Building on its work late last year to revise the denominator governing the global leverage ratio (LR), the Basel Committee is seeking comment on an unresolved controversy: whether certain client-clearing accounts should be exempt to facilitate central clearing. Although open to change by virtue of this consultation, Basel makes it clear that those seeking a revised LR will face an uphill battle despite decisions in some Basel-member regimes to revise the global rules. Doing so would, advocates believe, lead to greater bank participation in client-clearing operations, reducing systemic risk at both large banks and CCPs as well as increasing services to small end-users. However, opponents strongly fear making the leverage ratio more risk sensitive.
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