Capital rules for CCP exposures could make clearing costs punitive, dealers conclude

Clearing of over-the-counter derivatives could become punitively expensive if a proposal by the Basel Committee on Banking Supervision to increase capital held against exposures to central counterparties (CCPs) is not watered down, according to dealers.

The Basel Committee published a consultative document on December 20 that would require clearing members to attach a 2% risk weight to their exposures to CCPs and to also hold capital against their contributions to the default fund of the CCP – a