Industry Groups Comment On Standardized Counterparty Credit Risk

ISDA, SIFMA, the American Bankers Association, the Bank Policy Institute and the FIA (collectively, the "Associations") commented on a proposal of U.S. banking regulators (see here for coverage) to implement the "standardized approach for counterparty credit risk" ("SA-CCR") by U.S. capital rules.

The Associations raised concerns over the potential impact of the proposed rule on the derivatives market, specifically equity and commodity derivatives. The Associations expressed general support for the move from the "current exposure method" to a more risk-based measure, but found that elements of the proposal "could have a significantly negative impact on liquidity in the derivatives market and hinder the development of capital markets."