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Economy
In reply to the discussion: Weekend Economists Get Syri-ous August 30-September 2, 2013 [View all]xchrom
(108,903 posts)92. Regulators ease derivatives rule to avoid harming economy
http://www.reuters.com/article/2013/09/02/us-g20-derivatives-idUSBRE98107R20130902
(Reuters) - Global regulators have eased the impact of new rules designed to make the $630 trillion derivatives market safer as they seek to avoid too-tight controls on the sector that some banks argue could harm economic recovery.
The Basel Committee of regulators and central bankers published their final rule for requiring banks and brokerages to post an initial margin on trades in derivatives known as swaps, if those trades don't pass through a "clearing house" which in itself generates a backup if one party to the trade goes bust.
The reform, which now envisages a threshold on the value of a trade below which no collateral is required, is part of a wider shake up of derivatives which is underway among the top 20 economies (G20), including the mandatory clearing of trades where possible, and for all transactions to be recorded.
Regulators want to apply lessons from the 2007-09 financial crisis in which the opaqueness of derivatives such as credit default swaps - used to insure against falls in bond prices - played a central part in creating market uncertainty.
(Reuters) - Global regulators have eased the impact of new rules designed to make the $630 trillion derivatives market safer as they seek to avoid too-tight controls on the sector that some banks argue could harm economic recovery.
The Basel Committee of regulators and central bankers published their final rule for requiring banks and brokerages to post an initial margin on trades in derivatives known as swaps, if those trades don't pass through a "clearing house" which in itself generates a backup if one party to the trade goes bust.
The reform, which now envisages a threshold on the value of a trade below which no collateral is required, is part of a wider shake up of derivatives which is underway among the top 20 economies (G20), including the mandatory clearing of trades where possible, and for all transactions to be recorded.
Regulators want to apply lessons from the 2007-09 financial crisis in which the opaqueness of derivatives such as credit default swaps - used to insure against falls in bond prices - played a central part in creating market uncertainty.
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