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FIA Global requests segregated margin be excluded from Basel III capital requirements 

November 24, 2014
Automated Trader

FIA Global sent a letter to the Basel Committee on Banking Supervision this week urging the committee to consider how segregated margin is treated in the leverage calculations that determine bank capital requirements. FIA Global was joined on the letter by two other global trade associations-the World Federation of Exchanges and CCP12-as well as four global central clearing parties in their own rights: ICE, CME Group, LCH Clearnet Group, and Eurex Group.

The letter addresses the Basel III leverage ratio framework, which was designed to capture the total exposure a banking organization has to its customers and counterparties. Accurately capturing this exposure is critical to establishing appropriate capital requirements to mitigate risk.

"It's troubling that the Basel III leverage ratio fails to treat segregated margin appropriately," Walt Lukken, President and CEO of FIA said. "Segregated margin plainly reduces the exposure of centrally cleared derivatives transactions. This letter explains why the leverage ratio should be calculated in a way that accounts for that exposure reduction."

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