FIA recently applauded the publication of the European Commission’s proposals to amend the Capital Requirements Directive 2013/36/EU (CRD IV) and the Capital Requirements Regulation EU no 575/2013(CRR).
The proposals have four primary components of interest for the cleared derivatives industry which include a framework allowing additional time for the recognition of qualified central counterparts, a new method of calculating the exposure value of derivatives transactions, changes to the capitalization of exposures to CCPs and an offset for client initial margin when calculating leverage exposure for clearing members.
“We’re glad to see the EC recognizes that the leverage ratio without an appropriate offset for initial margin would disincentivize clearing,” said FIA President and CEO Walt Lukken. “Our markets are global and it’s critical that the Basel Committee and other international and national regulators take similar action. If not, central clearing, a pillar of financial reform, will suffer. We’re looking forward to reviewing this proposal in more detail and considering its impact on the listed and cleared derivatives industry.”
The amendments will now be reviewed by the European Parliament and European Council for review and consideration through its co-decision procedure.