A pretty length article from Institutional Investor covering the constantly in flux world of OTC derivatives clearing and across the board reform. I began speaking with them back in the summer about this article so you can appreciate how much has done into this and the moving target that all journalists (and researchers for that matter) are dealing with in covering OTC derivatives reform.
“The politicians say they will prevent another AIG with the new rules,” says Kevin McPartland, a senior analyst with research firm TABB Group in New York. “But most of the positions held by AIG that caused those collateral calls would not be clearable even today because they’re nonstandard and illiquid.”
The top five bank dealers, all at ICE, command 95 percent of the notional amount of CDSs bought and sold in the market. “We have to be realistic,” TABB’s McPartland says. “These are for-profit companies, and, yes, they’ll be working with federal global regulators to reduce systemic risk. But they also need to make money for shareholders, so they will craft models that work for them.”