Banks face capital hit on broader energy market collateral
Non-standard clearing house margin for energy trades would increase RWAs unless relief granted
Energy firms struggling to meet huge margin calls amid the severe volatility induced by Russia’s invasion of Ukraine may have found a partial solution – widening the range of clearing house collateral eligible under European Union markets regulation. But banks face a capital hit on such alternative forms of collateral, unless they receive relief under banking regulation at the same time.
“Eligible types are limited to financial collateral for which specific features – such as a good external
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