OTC Derivatives Clearing Summit Europe: No need to panic about collateral supply, says Bank of England
Isda estimates that mandatory clearing and margin could require the posting of up to $30 trillion of initial margin have been inflated, not least because of a likely exemption for forex swaps and forwards, according to a senior BoE official
The possibility that mandatory central clearing of over-the-counter derivatives, coupled with margin requirements for uncleared trades, could create a drain on the supply of eligible collateral has been overestimated and should not be a cause for panic, a senior official at the Bank of England has warned.
"There are clearly a number of real regulatory and market factors that are tending towards an increased demand for collateral and those do include the central clearing obligation and the margin
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