Leverage ratio disincentives clearing – BoE paper
Leverage ratio appears to have made some banks less willing to take on new clients
The leverage ratio appears to have reduced banks’ incentives to offer clearing services, a staff working paper published by the Bank of England finds.
Jonathan Acosta-Smith, Gerardo Ferrara and Francesc Rodriguez-Tous note that while margin posted on centrally-cleared transactions reduces risk-based capital requirements, it has no effect in reducing measures of exposure in the leverage ratio.
They test for a possible disincentive effect on clearing banks using trade repository data and
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