Vedder Thinking | News Sam Tyfield Discusses Basel Committee Ruling on Minimum Risk Weight for Banks in FOW Intelligence Article
The Basel Committee on Banking Regulation recently ruled that banks must set aside a minimum risk weight of 20 percent in order to cover trade exposure to a clearing house with respect to listed derivatives and over-the-counter (OTC) transactions. Sam Tyfield, a London-based member of Vedder Price's Investment Services group, spoke to FOW Intelligence about the impact of the ruling on banks, the derivatives industry and end users.
"The standards seem to try to draw a welcome balance between managing systemic risk and encouraging participation in the centrally cleared derivatives trading model," Mr. Tyfield noted. He went on to say that with increasing steps to move OTC derivatives onto clearing houses, central counterparties (CCPs), and qualified counterparties (QCCPs), "might themselves start to present a systemic risk."
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