Applying the Central Clearing Mandate: Different Options for Different Markets

46 Pages Posted: 12 Apr 2022

See all articles by John Kiff

John Kiff

Kiffmeister Consulting

Alessandro Gullo

International Monetary Fund (IMF)

Cory Hillier

International Monetary Fund (IMF) - Fiscal and Financial Law Unit

Panagiotis Papapaschalis

European Central Bank (ECB)

Date Written: January 1, 2022

Abstract

Back in 2009, G-20 leaders have called for all standardized over-the-counter (OTC) derivatives to be cleared through central counterparties (CCPs). By now, 18 of the 24 Financial Stability Board (FSB) member jurisdictions have provided for mandatory central clearing frameworks in place, covering at least 90 percent of all standardized OTC derivatives in their jurisdictions. However, the authorities in several countries remain confronted with the hows and wherefores of mandatory central clearing, also in light of the international dimension of OTC derivatives contracts. This paper examines the policy options available to countries that have yet to fully conform to the clearing mandate, centered on the setup of local CCPs or on the use of foreign CCPs, and elaborates on their feasibility, risks and benefits from an economic, legal and tax viewpoint.

Keywords: central counterparties, international over the counter derivatives markets, regulation and governance., interest rate derivatives CCP, Non-U.S. OTC foreign exchange, OTC derivatives transaction, counter derivatives market, clearing mandate, Central counterparty clearing house, Withholding tax, Interest payments, Collateral, Tax law, Global, Africa

JEL Classification: G15, G18, G23, H24, F34, G21, K34

Suggested Citation

Kiff, John and Gullo, Alessandro and Hillier, Cory and Papapaschalis, Panagiotis, Applying the Central Clearing Mandate: Different Options for Different Markets (January 1, 2022). IMF Working Paper No. 2022/014, Available at SSRN: https://ssrn.com/abstract=4065435

John Kiff (Contact Author)

Kiffmeister Consulting ( email )

VA
United States

Alessandro Gullo

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Cory Hillier

International Monetary Fund (IMF) - Fiscal and Financial Law Unit ( email )

Washington, DC
United States

Panagiotis Papapaschalis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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