Nonbank Hedgers Should Go Through Clearinghouses: ECB

Law360, New York (August 29, 2012, 4:24 PM EDT) -- Nonfinancial companies should run their derivatives trades through clearinghouses instead of paying banks to do it because of the inherent risk involved with the banks' fees, a European Central Bank body said in a report released Wednesday.

Although derivatives contracts are often used by such companies to balance their risks from commercial financing activities, clearing such trades through banks could introduce additional risks in the form of nonrecoverable fees for such services, according to the European Systemic Risk Board, which was set up by legislation in...
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