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November 11, 2013
Analyst:
Among the agreed derivatives market reforms, the central clearing of OTC derivatives contracts has a pivotal role that changes the existing risk management and collateralisation practices tremendously. Nevertheless, to date, there is little empirical evidence on the impact of the new market infrastructure on CDS spreads. Controlling for a number of factors, our results indicate that the costs of central clearing seem to be passed on to end-users in the form of increased CDS spreads. [more]
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