LCH margin changes aim to reduce banks’ funding costs

Changes to allow over-collateralisation by buy-side clearers should ease FCMs’ funding burden

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LCH’s SwapClear is set to make a significant change to its initial margin policy later this month by making it easier for buy-side clients to post excess margin against their positions. The move is aimed at preventing clients with large directional portfolios being outsized contributors to a futures commission merchant’s (FCM) total margin contributions, reducing the funding burden this places on the bank.

The changes, which should go live on or after March 27 pending regulatory approval, will

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