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Navigating collateral through a super-storm

Navigating collateral through a super-storm

Capital market regulators and financial institutions have turned their attention to the control and reduction of various forms of risk. Their objective is to support stable economic growth and to revive the global economy from the worst recession since the great depression of 1929.

Many of the risks can be mitigated through the astute use of collateral. The recent spate of proposed regulation paints this picture even more clearly. Basel III, the Volcker rule, the Erkii Liikanen report, the European market infrastructure regulation (EMIR) and the central securities depository regulation (CSDR) all sanction more stringent risk management requirements in terms of capital ratios, or by moving business to regulated exchanges and central counterparties (CCPs).


The combined effect of regulations and changes  in market behaviour is creating a potential collateral scarcity equivalent of a super-storm

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