Some Buy-Side Firms Not Prepared for New Derivatives Rules, May Avoid Swaps Trades

A State Street Corp. survey finding that more than one-third of buy-side firms don’t have the type of collateral considered ideal for swaps trading under new rules may signal that some plan to avoid swaps trades entirely, a State Street director said.


Thirty-seven percent of the survey’s respondents said they don’t have the high-grade collateral – such as cash or U.S. treasuries – that will typically be required to trade swaps under G-20 reforms. The G-20 said that by the end of 2012 “all standardized OTC derivatives contracts should be traded on exchanges or electronic trading platforms,” cleared through central counterparties, and reported to trade repositories, while non-centrally cleared contracts should be subject to higher capital requirements.


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