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7/9/13 - Clearinghouse Exposures Now Subject to Bank Lending Limits

Swap dealers, futures commission merchants, and clearinghouse settlement banks are facing demanding new requirements to aggregate exposures on cleared swaps, futures, and options, as well as to other exposures that arise from their relationships with clearinghouses. The coming changes could require some large banking organizations to pull back on activities designed to hedge risk.

The new requirements are looming consequences of regulators’ interpretation of a provision of the Dodd-Frank Act. Please click below to read a Sightlines InFocus by Doug Harris that explains how the interpretation could unintentionally thwart one of the primary goals of Dodd-Frank: to better manage and contain systemic risk by moving over-the-counter derivatives transactions to a centrally cleared environment.

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