Provisions in the current version of the Bank of International Settlements (Basel) proposal that relate to imposing a capital charge on asset-backed commercial paper liquidity lines will a have material effect on the ABCP-dominated Canadian market, experts say.

The current version of the proposal contains a provision that would allow a 20% capital charge for asset-backed commercial paper liquidity lines. However, there is a provision that if these lines are unconditionally cancelable and are restricted in use for market disruption, a 0% risk weighting may still apply.

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