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The Law And Regulation Of Central Counterparties

Author: Jiabin Huang
Publisher: Bloomsbury Publishing
ISBN: 1847316093
Size: 27.91 MB
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The Law and Regulation of Central Counterparties provides a detailed analysis of the legal and regulatory aspects of Central Counterparties (CCPs) with an introduction to their role and functions in modern financial markets. The book begins by describing in detail basic elements of modern post-trade infrastructure, exploring the modern functional and operational aspects of CCPs in the markets. It moves on to discuss the relationships between CCPs and their members, and clients of clearing members as non-members, legal issues concerning collateralisation, netting and set-off, and default arrangements that are primarily embedded in the form of the rules and regulations of CCPs. With regard to regulatory issues, the book examines the regulatory framework with reference to the UK and the EU. As to the case for a single CCP for various different types of markets, the analysis covers the advantages and disadvantages of CCP clearing and carries out an assessment of the risks and benefits of a single multi-market CCP.

Regulating Financial Derivatives

Author: Alexandra G. Balmer
Publisher: Edward Elgar Publishing
ISBN: 1788111923
Size: 61.88 MB
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This book puts forward a holistic approach to post-crisis derivatives regulation, providing insight into how new regulation has dealt with the risk that OTC derivatives pose to financial stability. It discusses the implications that post crisis regulation has had on central counterparties and the risk associated with clearing of OTC derivatives. The author offers a novel solution to tackle the potential negative externalities from the failure of a central counterparty and identifies potential new risks arising from post crisis reforms.

Central Counterparties Addressing Their Too Important To Fail Nature

Author: Froukelien Wendt
Publisher: International Monetary Fund
ISBN: 1498353983
Size: 41.91 MB
Format: PDF, Kindle
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Central counterparties (CCPs) can offer significant benefits to a market. However, CCPs are also highly interconnected with financial institutions and markets and therefore too important to fail. The increased volumes cleared through CCPs and their increasing global scope, in particular in the OTC derivatives market, make it even more important that systemic risks related to CCPs are managed. This paper argues that the current set of international policy measures does partly address these risks, but that alternative policy measures are needed to reduce remaining systemic risks. For example, the paper recommends network analysis to be conducted by CCPs and authorities to gauge potential losses and suggests a common international approach to central bank services to help reduce the dependency of CCPs on services provided by commercial banks.

Central Counterparties

Author: Jon Gregory
Publisher: John Wiley & Sons
ISBN: 1118891589
Size: 58.34 MB
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Practical guidance toward handling the latest changes to the OTCderivatives market 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.

The Law Of Corporate Finance General Principles And Eu Law

Author: Petri Mäntysaari
Publisher: Springer Science & Business Media
ISBN: 9783642030550
Size: 50.28 MB
Format: PDF
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1. 1 Investments, Generic Contracts, Payments According to Volume I, contracts are one of the five generic legal tools used to manage cash flow, risk, agency relationships, and information. Many investments are therefore based on one or more contracts. Obviously, the firm should draft good contracts. Good drafting can ensure the same intended cash flow with reduced risk. Bad drafting can increase risk. This volume attempts to deconstruct contracts used by non-financial firms and analyse them from a cash flow, risk, agency, and information perspective. The starting point is a generic contract, i. e. a contract which does not belong to any particular contract type (Chapters 2–7). This volume will also focus on payment obligations. Payment obligations are characteristic of all financial instruments, and they can range from simple payment obligations in minor sales contracts and traditional lending contracts (Chapters 8– 11). 1. 2 Particular Contract Types A number of particular contract types have been discussed in the other volumes of this book. (1) A certain party’s investment contract can be another party’s fu- ing contract. Particular investment contracts will therefore be discussed in Volume III in the context of funding. (2) Many contracts are necessary in the context of business acquisitions discussed in Volume III. (3) Multi-party contracts are c- mon in corporate finance. The firm’s contracts with two or more parties range from syndicated loans to central counterparties’ contracts. Such contracts will be discussed both in Chapter 12 and Volume III.

