Clearing For OTC Derivatives Used Erratically, Data Shows

Law360, London (November 10, 2016, 6:57 PM GMT) -- Less than 2 percent of over-the-counter foreign exchange and equity derivatives are going through central counterparties, according to data released Thursday revealing their wildly inconsistent use across the unlisted securities market.

Numbers from the Bank for International Settlements showed big swings in the use of central counterparties, or CCPs, which stabilize markets by absorbing the credit risk of buyers and sellers when settling transactions in the multitrillion-dollar OTC trade.

“Central clearing has made very significant inroads into OTC interest rate derivatives markets but is less prevalent in other OTC derivatives segments,” said the BIS, which comprises 60 international central banks....

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