Low CCP compression rates in Japan vex foreign banks

Leverage ratio concerns weigh on international dealers

Japan securities

A reluctance by Japanese banks to compress down their interest rate swap portfolios at the Japan Securities Clearing Corporation (JSCC) is posing a challenge for international dealers that can't get the full benefits of compression which reduces the capital that banks need to set aside against derivatives positions.

JSCC has been clearing interest rate swaps since 2012 but multilateral compression only started at the end of last year. With the Basel III leverage ratio beginning to bite for

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