Default fund capital will halve under final rule, banks say
In theory, swaps market participants will be pushed towards clearing houses by a supportive capital regime, but in practice, banks claim, successive regulatory proposals would have killed the business. However, the verdict on a final version of the rules is now in, and it’s positive. By Matt Cameron
It has taken nearly four years, 82 comment letters, five different calculations, and a lot of handwringing and fretting, but the Basel Committee on Banking Supervision has finally produced a capital regime for exposures to central counterparty (CCP) default funds that banks believe will allow them to run the clearing business sustainably.
Dealers claim each of the previous four methods would have discouraged the trading of cleared over-the-counter derivatives, conflicting with a key pillar of
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