Banks have been campaigning for some time to change this measure of capital to total assets, known as the leverage ratio, which becomes binding from January 2018.

The shift is the latest sign of a more accommodative stance towards the finance industry, which has faced tougher capital rules since the financial crisis in 2008-2009. But some in the industry said the changes did not go far enough.

The rule, proposed by Basel Committee of banking supervisors, originally required banks to total up their exposures to derivatives, such as interest rate swaps, when calculating their compliance with the leverage ratio.

Banks wanted them changed to take into account the fact that in the future big chunks of derivatives trades would have to be cleared, or pass through a third party to ensure a trade's completion.

The clearing process requires customers to post a margin or cash to cover risks of losses. The banks want to be allowed to deduct this margin from their derivatives exposures to leave a net figure that would cut their capital requirement.

As reported by Reuters last month, Basel has proposed replacing the current method for calculating derivatives exposures with a so-called standardised approach for measuring counterparty credit risk.

This method, already part of other Basel rules, would allow some netting of trades to bring down total exposures and also capital.

But the Basel Committee said it would collect more evidence on whether to allow banks to cut exposures further by taking into account customer margins.

The FIA, a derivatives industry body, said it was disappointed that Basel had not gone as far as allowing the immediate inclusion of margins in calculating capital requirements for derivatives holdings. It said this would also help to encourage central clearing of derivatives trades, many of which are traded over-the-counter and uncleared.

"Our concern is that this will make it more difficult for market participants to hedge risk using cleared derivatives," FIA president and CEO Walt Lukken said in a statement.

ACCOUNTING CONSISTENCY

Deutsche Bank (>> Deutsche Bank AG) has said that under the regulators' original plan it was penalised by the international accounting rules it uses, which force the bank to count derivatives exposures on a gross basis until the trades are settled.

Banks in the United States can include trades before settlement on a net basis under U.S. accounting rules.

The Basel Committee's proposals said one of the two approaches would be chosen for all banks to ensure consistency.

The Committee also began sketching out how a higher leverage ratio could be imposed on the world's 30 biggest globally systemically important banks like Goldman Sachs (>> Goldman Sachs Group Inc), Societe Generale (>> SOCIETE GENERALE), Morgan Stanley (>> Morgan Stanley) and HSBC (>> HSBC Holdings plc). Most banks will have to comply with a leverage ratio of 3 percent, but regulators want a higher ratio for big banks.

These large banks already face higher core, risk-weighted capital requirements or a surcharge which varies according to balance sheet size.

The Basel Committee said the top up leverage ratio could be a fixed number applied uniformly to all 30 banks, or vary in the same way as the capital "surcharge".

Many big banks already meet a ratio of 4 percent or above to reassure supervisors and markets and easier treatment of derivatives exposures would lighten this burden.

(Reporting by Huw Jones. Editing by Jane Merriman)

By Huw Jones