Â鶹´«Ã½

Home   News   Features   Interviews   Magazine Archive   Symposium   Industry Awards  
Subscribe
Â鶹´«Ã½
Leading the Way

Global Â鶹´«Ã½ Finance News and Commentary
≔ Menu
Â鶹´«Ã½
Leading the Way

Global Â鶹´«Ã½ Finance News and Commentary
News by section
Subscribe
⨂ Close
  1. Home
  2. Industry news
  3. Asset managers could save ‘millions’ through clearing ahead of UMR
Industry news

Asset managers could save ‘millions’ through clearing ahead of UMR


31 July 2019 London
Reporter: Maddie Saghir

Generic business image for news article
Image: Shutterstock
Asset managers could save millions of dollars through clearing ahead of Uncleared Margin Rules (UMR), research from OpenGamma has suggested.

OpenGamma explained that asset managers have been dragged into new rules making over-the-counter (OTC) derivatives more expensive.

The study showed that asset managers pulled into phases four and five of the UMR will be able to save up to 53 percent in initial margin when clearing compared to uncleared margining.

According to OpenGamma, for asset managers with portfolios above €750 billion in notional, clearing a greater volume of OTC trades frees up potentially millions of dollars worth of assets to put to use elsewhere.

Peter Rippon, CEO, OpenGamma, commented: “The overarching goal of UMR is to strongly incentivise asset managers to stop trading bilateral uncleared derivatives, and shift towards central clearing.â€

“Unfortunately, it’s not as simple as just deciding to clear, firms then need to decide where to clear. A derivative may be eligible to clear at numerous venues, but an asset manager then needs to factor in liquidity and whether they have an existing position, not to mention any pricing discrepancies between the clearinghouses.â€

Rippon concluded: “The trouble is, at a time when investors are putting fund performance under the spotlight following Neil Woodford’s woes, the last thing asset managers need is to be restricted from delivering strong returns. This problem can be solved, which is why we are seeing more firms carefully considering the differences in the margin calculated, and the level of margin that will be required for UMR.â€
Next industry article →

OCC bolsters board of directors
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Â鶹´«Ã½ Finance Times
Advertisement
Subscribe today
Knowledge base

Explore our extensive directory to find all the essential contacts you need

Visit our directory →
Glossary terms in this article
→ Liquidity

Discover definitions, explanations and related news articles in our glossary

Visit our glossary →