Isda forced to rework year-old standard CSA

Regulation hits key element of landmark collateral contract - but planned revisions will reintroduce settlement risk

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The International Swaps and Derivatives Association is reworking a new collateral contract it unveiled just over a year ago, after three different regulatory changes made it too capital intensive for banks to use. The amended contract will remove a form of foreign exchange exposure that is penalised by the new regulations, but will add settlement risk back in – an outcome that shows regulators have their priorities wrong, according to some of those involved in the project.

"The medicine is worse

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