Waller Raises Stakes for End-Game Finalization
Going beyond his longstanding critique of the end-game rules, FRB Gov. Waller today reflected industry comments and litigation plans, saying that he now thinks the proposal needs a “major overhaul” or should be withdrawn and reissued. As we noted in our recent 2024 outlook, Gov. Bowman will surely side with this view, but Chair Powell holds the gavel when it comes to the end-game outcome at the Federal Reserve. Mr. Waller also is personally opposed to the pending rewrite of debit-card interchange fees (see FSM Report INTERCHANGE12) because it forces the Fed to pick winners and losers.
Global Regulators Try Transparency as Cure to CCP-Margin Risk
The Basel Committee, CPMI, and IOSCO today released a long-planned consultation on CCP and clearing-member margining practices. These are designed to limit the volatile and potentially-systemic liquidity stresses due to margining practices evident in 2020 and again after the Ukraine invasion, with the extent to which these further shift cost burdens from CCPs to clearing members their most controversial aspect. Largely focused on transparency, the new approach would require CCPs to provide clearing members with margin-simulation tools that members would then make available to end-users to enhance margin-call preparedness.