Bank of England to post collateral in OTC derivatives trades
The Bank of England (BoE) will start posting collateral to its counterparties in over-the-counter derivatives trades – an attempt to reduce costs for the central bank, and a policy U-turn that took dealers by surprise when it was announced yesterday afternoon.
Sovereign and supranational derivatives users typically do not post collateral, which creates a funding obligation for dealers. While the Portuguese and Irish debt offices have switched to two-way agreements in the past two years, the BoE
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