Central Counterparties: Mandatory Central Clearing and Initial Margin Requirements for OTC Derivatives

Central Counterparties is a practical guide to centralclearing and bilateral margin requirements, from one of theindustry's most influential credit practitioners. With up-to-dateinformation on the latest regulations imposed after the globalfinancial crisis, this book covers the mechanics of the clearingprocess and analyses the resulting consequences. Detaileddiscussion explains the ways in which the very significant clearingand margining rules will affect the OTC derivatives market and thefinancial markets in general, with practical guidance towardimplementation and how to handle the potential consequences.

Over-the-counter derivatives were blamed by many for playing amajor role in the 2007 financial crisis, resulting in a significantattention and dramatic action by policymakers, politicians, andregulators to reduce counterparty credit risk which was seen as amajor issue in the crisis. The two most important regulatorychanges are the mandatory clearing of standardised OTC derivatives, and the requirements for bilateral margin posting in non-standardOTC contracts. Central Counterparties is a completereference guide to navigating these changes, providingclarification and practical advice.

• Review the mitigation of counterparty credit risk with thehistorical development of central clearing
• Clarify the latest regulatory requirements imposed byDodd-Frank, EMIR, Basel III and more
• Learn the mechanics of central clearing, with special attentionto complex issues such as margin calculations, the loss waterfall, client clearing and regulatory capital rules
• Gain insight into the advantages and disadvantages of clearingand bilateral margin requirements, and the potential issues thatarise

As the clearing and margining mandates are phased in, theassociated costs will be severe enough to dramatically shift thetopology of the financial markets and transform the nature of risk.Central Counterparties provides the information, clarification and expert insight market practitioners need to getup to speed quickly.