FIA welcomed the Basel Committee's consultation on proposed revisions to the leverage ratio today, but expressed disappointment that the new framework does not include an offset for initial margin. The Committee called for data to further evaluate this critical issue, and FIA pledged to continue working with regulators and industry members to address on the impact of the leverage ratio on clearing.
“It’s critical that we get the calculation for the leverage ratio right,” said Walt Lukken, president and CEO of FIA. “The leverage ratio should not stand in the way of the G-20’s goal of reducing systemic risk through greater adoption of central clearing. Our concern is that this will make it more difficult for market participants to hedge risk using cleared derivatives. Worse, it may harm the safety and resilience of our clearing system.”
FIA has raised this issue in conversations with a range of regulatory authorities globally, describing how increased capital requirements are already being felt in the markets.
“We are seeing a declining number of clearing members, greater concentration of risk, and reduced access for hedging,” Lukken said. “FIA welcomes the opportunity to share these concerns with the Basel Committee. We will work with industry members to facilitate the Committee’s efforts to gather and analyze data on the impact of capital requirements.”
