A new Greenwich Market Pulse shows that corporations and financial institutions around the world broadly agree that moving OTC derivatives trading to a system of centralized clearing would be an effective means of managing both counterparty risk at an individual level and market-wide systemic risk. However, financials and corporates also have some serious concerns about the ongoing process of market structure reform.

Some of these concerns stem from the fact that market participants are uncertain about details of the proposals being considered. Other concerns involve more informed questions among users of OTC derivatives about how the switch to centralized clearing would impact overall market liquidity and costs, as well as corporates' ability to effectively hedge risk positions.

Mitigating Counterparty and Systemic Risks

Corporates and financial institutions around the world largely agree that the move to centralized clearing would be an effective means of mitigating...