Banks cut commodity VAR as regulatory reform bites
Basel capital rules and regulatory reform stymie risk appetite of major banks in commodities
Higher capital requirements and regulatory reform are causing banks to dramatically curb their risk-taking in commodity and energy markets, according to market participants.
The value-at-risk figures reported by banks between the first quarter of 2011 and the second quarter of 2012 underline a trend of lower risk-taking in commodity and energy derivatives. Eight out of 11 major dealers surveyed by Energy Risk saw a drop in value-at-risk for their commodities businesses during this period.
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