March turmoil fuels debate over clearinghouse margin calls

摘要

A sharp increase in margin calls during this year's market turmoil has triggered a fierce debate between banks and derivatives clearinghouses over the extent to which the clearing industry needs to reform and standardise margining practices to avoid destabilising the wider financial system in future crises. Central counterparties weathered their sternest test since the great financial crisis of 2008 after markets nosedived in March, demonstrating that a crucial pillar in the regulatory framework developed in response to that time was up to the task. But a recent paper from the the Futures Industry Association, a trade body, said a nearly 50% rise in initial margin levels at derivatives clearinghouses in the first quarter - to US$834bn - contributed to "an abrupt and disorderly 'dash for cash'", which ultimately abated only after central banks stepped in to calm markets.