Basel exposure limits raise questions for client clearing

If clearing members are deemed to be interconnected, banks that use them to access a CCP may run into problems with the Basel Committee's new counterparty exposure regime

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Banks that clear derivatives as the client of a clearing house member rather than as a member themselves may end up breaching new rules limiting large, single-counterparty exposures if regulators decide member firms are interconnected – a concept introduced when the rules were finalised on April 15.

The new limits, released by the Basel Committee on Banking Supervision, do not catch bank exposures to central counterparties (CCPs) - the original fear when the rules were proposed in March last

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