WFE Response to BCBS Discussion Paper on Leverage Ratio Treatment of Client Cleared Derivatives

The WFE response to BCBS' Discussion Paper on Leverage Ratio Treatment of Client Cleared Derivatives  can be summarised as follows:

• The WFE supports a policy framework that allows for accessible, competitive and vibrant derivatives markets - and one that also ensures the soundness of banks (including the prevention of excessive leverage);
• The WFE has long advocated for the recognition of client margin offsets, and welcomes the Basel Committee’s proposals to address the leverage ratio treatment of a segregated client margin; and
• The WFE supports the Basel Committee’s efforts towards a coordinated implementation of the standardised approach for measuring counterparty credit risk (SA-CCR); this should be done in a manner that incorporates margin offsets.

This consultation response follows the WFE’s 7 September 2018 response to the four global standard-setting boards assessing the effectiveness of incentives to centrally clear over-the-counter (OTC) derivatives.