01999cas a2200241 a 4500 AALejournalIMF006379 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451982763 1018-5941 BD-DhAAL BD-DhAAL Singh, Manmohan. Collateral, Netting and Systemic Risk in the OTC Derivatives Market / Manmohan Singh. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (15 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students To mitigate systemic risk, some regulators have advocated the greater use of centralized counterparties (CCPs) to clear Over-The-Counter (OTC) derivatives trades. Regulators should be cognizant that large banks active in the OTC derivatives market do not hold collateral against all the positions in their trading book and the paper proves an estimate of this under-collateralization. Whatever collateral is held by banks is allowed to be rehypothecated (or re-used) to others. Since CCPs would require all positions to have collateral against them, off-loading a significant portion of OTC derivatives transactions to central counterparties (CCPs) would require large increases in posted collateral, possibly requiring large banks to raise more capital. These costs suggest that most large banks will be reluctant to offload their positions to CCPs, and the paper proposes an appropriate capital levy on remaining positions to encourage the transition. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2010/099 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/099/001.2010.issue-099-en.xml IMF e-Library