Still time to challenge on CB swaps

By Bill Thornhill
16 Apr 2014

The European Banking Authority has proposed that covered bond swaps should be exempt from the central clearing proposals set out as part of the European Market Infrastructure Regulation (Emir). In so doing it has provided the market with a fillip, but there is a risk covered bonds will lose appeal if issuers' swap obligations become too onerous to fulfil.

The EBA’s draft technical standards, issued on Monday, said that the swap clearing regulations should acknowledge how hard it is for cover pools to post collateral. In so doing the EBA upheld one-way collateral posting from the swap counterparty to the cover pool, which is a feature covered ...

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