Intra-group margin will ‘stifle’ internal hedging, banks warn
Banks in the US are lobbying against a requirement to post initial margin for internal trades
Banks in the US will be forced to rework how they manage risk if they are granted no exemption from posting initial margin on uncleared derivatives in intra-company trades, dealers have warned. A carve-out exists under European Union and Japan rules but not in the US, which will double costs and ultimately be passed on to end-users, the dealers say.
"We are concerned that there is no inter-affiliate in the US rules, but the EU and Japan rules do allow for it. We think it would be a disadvantage
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