Post-crisis accounting trick haunts clearing brokers

FCMs gave up interest income for capital savings when rates were low. Now, some want it back

Gains and losses

Futures commission merchants (FCMs) that cut their leverage exposures by deconsolidating client margin when interest rates were low may now be regretting that decision.

When the Basel III capital requirements were rolled out in the mid-2010s, FCMs including Citi and UBS removed billions of dollars in cash initial margin posted by clients from their balance sheets in an effort to reduce the impact of the leverage ratio on their clearing businesses. The practice, known as derecognition or

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