otc prescription - plenum group
DESCRIPTION
A discussion of how the impact of OTC clearing regulations may come down to the quality of the modellers hired.TRANSCRIPT
www.theplenumgroup.com
Plenum 2013 – Financial Services Executive Search
OTC Derivatives Clearing
An Over The Counter Prescription?
On both sides of the Atlantic, OTC Central clearing is being introduced in the wake of the financial crisis to increase transparency and security for over the counter derivative trades. Whilst the changes no doubt have the capacity to deliver significant benefits such as the removal of counterparty risk, increased standardisation in the market, and operational efficiencies it will also force some major changes upon this market, and not all of them positive.
While recruiters typically celebrate the new skill-sets required, many employed in this area are concerned that standardisation of the process will effectively lead to a de-skilling of the workforce.
Some press articles http://www.ft.com/cms/s/0/d6313620-3aa4-11df-b6d5-00144feabdc0.html#axzz1aUJxWpP7 have commented that the UK's long standing dominance of the market for over-the-counter derivatives is to be threatened by a concerted French campaign (led by French finance minister Christine Lagarde) to ensure Paris becomes the centre for all such Euro denominated transactions.
However, it is the requirement to post margin that has drawn the most criticism with the accusation that responsible investors are to be subsidising the reckless few. However with regulations yet to come into full force, the extent to which sophisticated modelling might allow for cross-margin relief is yet to be seen. We could find that the degree to which the regulations impact on our financial sector is in the hands of a few skilled modellers.
Regardless of ones standpoint, the regulations look set to surge ahead. To discuss how Plenum can help you build a team adequately skilled team to prepare for life after
clearing, please get in contact.