The current global landscape for securities clearing is one of heavy duty regulation and strangely enough increased fragmentation, says asset management and derivatives expert Jeffrey O. Himstreet, corporate counsel, PGIM Fixed Income Law, PGIM Fixed Income. Himstreet spoke to FTF News during FTF’s CMD Ops 2017 (collateral, margining and derivatives) conference in New York City this past October.
“The global landscape for securities clearing has matured and developed considerably since Dodd Frank was enacted a few years ago,” Himstreet says. “While regulators have done the lion’s share of developing clearing and trading requirements, there is increased fragmentation in the industry.”
The fragmentation is largely “because of competing pressures regionally with CCPs [central counterparty clearinghouses] and counterparties,” Himstreet says. “This has led to an increase of CCPs but that has created constraints on regulators’ ability to harmonize regulations between U.S. and non-U.S. jurisdictions.”
At the CMD event, Himstreet was a panelist in the session, “A Global Clearing Review” that focused on the clearing of derivatives transactions. The issues have become prominent in Europe as the Brexit talks forge ahead and create questions about the future of euro-denominated clearing of interest rate and credit derivative swaps. For decades, London has served as the clearing hub for derivatives but the pending exit is complicating matters and causing some firms to consider using clearinghouses on the continent or via U.S.-based providers.
CREDITS:
Video Production: Janene Knox and William J. Poznanski, Jr.
Interview conducted by: Eugene Grygo, chief content officer, FTF News
Co-Producers: Sarah Hathaway, vice president, Financial Technologies Forum (FTF) and Eugene Grygo
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