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Banks to save on derivatives

International regulators exempt foreign exchange swaps from derivative fee plans.
By · 9 Sep 2013
By ·
9 Sep 2013
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International regulators have exempt foreign exchange forwards and swaps from plans to charge banks a fee for certain derivatives transactions, in a move likely to be financially beneficial to Australian banks.

In a statement, the Basel Committee on Banking Supervision said all financial firms that engage in over the counter derivatives will have to pay a margin in line with the risks arising from the transaction.

The move has been designed to give banks incentive to process derivative transactions through a central clearing house instead of between themselves.

But the framework exempts physically settled foreign exchange forwards and swaps, which should reduce costs for Australian banks.

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