City Research Online

Abstract

As part of the post global financial crisis banking reforms, regulators introduced a leverage ratio requirement, a minimum capital requirement over a bank’s total exposures. We assess the consequences of this requirement for derivative clearing services to clients, which creates exposures for the dealers, by exploiting its earlier introduction in the United Kingdom and detailed confidential transaction and portfolio data. UK dealers reduce their client clearing business following the introduction of the requirement, particularly dealers with lower capital positions and for longer-term derivatives; they are also more likely to end client relationships. Capital regulation might indirectly limit access to clearing services.

Publication Type:	Article
Additional Information:	This is the peer reviewed version of the following article: Acosta-Smith, J., Ferrara, G. & Rodriguez-Tous, F. (2024). Bank Capital Regulation and Derivatives Clearing. International Journal of Finance and Economics, which will be published in final form at onlinelibrary.wiley.com/journal/10991158. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
Publisher Keywords:	Financial Regulation, leverage ratio, derivatives, clearing, banking
Subjects:	H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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