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FIA commends final rule on the standard for calculating the exposure amount of derivatives contracts

FIA commends final rule on the standard for calculating the exposure amount of derivatives contracts

20 November 2019 2:15pm EST

Washington, DC – FIA President and CEO Walt Lukken today released the following statement on the recently finalized rule on implementing the standardized approach for calculating the exposure amount of derivative contracts:

“FIA welcomes the actions taken by the U.S. banking regulators this week to implement the international standard for calculating the exposure amount of derivatives contracts.

The final rule will implement an updated methodology for calculating the exposure amount of derivative contracts. This updated methodology, known as the Standardized Approach for Counterparty Credit Risk (SA-CCR), reflects improvements made to the derivatives markets since the 2007-2008 financial crisis such as the greater adoption of central clearing and the implementation of margin requirements on uncleared derivatives.

FIA is pleased with the provisions in the final rule that recognize the exposure-reducing nature of client clearing under the leverage ratio for cleared derivatives, and the provisions designed to mitigate the impact on end-users. This will preserve access to derivatives for manufacturers, transportation companies and other commercial enterprises that use derivatives to hedge price risk.

While we continue to review the details of the rule, we thank the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve, and the Federal Deposit Insurance Corporation for the thoughtful and diligent rulemaking process, and for being responsive to many of the recommendations raised by market participants and stakeholders.”

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