CFTC Rule Proposal Makes Margin Requirements More Complex (Waters)

These quotes were taken from my presentation and panel moderation at the Calypso customer event in San Francisco earlier this week.  We had a great debate on the panel between LCH and CME as to who’s model was better.  If we agreed anything it was that the neither model is necessarily better, they’re just different.

“Even if you’re looking across the clearing options, if those are LCH, CME & IDCG, and everyone’s models are slightly different, how do you know where to clear and how do you know how much margin you’re going to put up?” says McPartland. “For some of these, the initial margin is lower and the variation margin is higher, so it has a big impact on the cost of trading and the cost of carrying that trade.”

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