Cross-border clearing: Implications for developing markets

Alicia Greenwood
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Alicia Greenwood: JSE, South Africa

Journal of Securities Operations & Custody, 2023, vol. 15, issue 4, 315-324

Abstract: The widespread introduction of central clearing in many jurisdictions has introduced the benefits of more robust and transparent risk management for markets, with the ultimate objective of improving investor protection. All jurisdictions wish to optimise an ‘open for business’ model that attracts international flows and supports deep, liquid and high-quality markets. The inconsistent adoption of central clearing by different jurisdictions may, however, introduce market fragmentation effects and negatively affect liquidity. Liquidity pools may move away from jurisdictions where central clearing requirements are more onerous than in other jurisdictions, or where central clearing has not yet been adopted at all. Jurisdictions must ensure a considered approach when reconciling their local regulatory and market expectations with cross-border and global clearing expectations, and the impact this may introduce to trading behaviour.

Keywords: central clearing; regulatory equivalence; market fragmentation (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jsoc00:y:2023:v:15:i:4:p:315-324

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