- Category: Interest Rate Swaps
- Published: Monday, 04 February 2013 15:07
- Written by Super User
- Hits: 1420
Following to some Exchanges movements switch their products from Swaps to Futures, the cacophony of futurisation is getting too loud to ignore.
Futurization: Dodd-Frank Drives Swaps-to-Futures Migration
A) Here is the comparison of two products:
|Swaps||High||5-day VaR||High Threshold||Complex Positions Liquidation||Custom: Rate/Tenor||Designated Trading Platform||Real-time|
|Simple Liquidation||Standard or Block Trades||Open Access||
10 mins. delay
B) Eris Exchange produced a very comprehensive document to compare the cash flow movement in order to prove the two products are identical: Details
So, the question needs to be answered:
What’s the difference between the Swaps and Futures, if there is any?
- If there is no difference, why the margin treatment is different?
- If there is difference, what is that?
The ball is now on the regulator’s hand, although the question sounds simple, the answer is not that straight forward. To avoid massive SWAPS exodus and cause the SWAP rules collapse, the regulators need to come out with an innovative answer.