VIDEO | The art of managing collateral, and the costs of clearing, were at the centre of a just-after-lunch session of the PostTrade 360° Copenhagen conference on Thursday. On stage were ATP’s Caroline Keegan Andersen, and ABN Amro Clearing Bank’s Alexander Jacobs, in discussion led by Eurex’s Frank Odendall.
The session was sponsored by Eurex.
With the huge variety of asset classes and stakeholder strategies, collateral management is not an easy area to sum up. Still, many would agree it is coming increasingly into focus, and the conference session came to cover many corners.
Looking at the development in OTC clearing – where authorities have encouraged increased central clearing for stability reasons by toughening the requirements for margin posting when clearing bilaterally – Caroline Keegan Anderson observed that increasing competition has helped service prices come down.
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“On cleared OTC, I think it’s fair to say – if you look from five years ago to now – that the cost of clearing, on a broker level, has gone down substantially and there’s a lot more competition in that space. Albeit said, when we still look at bilateral versus cleared – even with the “Uncleared Margin Rules”, the capital requirements on initial margin – it is more even now. There is still a basis in our portfolio to be bilateral if we could be, versus clearing, but the costs have definitely come down on cleared OTC in the last five years based on competition, she said.”
On repo clearing, Frank Odendall noted that America already has a higher activity and liquidity than many European market participants imagine, with 2,000 entities or more clearing repo on a daily basis.
The session was titled “Collateral management and the cost of clearing”, hosting …
Caroline Keegan Andersen, Director, Hedging & Treasury, ATP,
Alexander Jacobs, Head of OTC Clearing, ABN Amro Clearing Bank, and as moderator
Frank Odendall, Head of Securities Financing Product & Business Development, Eurex.
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