Gary Cohn: Clearinghouses a Systemic Problem10.23.2017 By John D'Antona Editor, Traders Magazine
President Donald Trump’s chief economic adviser Gary Cohn said he sees a major risk evolving in clearinghouses, platforms that regulators turned to for swaps following the 2008 financial-market crisis.
According to a report on Bloomberg, Cohn said as “we get less transparency, we get less liquid assets in the clearinghouse, it does start to resonate to me to be a new systemic problem in the system,” Cohn, director of the White House’s National Economic Council, said at a banking conference in Washington on Sunday.
Cohn isn’t the first to raise the risk. JPMorgan Chase & Co. and BlackRock Inc. have argued for years that clearinghouses pose their own threats, shifting risk to just a handful of entities. The Treasury Department’s Office of Financial Research has warned that clearinghouses used for derivatives trades can be vulnerable and potentially spread risks through the financial system.
A dynamic, proactive approach is needed to continuously improve surveillance.
Technology has enhanced capabilities of surveilling larger and more disparate data sets.
HSBC is looking to include the impact of climate risk on the trading book.
Investing in ETFs in 2020 will require a balanced and steady approach.
The hosted offering quickens reporting by shortening credit risk calculations.