Basel leverage ratio would double up collateralised OTC positions

money-stacks

Collateralised derivatives positions will be doubled in size under the revised leverage ratio published yesterday by the Basel Committee on Banking Supervision – a prospect that is already alarming traders who fear it could force a retreat from some business lines. The doubling effect occurs because banks are not allowed to set collateral against the size of their derivatives assets and the collateral itself also has to be counted as part of an institution's total exposure.

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