The Basel Committee has issued final limits on credit exposures to single counterparties and those where credit and market risk may be concentrated, significantly revising the proposed approach but still imposing stringent limits that will require significant changes in client relationships, risk management and data systems at affected banks. Because no grandfathering of existing exposures is permitted after the 2019 compliance deadline, institutions may face divestitures that could roil market pricing. The U.S. is likely to impose standards at least as stringent as Basel’s and to do so on a tighter schedule. The U.S. may, however, concur with Basel and, at least for now, exempt qualifying central counterparties and intraday non-interbank transactions from its single-counterparty credit limits.
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