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Study shows economic benefits of integrated CCP service

Release date: 17 Apr 2014 | Eurex Clearing

Study shows economic benefits of integrated CCP service

Eurex Clearing recently published the study "The Future of Central Clearing - Maximizing capital and cost efficiency through an integrated cross-product CCP clearing service". The study was supported by and commissioned to Oliver Wyman, a leading global management consulting firm and reviews how new capital and collateral requirements impact derivatives and securities financing markets.

The study shows that sell and buy side participants can substantially lower their capital and funding cost by actively pooling clearing business on an integrated cross-product CCP. Netting efficiency, default fund structure and collateral efficiency are the core drivers for capital efficiency. Savings can be realized from cross-margining OTC and listed derivatives as well as cross-product exposure netting, an integrated default fund structure and collateral management services.

Detailed case studies quantify the cost components

In the new world of regulations, such as Basel III, Capital Requirements Directive IV (CRD IV) or EMIR, capital and collateral requirements for derivatives and securities financing transactions are becoming ever more important.

In the study, you will find detailed case studies for typical portfolios of a global and a regional bank as well as for a mutual and a hedge fund and quantifies the cost components for interest rate derivatives, repo and securities lending exposures. For these asset classes an integrated cross-product CCP structure with a broad collateral spectrum can deliver up to EUR 4-5 billion incremental cost benefits to the European sell and buy side community combined.

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