As a result of the referendum in Britain, traders are forced to increase collateral. This is due to a significant increase in volatility and the need to somehow cope with it.
The largest clearing companies demanded the creation of additional collateral, the amount of which was not much, not a little – 27 billion dollars. This amount is five times higher than usual for the last year.
Clearing companies are a key player in the derivatives market. Therefore, they take collateral to cover possible losses in the event that a third party defaults.
But investors do not agree with this requirement. They rightly believe that such an increase in requirements during volatility reduces the level of liquidity in the market.
But after Donald Trump’s victory in the presidential election, although volatility increased to a fabulous level, the margins were low. Definitely much lower than in the run-up to the referendum in Britain.
