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Basel tries to create clearing pull with new capital rules
Dealers say rules for default fund exposures are an improvement, but risk weights are not tied to "real default probabilities"
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The Basel Committee on Banking Supervision has revamped its capital rules for cleared exposures after deciding an interim regime published last July had "fallen short of the desired objectives", producing a range of charges that was difficult to justify. Regulators feared the rules could have removed incentives for derivatives market participants to use central counterparties (CCPs) – a fear shared by dealers, which had been pushing their own alternative approach.
The latest proposals rely in
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