Banks stand to benefit from new derivatives disclosure rules

While banks may grouse over stricter derivatives rules recently recommended by the Basel Committee on Banking Supervision, bank risk managers should focus on the potential upside of new regulation, industry consultant Mayra Rodr??guez Valladares said.

Measures known as Basel III, which the committee adopted in June, likely will force banks to migrate more over-the-counter derivatives positions to a central clearing party (CCP). That stands to benefit banks, in light of certain Basel III disclosure requirements, Valladares said in a new report.

“Those banks that migrate their derivatives to CCPs will be able to publish more information about their transactions, which will make them more transparent,” Valladares said. “This increased transparency is likely to translate into favorable market discipline, an increase in a bank’s bond and stock prices.”

Valladares is managing principal with MRV Associates, a New York based capital markets and financial regulatory consulting firm.

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