CFTC quizzes clearing banks over leverage-cutting tactic

Billions of dollars in client margin have already been moved off balance sheet

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CFTC: several FCMs 'no longer recognising' client margin

Banks that found a way to remove billions of dollars of cash from their balance sheets have been sent a list of questions by the Commodity Futures Trading Commission (CFTC).

The tactic is used to reduce the impact of the leverage ratio on clearing businesses, which hoover up billions of dollars in cash margin from their clients and have to count it towards their own exposure totals. But it is controversial in the industry, with banks that apply it doing so in different ways, and accounting firms

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