MFA Submits Letter to FSB on Consultation on Derivatives Clearing Incentives

On September 7, MFA submitted a comment letter in response to the consultation issued by the Financial Stability Board (FSB) and other international standard-setting bodies to assess incentives to centrally clear OTC derivatives.  The letter reiterates MFA’s support for central clearing, and encourages the standard-setting bodies and national regulators to modify the leverage ratio to recognize the exposure-reducing nature of client initial margin for cleared derivatives. The letter also expresses concerns with punitive and disproportionate initial margin requirements for uncleared derivatives as a means to incentivize clearing.