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Robeco among the first European asset managers to embrace central clearing

19-01-2012 | Press release Recently Robeco has gone live with clearing Over-The-Counter interest rate swaps, through a central clearing party

Robeco among the first European asset managers to embrace central clearing


Rotterdam, 19 January 2012 - Recently Robeco has gone live with clearing Over-The-Counter (bilateral trades) interest rate swaps, through a central clearing party. Not only are all new swaps to be traded from now on through a central clearing platform, also all outstanding positions are being back loaded as cleared trades. Robeco is among the first European asset managers to embrace central clearing and is convinced that doing so will improve the mitigation of counterparty and systemic risk from bilateral collateral agreements. Robeco strongly believes that central clearing will become market practice for mainstream derivatives. Furthermore, it brings operational simplification and standardized pricing methods to derivative clearing which is expected to have a positive benefit on operational and trading costs.

The collapse of Lehman had a significant impact on the management of counterparty risk throughout the industry and as a result made managing counterparty risk a labour-intensive matter. To limit systematic and counterparty risk, regulators have come up with a framework (EMIR and Dodd-Frank) which quite strongly encourages the industry to adopt central clearing.  In addition, regulators have focused on strengthening capital requirements (e.g. BASEL III) which eventually will have an upward effect on prices for non-cleared trades.

Central clearing mitigates counterparty risk while making it less labour intensive by reducing the number of daily collateral movements. It also encourages price transparency which may very well have a downward pressure on the trading cost of cleared trades. This trend may be boosted by the regulatory development of OTC trading facilities.

Robeco uses the LCH platform and Barclays as its clearing broker.
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