SEC capital rules could stunt CDS client clearing


Banks are threatening not to offer client clearing for credit derivatives in the US due to capital rules from the Securities and Exchange Commission (SEC), which they claim could cause a single missed margin payment by a client to result in the default of a bank's clearing arm.

Under the rules, US clearing members - known as futures commission merchants (FCMs) - have to take a capital charge on a customer's entire portfolio, ignoring any existing initial or variation margin posted by the client

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