Standards Setter Warns Clearinghouses After Nasdaq Default

Law360, London (January 25, 2019, 1:25 PM GMT) -- The global standards setter for trading in derivatives has called for better practices at clearinghouses in a move to reduce stress on the world’s financial system, after a default by a member of a Nordic clearinghouse blew a €114 million ($149 million) hole in the exchange.

The International Swaps and Derivatives Association set out recommendations on Thursday for central counterparties, or CCPs, to help minimize the impact on the market if one of its members defaults. The trade body recommended that CCPs should decide — based on the underlying product — how risky a member’s derivatives are, regardless of whether the instrument is traded...

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