For anyone toiling in the arcane world of clearing, figures out this week showing that the over-the-counter derivative markets were showing signs of life must have sounded like good news.
The Bank for International Settlements reported that, for the six months ending in June, the total notional amount of OTC derivatives contracts outstanding rose 10 per cent to $604,622bn.
Regulators have for months been insisting that many OTC derivatives be shifted to clearing houses as part of the clean-up of the financial system. A clearing house stands between two parties to a trade, guaranteeing that deals are completed if one side defaults.
The two developments should mean a bonanza for businesses that operate clearing houses, including exchanges.
When the US administration unveiled its proposals for reforming the OTC markets in June, industry analysts forecast that clearing would be a boon for exchanges as the crisis hurt their core trading business.
But OTC clearing may not be the big money-spinner many believed.
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Publish Date: 12 November, 2009
Source URL: http://www.ft.com/cms/s/0/06ffb0de-cfba-11de-a36d-00144feabdc0.html?nclick_check=1
