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Wall Street May Get Capital Break in New Approach to Derivatives

  • Regulators propose standards addressing collateral, netting
  • Fed, OCC and FDIC release response to 2014 Basel agreement
Trading On The Floor Of The NYSE As U.S. Stocks Rise With Dollar
Photographer: Michael Nagle/Bloomberg

The biggest U.S. banks may be on their way to a new capital standard for derivatives trading that addresses industry complaints that Wall Street’s risk-taking has been overestimated.

The Federal Reserve and two other agencies on Tuesday proposed a new approach meant to answer concerns that existing requirements ignore risk-reducing collateral and didn’t allow enough netting of derivatives contracts with similar risks. The change would free up some of the bank capital demanded after the 2008 financial crisis.