Dampening pro-cyclicality in margin


Pro-cyclicality has become public enemy number one for regulators over the past three years. Everything from accounting standards to capital requirements have been blamed for fuelling the fire of the financial crisis. These concerns are not new. Practices around collateral – whether in securities financing or over-the-counter derivatives – have long been identified as exacerbating the more extreme points of the economic cycle, although it has taken a major market event for regulat