Sovereigns urged to clear OTC trades

Asian sovereigns might be better off centrally clearing over-the-counter derivatives trades regardless of statutory requirements, because the higher pricing charged on non-cleared, bilateral trades by bank counterparties is likely to outweigh clearing costs. While it remains unclear whether sovereign institutions will be required under the US Dodd-Frank Act to clear and report OTC trades through a central counterparty (CCP), they will likely face higher costs from trading them via…