On 12 April 2017, Financial Investigator organized a round table to discuss the European Market Infrastructure Regulation (EMIR) and collateral management.
Chaired by John van Scheijndel, the 8 participants discussed aspects of derivatives trading and collateral management which are currently important for pension funds and insurance companies. Aegon Asset Management was represented by David van Bragt in this discussion.
In response to concerns about systemic risks in the over-the-counter (OTC) derivatives markets, the European Commission has initiated the European Market Infrastructure Regulation (EMIR). EMIR is in the process of being implemented by the European authorities and should lead to a more stable market in OTC derivatives, along with increased transparency. The mandatory clearing of OTC derivatives transactions through central counterparties (CCPs) is an important element of EMIR. CCPs are organizations that act as counterparties to OTC derivative contracts, taking on the credit risk from the parties involved in the transaction.
As the market for interest rate derivatives is so large, mandatory clearing is currently in force for most large institutional investors entering into new interest rate derivative transactions (given their specific circumstances, pension funds currently have a temporary exemption from these requirements). This means there is greater pressure on investors to manage their collateral effectively, in particular as daily variation margin must be posted in the form of cash for cleared swaps. This in turn is leading large institutional investors (like pension funds) to look for new clearing and/or collateral management solutions.
This article summarizes the round table discussions on these topics.
See the full article (in Dutch) as published in Financial Investigator »
Please feel free to contact us if you require more information in English or if you would like to discuss these topics in more detail.
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