Third, minimum margin requirements for securities-financing operations and initial margin for overthe-counter derivatives transactions could be set on the basis of through-the-cycle calculations and expected to remain constant. 16 Regulation might be required to accomplish this.
Finally, the IMF has noted that having some institutions that are not subject to regulatory capital requirements for their trading books is helpful because these institutions will have more independence in the way that they carry out their risk management. 17 This independence of action would tend to increase market liquidity, reduce volatility, and therefore reduce procyclicality.