Leverage ratio begins to bite for forex derivatives

Capital-intensive rule for banks likely to hit clients with higher costs

Clients face squeeze as banks pass on servicing costs

The price of trading foreign exchange derivatives via a prime broker could increase to as much as $85 per million dollars traded for clients when banks start charging for the higher cost of servicing the supplementary leverage ratio (SLR) requirements, according to prime brokers.

The rules are part of the Basel III capital reforms that are sweeping their way into forex markets and changing the economics of banks' credit and balance-sheet services. This is because the SLR assumes that the

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