New regulations could cause $7 trillion "collateral shock"


A trio of post-crisis reforms – the Basel III liquidity coverage ratio (LCR), central clearing for standardised derivatives and nascent global standards on margin for uncleared trades – could create combined demand for $7 trillion of collateral, according to some estimates. Market participants are worried about the effect.

"If you take the liquid assets required by Basel III's LCR, central counterparties and potentially strict initial margin requirements on uncleared trades, there is no doubt th