The Global Financial Crisis (GFC) of 2008 exposed significant weaknesses in the OTC derivatives market, including the build-up of large counterparty exposures between participants; limited transparency into levels of activity in the market and the overall size of counterparty credit exposures; and operational weaknesses that demonstrated the need for further standardisation and automation.
Prompted by legislative action and regulatory changes in response to these issues, central clearing for OTC derivatives markets has made great strides in the past decade. However, equity swaps markets constitute one major area that has yet to embrace clearing.
This paper examines the difficulties to date in providing cleared solutions in that market, outlines reasons why clearing is now a very compelling response to rising pressures for participants and reviews a new product offering in this space.
The full paper is available at https://docs.londonstockexchange.com/sites/default/files/documents/turquoise-nylontm-whitepaper.pdf