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.