The TRADE Derivatives

In Q1, LCH’s SwapClear cleared

1.2 million trades

with record buy-side volumes of

$56 trillion
notionally cleared.

Of which

$2.4 trillion

in notionally cleared FX derivatives from over

333,000 trades

$858 billion

in notionally cleared

inflation swaps

– some, but not all - the brokers were during the process which, given the volume of change is understandable; however we are left now in a state of trying to tidy up agreements that were rushed through. Brokers who outsourced the process have moved away from umbrella agreements for some inexplicable reason,” says the operations head.

“[It’s] very much admin noise
rather than legal issues, but it does
leave us staring down at a clean-up
exercise for the next few months
before we prepare for the next
round and move to include all FX
forwards.”
This experience reflects the
growing suspicion among the buy-
side for using third-party providers
and brokers for functions they can
easily perform in-house.

For some of the larger asset managers that are using expensive outsourced solutions, there is a growing demand to hire new people in non-traditional specialist roles, such as heads of cash/collateral management.

“The buy-side are looking more towards an all-inclusive liquidity and cash/collateral management function out of a need to better manage their cash exposure and related risk,” says Joshua Satten, director of business consulting, Sapient Global Markets.