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ISDA AGM: Cumulative impact of swaps reforms “scary” 

April 14, 2014
Christopher Whittall, IFR Asia

The most comprehensive reform of financial markets since the 1930s has introduced a wave of regulations aimed at reining in risk in the derivatives market. This includes increased capitalisation of trading book exposures and counterparty credit risk, beefed up initial margin on uncleared trades and the introduction of a minimum 3% leverage ratio – a non-risk sensitive measure that caps the size of banks’ overall assets relative to their capital base.

All of these reforms hit fixed-income derivatives particularly hard, although practitioners are still struggling to quantify the damage to their businesses.

“It’s hard to say which [of these measures] is most detrimental, but the cumulative impact is pretty scary,” said TJ Lim, head of markets at UniCredit.

Read more: IFR Asia

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