EU banks forced to up collateral for ETDs in Q4 2020

Over-collateralisation of liabilities jumps to highest since March 2020

Over-collateralisation of European Union banks’ exchange-traded derivatives (ETD) liabilities at end-2020 was the highest since the previous March, European Banking Authority (EBA) data shows – a sign of how margin requirements can ramp up despite ostensibly benign market conditions.

As of the end of last year, security posted by lenders in ETD transactions was 23.3% in excess of their liability, compared with 12% at end-September and 17.4% at end-June.

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