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Clearing costs could shoot up under Basel III

Analysis by JP Morgan casts doubt on initial assumptions surrounding the cost of risk exposure to clearing houses under new regulations

Banks could face unexpected clearing costs under the new Basel III rules, according to analysis by JP Morgan that casts doubt on many of the initial assumptions surrounding the cost of risk exposure to clearing houses.

Regulators across the globe are working towards pushing standardised over-the-counter derivatives through central clearing houses, which reduce risk by sitting in-between a trade to guarantee payment in the event either party defaults.

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