Contango has just released a special report looking at the changing face of client derivatives clearing as regulation, higher capital requirements and constraints on revenue models are changing the way banks in particular look at their clients. In line with a trend that started some years ago, the number of derivatives clearing firms is shrinking further. Banks must earn more from their clients or be faced with exiting the listed derivative brokerage business (unwelcome), accept lower returns on capital utilised (unlikely) or be more picky about the types of clients that they serve (likely). As a result a number are ‘reassessing’ their client base and some clients just don’t fit any more.
The Contango whitepaper looks at the various choices on offer for these “unloved” clients, with a particular emphasis on the response from clearing houses and a high-level overview of the route to self (or direct)-clearing.
The report can be downloaded for free at http://contango.co.uk/contango-clearing-whitepaper.pdf
