Global authorities say derivative clearing may be undercut by Basel III capital standard

8 August 2018 7:41pm
Global authorities said that a Basel III capital standard can deter clearing banks from centrally clearing derivatives, a finding that fortifies US commodity regulators’ case for an easing of Federal Reserve leverage requirements.

The supplementary leverage ratio can have the unintended effect of discouraging banks from clearing standardized derivative contracts for traders, undermining a key goal of the Group of 20 economic powers, the Financial Stability Board and other international standard-setters said Tuesday.

“The leverage ratio can be a disincentive for client clearing service providers to offer or expand client clearing,” said the 127-page review of post-crisis policies, which was issued for public comment.