BoE says leverage ratio disincentivises client clearing

Bank of England BoE adobe stock 230x150
By Costas Mourselas
18 Jun 2018

The Bank of England has released a new working paper on the impact of the leverage ratio for derivatives, arguing that the ratio had a “disincentivising effect” on client clearing for the period evaluated, confirming the views of many industry participants.

The leverage ratio is a risk-agnostic measure of bank tier one capital against bank exposures, which was originally proposed by the Basel Committee for Banking Supervision. 

The BCBS determined the minimum leverage ratio to be 3%, though implementation based on systemic importance of financial intuitions and local factors means ...

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