Client clearing clauses put banks on the hook

Asset managers in Europe are herding banks into providing ever longer clearing commitments. The decision by banks such as the Royal Bank of Scotland and BNY Mellon to shut down their clearing operations before the European clearing mandate kicks in has spooked some derivatives trading firms, who now want assurances that they’re jumping into bed with a dealer who will stick around. But delays to the clearing mandate make it only more likely more banks will withdraw from clearing, writes Hazel Sheffield.