Under the European Markets Infrastructure Regulation (EMIR), counterparties for a range of over-the-counter interest rate and credit default derivatives will be required to use clearing houses.
Pension funds have so far been exempt, but European regulators have yet to agree whether this exemption will be extended, or for how long.
OpenGamma said its research showed that new margin rules for uncleared over-the-counter (OTC) derivatives under EMIR could increase the cost of financing by up to 10 times.
Pension funds, many of which could be drawn into scope of the new rules from September 2019, could save 50% in initial margin costs by choosing to clear voluntarily before the rules come in, the firm said.
Peter Rippon, OpenGamma’s chief executive, said: “While a few market participants will be caught out this month, the real big bang for pension funds is still to come.”
He said “a monumental headache” awaited because many investment managers would be carrying out huge amounts of work all at the same time.
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