FIA President and CEO Walt Lukken on the Basel Committee’s recognition of client cleared margin as reducing exposure

20 June 2019

Washington, DC – FIA President and CEO Walt Lukken today made the following statement on the Basel Committee’s agreement “on a targeted and limited revision of the leverage ratio to allow margin received from a client to offset the exposure amounts of client-cleared derivatives.” 

Mr. Lukken’s statement follows:

“For many years, FIA has urged regulators to address the punitive capital treatment of client initial margin for cleared derivatives. Today, the Basel Committee on Banking Supervision agreed to provide an offset for client cleared initial margin under the leverage ratio. We are extremely pleased that global prudential regulators have recognized the exposure reducing impact of margin for client clearing.  Additionally, we are heartened that these recommendations reaffirm the G20 2009 Leaders' commitment to provide greater clearing post-crisis as an essential and risk-reducing financial market reform.

We encourage U.S. and other regulators to quickly implement this change in their final capital methodology and to consider additional necessary changes that have a negative impact on clearing, especially for end-users.”

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