EBA connected counterparty plan raises compliance jitters

Guidelines would cut the large exposure due diligence threshold to 2%, versus the 5% Basel standard


European banks could face a drastically increased compliance burden if new rules requiring dealers to conduct due diligence to root out economic connections between clients are implemented as proposed, derivatives lawyers have warned.

The European Banking Authority’s (EBA) July 26 consultation paper on the treatment of connected clients startled market participants by proposing rules that would oblige a bank in the EU to significantly increase efforts to identify economic connections between all

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