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Central Counterparty Clearing—and its impact on the market going forward

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New regulations such as Dodd-Frank act, passed July 2010 by the US administration, and similar reforms in Europe known by the acronym “Emir” are pushing clearing of OTC derivatives to the forefront of the agenda of many in the financial markets beyond the US and Europe.

A clearing house stands between parties to a trade, taking on the financial risk if one party defaults. Central Counterparty Clearing of OTC derivatives (CCP) itself it’s not new – but what is new is that under the Dodd-Frank act and the reforms being launched in Europe certain derivatives types such as interest rate swaps are required to be cleared centrally in order to avoid heavy capital charges. Many banks that bought and sold such instruments from each other trusted each other’s creditworthiness when it came to assessing whether the other side might default. The lack of safeguard such as a CCP was starkly exposed when Lehman Brothers defaulted in September 2008, since many counterparties were left holding open positions with the failed bank.

The market implications are however more wide-spread than just clearing OTC derivatives on a CCP. The use of Collateral and CVA adjusted pricing are just a few areas that changed significantly as a consequence of the Lehman crisis.

In our presentation we will discuss the impact of the regulatory changes on banks as well as the opportunities that it can provide for institutions that are embracing these changes. The presentation will focus on the business aspects of the introduction of Central Counterparty Clearing (as supposed to the legal sides). We will also present what some banks have already achieved and how they are taking advantages of the new regulations.

Not everybody will be able to win – but by attending our presentation we hope that you will gain better insight into the challenges / opportunities that CCP could bring to you.

David Little

David LittleDavid Little

Director of Strategy and Business Development, Calypso Technology

David Little recently joined Calypso as Director of Strategy and Business Development. David is primarily responsible for identifying new opportunities for development and growth in Securities Finance and Collateral Management for Calypso Technology.

David Little works with Calypso’s product managers and its sales organization to develop innovative solutions for securities finance. Post credit crisis, there has been a focus on achieving more efficient use and better management of collateral. Today, the market demands an integrated cross asset solution that manages cash and securities positions while also handling trading, risk and operations. Calypso has unique advantages in addressing this market due to its broad asset coverage, full front to back processing with advanced Securities Finance and comprehensive risk management.

David Little brings over 20 years experience and expertise in IT development to Calypso. He was previously a Partner at Rule Financial, a leading consultancy headquartered in London, where he founded, led and expanded the Securities Finance business unit. Before moving into financial technology in 1997, Mr. Little worked at ICL, where his projects included developing and implementing a secure Office Automation product for the Ministry of Defense in the UK. He began his career as a geophysicist working in oil exploration, where he gained experience in software engineering, as well as data acquisition and data processing techniques. Mr. Little is a graduate of the University of Exeter, from which he holds a BSc (Hons.) in Engineering Science.


Sanela Hodzic

Manager Director, Strategy and Business Development, Calypso Technology

Sanela Hodzic is responsible for OTC clearing, risk management and liquidity business initiatives at Calypso Technology. Sanela has a wealth of risk management experience from working with world’s largest banks, corporations, insurance and assert management institutions.

Prior to joining Calypso, Sanela worked as a risk practitioner in various risk management roles at Moody’s KMV, British Petroleum and Goldman Sachs. She earned a Masters in Engineering from Imperial College, London and a Masters in Finance from London Business School. Sanela is based in San Francisco, CA.


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