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To clear or not to clear?

EU proposals to reform the over-the-counter derivatives markets are given a frosty welcome by some market participants

The European Commission might think it has solved the problems posed by the over-the-counter derivatives markets in one fell swoop with draft legislation released today, but its proposals were given a frosty reception from some quarters.

The commission said today that it aims to clear 80% of the most standardised derivatives through central counterparties or clearing houses, compared to around 20% at present, leaving only the most exotic and illiquid products outside of the new regime.

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