Basel could force derivatives onto exchanges

Author: | Published: 1 Feb 2010
The haircut looks a lot more for instruments with more than five-year maturity

The haircuts would be applied to the collateral that counterparties give to each other to secure obligations. Under the existing Basel II rules, all similarly rated instruments are given the same haircut. But under new rules a distinction would be made between government, corporate and asset-backed bonds.

“The Basel committee wants banks to have an economic incentive to trade...