Basel leverage ratio may force CSA restructuring

Cash collateral can only reduce derivatives exposure if it matches the currency of the underlying swap, threatening existing CSAs and even the new standard CSA

Banks will only be allowed to reduce derivatives exposure with cash variation margin under the final Basel leverage ratio rules if it is in the same currency as the underlying swap. This, they claim, is a ridiculous hurdle, as it will force them to restructure their existing collateral agreements.

The rule could also deal a blow to the new standard credit support annex (SCSA).

"The restriction to same-currency variation margin seems to be another nod in favour of central clearing, but it's hard