BOE Is Scrutinizing Bank Margin Rules to Stop Another Archegos
- Latest system-wide exploratory scenario examines margin rules
- The BOE has said a more extensive report will come this year
At the heart of regulators’ concern is a shift in risk-taking from banks to non-banks since the global financial crisis.
Photographer: Hollie Adams/BloombergUK regulators are examining the policies banks use when deciding how much margin to demand from clients as they look to avoid another incident like the implosion of Archegos Capital Management, which cost the industry billions of dollars and plunged Credit Suisse into a crisis that ultimately led to its collapse.
The Bank of England is trying to understand how clients’ willingness to share their full list of market positions could affect banks’ margin decisions, according to Nathanaël Benjamin, executive director of financial stability strategy and risk at the central bank. Banks that require too little collateral from the clients they provide leverage to can undermine financial stability, he said.