WFE Warns Against ‘Narrow View’ on CCP Margins

WFE Warns Against ‘Narrow View’ on CCP Margins

By Wendy Lisney
January 20, 2021, Global Investor Group

The idea that tweaking or imposing further constraints on central counterparties’ (CCP) margin models would prevent sharp increases in margin and procyclicality effects, represents a narrow view that fails to take into account the systemic nature of the problem, according to the World Federation of Exchanges.

“This narrow view, where you think a problem that is systemic will be solved by tweaking a little bit more how a margin model works, will not really lead to any robust solution in the future,” said Pedro Gurrola-Perez, the WFE’s head of research, in an interview with Global Investor.

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