Analysis: Changes could force derivatives to trade on exchanges

01/11/2010 | (subscription required)

The latest proposals from the Basel Committee on Banking Supervision could force derivatives trades onto exchanges by applying haircuts to collateral based on risk, according to this analysis. "The Basel Committee wants banks to have an economic incentive to trade derivatives through regulated exchanges, so is increasing the counterparty-risk charges for one-to-one deals," said Mark Nicolaides, a partner at Latham & Watkins.

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