The California Public Employees’ Retirement System (CalPERS) has collaborated with the world’s largest derivatives clearing house to provide liquidity to its trading platform.
The Options Clearing Corporation (OCC) established the facility with CalPERS, with institutional lending provider eSecLending brokering the transaction.
“We are delighted to have established a solution that achieves incremental risk-adjusted returns for our pensioners.” —Curtis Ishii, CalPERSThe $300 billion pension will provide liquidity alongside existing banking and broker firm lenders to the OCC.
The arrangement offers “incremental risk-adjusted returns” for CalPERS’ members, said Curtis Ishii, head of global fixed income at the pension.
Chris Poikonen, executive vice president at eSecLending, said the facility “offers CalPERS an attractive yield within a tightly controlled operating environment and addresses the OCC’s desire to establish right way risk in their funding sources.”
Liquidity for derivatives trading platforms and other clearing houses has reduced dramatically since the financial crisis as new regulations have forced investment banks to cut back their lending facilities.
A recently-published academic paper criticized pension funds for failing to provide liquidity and stability to financial markets, despite the long-term nature of their investment horizons.
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