The Enigma of Clearing Buy Side OTC Derivatives

Futures and Derivatives Law Report, Vol. 29, No. 11, December 2009

11 Pages Posted: 5 Feb 2010  

Christian A. Johnson

Widener University - Commonwealth Law School

Date Written: December 1, 2009

Abstract

Congress is currently debating whether to mandate the clearing of buy side OTC derivatives. Such an action, however, represents a seismic and unproven shift in how OTC derivatives function and how they are traded, processed and assessed, especially with respect to the highly customized products that are developed for the buy side. This article summarizes the various practical concerns implicated in such a requirement and questions whether the clearing requirement will stifle the use of OTC derivatives and whether aggregate risk will be reduced.

Keywords: derivatives, clearing, clearinghouse, regulated central counterparty, exchange, futures

JEL Classification: D40, E44, E52, G28

Suggested Citation

Johnson, Christian A., The Enigma of Clearing Buy Side OTC Derivatives (December 1, 2009). Futures and Derivatives Law Report, Vol. 29, No. 11, December 2009. Available at SSRN: https://ssrn.com/abstract=1544017

Christian A. Johnson (Contact Author)

Widener University - Commonwealth Law School ( email )

3800 Vartan Way
Harrisburg, PA 17110-9380
United States
717.541.3902 (Phone)

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