These requirements will, among other things, strengthen the prudential framework for OTC derivatives by increasing OTC derivatives’ risk-based capital and leverage requirements and by requiring banking firms to hold an additional buffer of highquality, liquid assets to address potential liquidity needs resulting from their derivatives portfolios.
As the adoption of Basel III – in contrast to its predecessors – has been fully integrated into the political process, the commitment to implement the new rules is extremely high. Europe is playing a pioneering role in the adoption process via the Capital Requirements Directive IV.