Public Policy Symposium on OTC Derivatives Clearing
This conference on the central clearing of over-the-counter (OTC) derivatives addressed policy issues related to the design, operation, and regulation of central counterparties (CCPs). Participants drawn from CCP operators, derivatives dealers, investors, regulators and academia focused attention on a range of key public policy issues.
After coffee and opening remarks, each of four panels took a subset of issues related to ownership and control of CCPs; participation in central clearing; capital structure of CCPs; and market structure. Open discussion, included questions from the floor, were strongly encouraged by moderators. Kenneth C. Griffin spoke as the keynote for the luncheon, Founder and Chief Executive Officer of Citadel. Please note: This event is by invitation only.
Panel 1 will address issues related to the ownership and control of CCPs. Of particular concern are the positive and negative incentive effects associated with the ownership or control of CCPs by major dealers.
Panel 2 will focus on who should participate in clearing. The issues to be addressed include CCP membership criteria and the costs and benefits of requiring hedge funds, commercial end users, and other market participants to centrally clear their derivatives positions. The appropriate scope of exemptions from clearing requirements for commercial hedging positions is likely to be raised.
Panel 3 will address the amounts and types of derivatives to be cleared, appropriate levels of CCP capital, guarantee funds, and collateral, as well as the regulatory capital and collateral requirements for cleared versus un-cleared derivatives.
Panel 4 will address the industrial organization of the market for central clearing and cross-CCP risk-management issues. The panel may focus on the potential for interoperability and on the positive and negative effects of competition among CCPs. Concerns may be raised over the concentration of risk in “too few” CCPs versus potential lost netting opportunities or coordination problems arising from “too many” CCPs.
Last Updated: 09/02/2010
