Basel has issued a set of interim rules on capitalisation of bank exposures to central counterparties (CCPs). The rules build on the report of the Committee on Payment and Settlement Systems (CPSS) and International Organisation of Securities Commissions (IOSCO) report. Under the rules, where a CCP is supervised in a manner consistent with these principles, exposures to these CCPs will receive a preferential capital treatment. The rules also allow banks to choose from one of two approaches for determining the capital required for exposures to default funds. They can choose a risk-sensitive approach or a simplified method, under which default fund exposures will be subject to a 1250% risk weight subject to an overall cap based on the volume of a bank's trade exposures. Basel hopes this will allow for implementation of Basel III while further work in this area continues. (Source: Basel Issues CCP Exposure Rules)