How would the exchanges be better able to measure and manage risk where some of the biggest financial firms with the soundest risk management systems failed? This would be particularly true of credit products such as CDS. In this context, the nature of collateral regime becomes extremely important. Any instrument with a credit risk element would inherently not be suitable for a collateral.
If these aspects are not addressed by the regulators, mandatory clearing would only result in a potentially riskier system. 23. The real sector i.e. end users are opposing mandatory move to exchanges and clearing platforms on the ground that the crisis was inherently due to complex transactions between financial intermediaries and there should be no increase in cost to the real sector, i.e.