VM change helps Barclays cut derivatives by $113bn

barclays-505978008 — Barclays' Q2 earnings showed a big drop in derivatives assets and liabilities over the first six months of this year

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Barclays has become the latest bank to confirm it is treating variation margin as the settlement of a cleared derivative, rather than as collateral – a move that contributed to an £87 billion ($113 billion) drop in the size of the bank’s derivatives assets, according to its second-quarter results.

Major clearing houses have obtained legal opinions to support what’s known as settled-to-market (STM) treatment of cleared swaps, but US banks have been wary of adopting the practice without

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