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COMMENTARY: Into the breach
Using mandatory margin requirements as an indicator of client activity – albeit an imperfect one – an aggregate 18% increase in total required margin among 17 US futures commission merchants in the past quarter suggests FCMs are taking on more risk through client trades.
Meanwhile, analysis by Clarus Financial Technology, aggregating data for more than 50 clearing houses or services, shows $740 billion is being held by central counterparties (CCPs) as initial margin – versus default resources of $210 billion.
The systemic risks in the almost $1 trillion clearing industry are plain to see. It is no surprise that banks and asset managers have called for an overhaul of default waterfall…
