The demand for collateral as margin on derivatives trades may have a U-shaped relationship to the proportion of central clearing, research published by the Bank of England finds.

In contrast to some previous studies, Marco Bardoscia, Fabio Caccioli and Haotian Gao find clearing all trades centrally is not necessarily the most efficient in terms of collateral demand. The research contributes to a growing debate over the costs and benefits of central clearing, particularly during bouts of market