Pension netting regs push bank clearing costs higher

By Beth Shah
16 Oct 2014

Dealers are facing increasing costs when providing clearing services to pension funds amid the regulatory push to move trades to clearing houses. The lack of netting provisions for pension funds means capital charges for dealers are high, with the result that leading banks are questioning the viability of the business without a rise in clearing prices.

“The reason that the situation is slightly different for pension funds is because they are not subject to the bankruptcy code so they don’t go into the same bankruptcy proceedings that an ordinary company would go into. They’re also not subject to the bank insolvency proceedings,” David Felsenthal, ...

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