Research Handbook On International Financial Regulation

Author: Kern Alexander
Publisher: Edward Elgar Publishing
ISBN: 0857930451
Size: 52.89 MB
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The globalisation of financial markets has attracted much academic and policymaking commentary in recent years, especially with the growing number of banking and financial crises and the current credit crisis that has threatened the stability of the global financial system. This major new Research Handbook sets out to address some of the fundamental issues in financial regulation from a comparative and international perspective and to identify some of the main research themes and approaches that combine economic, legal and institutional analysis of financial markets. Specially commissioned contributions represent diverse viewpoints on the financial regulation debate and cover a number of new and controversial topics not yet adequately addressed in the literature. Specifically, these include; financial innovation particularly in the context of the credit risk transfer market, securitization and the systemic importance of the over-the-counter trading markets; the institutional structure of international financial regulation; and risk management and corporate governance of financial institutions. This Handbook will provide a unique and fully up-to-date resource for all those with an interest in this critical issue including academic researchers in finance and regulation, practitioners working in the industry and those involved with regulation and policy.

Capital Requirements For Over The Counter Derivatives Central Counterparties

Author: Ms. Li Lin
Publisher: International Monetary Fund
ISBN: 1475571771
Size: 43.21 MB
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The central counterparties dominating the market for the clearing of over-the-counter interest rate and credit derivatives are globally systemic. Employing methodologies similar to the calculation of banks’ capital requirements against trading book exposures, this paper assesses the sensitivity of central counterparties’ required risk buffers, or capital requirements, to a range of model inputs. We find them to be highly sensitive to whether key model parameters are calibrated on a point-in-time versus stress-period basis, whether the risk tolerance metric adequately captures tail events, and the ability—or lack thereof—to define exposures on the basis of netting sets spanning multiple risk factors. Our results suggest that there are considerable benefits from having prudential authorities adopt a more prescriptive approach to for central counterparties’ risk buffers, in line with recent enhancements to the capital regime for banks.

The Law Of Institutional Investment Management

Author: Lodewijk D. Setten
Publisher: Oceana Publications
ISBN: 0199285012
Size: 20.75 MB
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Lodewijk van Setten is Special Counsel to Covington & Burling, the US law firm, in London. He has wide-ranging experience in advising financial institutions and institutional investors on all operational, regulatory, and legal aspects of transactions in the (secondary) financial markets, includingin areas such as investment management, custody, brokerage, and (trans)national trading, clearing, and settlement systems. In addition, he has particular experience in structuring unregulated (hedge) funds, including related repurchase/securities lending transactions and prime brokeragearrangements, and on-exchange/OTC derivative transactions. Before joining Covington & Burling, Lodewijk served as director and European Counsel for State Street Global Advisors (SSgA), the U.S. based institutional investment manager, in London. At SSgA, he was responsible for the legal support ofall aspects of SSgAs institutional investment business in Europe. Prior to joining SSgA, he worked as a banking and securities lawyer for a leading international law firm in Amsterdam. Lodewijk holds an LL.B and a Ph.D (Thesis- Private rights of action against broker-dealers and investorprotection) from the University of Utrecht (The Netherlands) and an LL.M from Duke University (U.S.), where he was a Special Staff Editor of the Duke Journal of Comparative International Law. He regularly publishes on various topics relating to transactions in the financial markets and teaches thesetopics in the graduate programme at Kings College (London), where he is a Visiting Professor. He was admitted as advocaat in the Netherlands in 1993, as attorney at law in the state of New York in 1994, and as solicitor in England and Wales in 2002.

Limiting Taxpayer Puts An Example From Central Counterparties

Author: Mr. Manmohan Singh
Publisher: International Monetary Fund
ISBN: 1498385389
Size: 49.23 MB
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Nonbanks such as central counterparties (CCPs) are a useful lens to see how regulators view the role of the lender-of-last-resort (LOLR). This paper explores the avenues available when a nonbank failure is likely, specifically by considering the options of keeping CCPs afloat. It is argued that CCPs have, by regulatory fiat, become “too important to fail,” and thus the imperative should be greater loss-sharing by all participants that better align the distribution of risks and rewards of CCPs, the clearing members and derivative end-users. In the context of LOLR, the proposed variation margin gains haircut (VMGH) is discussed as a way of limiting the taxpayer put.