Non-bank FCMs unlikely to fill OTC gap

Non-banks are unlikely to fill the gap left by retreating or constrained over-the-counter derivatives bank clearing members in Europe, according to market specialists.

Nomura, Royal Bank of Scotland, Bank of New York Mellon and State Street have all either retreated from OTC derivatives clearing or stepped out altogether in the last two years. Remaining futures commission merchants (FCMs) complain that the treatment of clearing exposures under the leverage ratio heavily restrains their capacity