Banks face capital hit on broader energy market collateral

Non-standard clearing house margin for energy trades would increase RWAs unless relief granted

Lawmakers will be hoping for leniency from both Esma and the EBA

Photo: EBA

Energy firms struggling to meet huge margin calls amid the severe volatility induced by Russia’s invasion of Ukraine may have found a partial solution – widening the range of clearing house collateral eligible under European Union markets regulation. But banks face a capital hit on such alternative forms of collateral, unless they receive relief under banking regulation at the same time.

“Eligible types are limited to financial collateral for which specific features – such as a good external