FIA cautions on Basel consultation

The FIA (Futures Industry Association) has given a guarded welcome to the Basel Committee’s just-issued consultation on revisions to the leverage ratio, expressing disappointment that the new framework does not include an offset for initial margin.

Said Walt Lukken, FIA president and CEO: “It’s critical that we get the calculation for the leverage ratio right. The leverage ratio should not stand in the way of the G-20’s goal of reducing systemic risk through greater adoption of central clearing. Our concern is that this will make it more difficult for market participants to hedge risk using cleared derivatives.  Worse, it may harm the safety and resilience of our clearing system.”

“We are seeing a declining number of clearing members, greater concentration of risk, and reduced access for hedging,” Lukken said.