Derivatives Margin up for Grabs in a Crisis

International regulators say margin posted in derivatives trades could be used to shore up CCPs, if necessary.

Derivatives traders should be prepared to lose the initial margin they post at clearinghouses if it’s needed to prevent a financial crisis, global markets regulators said.

The “margin is likely to constitute a very large pool of assets which would, if it can be used, provide a high degree of loss-absorbency” to help stabilize a central counterparty, or CCP, the International Organization of Securities Commissions and the Committee on Payment and Settlement Systems said in a joint report published yesterday.

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