EU banks poised to win reprieve on capital rule for derivatives

London

EUROPEAN Union (EU) banks are set to win a major reprieve from capital regulations in a victory for their argument that the restrictions would punish their ability to handle clients' derivatives trades.

In legislation to be released as early as next month, the European Commission plans to include a measure that will cut the capital banks need when they receive collateral from clients for trades settled at clearinghouses, according to a commission document summarising the proposal seen by Bloomberg. Without the change, the cost of the additional capital needed to meet the rules would have been passed on to clients, according to the industry.