talk!

Schedule a personalised demo today

Loading...