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Swap Clearing to Add $480 Bln of Margin

Morgan Stanley report estimates new collateral required as swaps processing moves to clearinghouses.

By Matthew Leising, Bloomberg | Updated on August 24, 2012

Banks and money managers will need to post $480 billion in new collateral to back swaps processed by clearinghouses under the Dodd-Frank Act, according to a Morgan Stanley analysis.

The firms would need to post as much as $1.3 trillion and as little as $20 billion of so-called initial margin, analysts led by Tiffany Wilding wrote in a note to clients today. The demands will be mitigated by “unencumbered collateral” already at the firms, the fact that only new trades need to be cleared and that a range of assets from sovereign debt to corporate bonds can be used, they wrote.

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