Impatience and optimism on clearing
London hosted the first worldwide conference of central counterparties last month to discuss developing a system of seamless global clearing.
The conference was initiated by the Depository Trust and Clearing Corporation of the US.
Sir David Walker, senior adviser to Morgan Stanley International, underscored the importance large securities firms attach to this: "There is, I believe, a general recognition that the capacity to clear and settle trades has not kept pace with the capacity of trading platforms to attract liquidity and handle trades," he said. Without serious thought to improving clearing and settlement, the present infrastructure will not be able to cope with large increases in volume and trading.
Representatives of central counterparties from the US, Asia and Europe discussed procedures for operations and risk management, the benefits of greater cooperation and legal ramifications. All believe there are advantages to be gained from the more effective use of collateral in the systems as well as netting which reduces the amount of settlement that needs to be handled.