(Adds more detail, background)
By Huw Jones
LONDON, April 10 Banks will not have to hold as
much capital as feared to cover trading losses, global
regulators said on Thursday in their latest easing of rules to
avoid crimping economic recovery.
The Basel Committee of banking supervisors from nearly 30
countries published its finalised rule on how much capital banks
must set aside to cover trading positions at clearing houses
It is the last piece in a complex regulatory puzzle ordered
by world leaders in 2009 to improve transparency and safeguards
in the $700 trillion derivatives market whose opacity compounded
the 2007-09 financial crisis.
World leaders called for swaps to be cleared and recorded
but in the past year as concerns over financial stability have
eased, politicians have become more mindful of the need to avoid
overburdensome rules that make it harder for banks to lend to
Clearing houses stand between two sides of a trade to ensure
its completion if one side goes bust, and are set to grow
rapidly as far more of the derivatives market is cleared.
Banks must already comply with interim capital rules from
the Basel Committee and the finalised versions contain several
changes to ease the capital burden.
There will be an explicit overall cap on capital charges for
exposures to so-called qualifying clearing houses, meaning those
that meet all the new safety standards. The aim is to encourage
banks to only use the safest clearers.
Bank exposures to qualifying clearing houses will be subject
to a 20 percent minimum risk-weighting, meaning they have to set
aside a fraction of the 1,250 percent weighting necessary under
the interim rules.
Basel made the changes after it conducted an impact
assessment on how the interim rules work.
"In formulating the revised framework, the committee sought
to avoid undue complexity and to ensure consistency, where
possible, with relevant initiatives advanced by other
supervisory bodies," the Committee said in a statement.
Basel also had to make sure there is a financial incentive
to clear trades rather than leaving them uncleared.
Margining requirements for uncleared trades were completed
last year, making it possible for Basel to fine tune the rules
for cleared trades on Thursday.
The final, scaled back rule is still tougher than the
relatively light regime in place before the crisis.
(Reporting by Huw Jones, editing by Chris Vellacott and Keiron