Dodd-Frank Act - White Paper - Citigroup - Ready or Not? Here it Comes: OTC Derivatives in the Post-Dodd-Frank Landscape - July 12, 2011

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July 12, 2011

Summary of key points from the white paper:

  • Operational challenges and requirement of sizeable re-engineering of operational and technology infrastructure.
  • Increase in connectivity points - multiple clearing members, swap execution facilities (SEFs) and swap data repositories (SDRs) - will increase market volume and complexity.
  • Market participants should expect significant impact on margin and collateral management and should preemptively establish cross-product margining with their core bank counterparties.
  • Valuation needs will also change as there will be potential requirements for daily valuations of non-cleared trades, harmonization and validation of marks.
  • Trade, position and risk reporting with regulators is expected to broaden and intensify.
  • Swap participants may have additional monitoring, compliance and reporting responsibilities,even if they are exempted from central clearing. Citi estimates that about 60% of the current OTC derivatives market by volume will be centrally cleared.
  • Traditional derivatives intermediation (prime brokerage services) will likely continue in the near term and be complementary to CCP clearing.


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