BANKS WORRIED ABOUT BASEL RULE FT’s Sam Fle
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Posted On: 09/02/2014 8:16:13 PM
BANKS WORRIED ABOUT BASEL RULE
FT’s Sam Fleming: “Banks are sounding the alarm about a proposed global rule aimed at forcing them to fund themselves more safely, warning that it could have ‘severe’ knock-on effects on short selling and other important equities market transactions. Industry lobbyists have warned the Basel Committee on Banking Supervision that proposed funding rules could make it five times more expensive for banks to facilitate short selling … The rule would also make it much more expensive for banks to provide equity swaps …
“If other financial institutions, so-called shadow banks, do not step into the breach, investors could be forced to pay more to bet on equity price moves. The banks are making a last-ditch effort to modify the Net Stable Funding Ratio, seen as the final plank of the ‘Basel III’ banking reforms that seek to prevent a repeat of the 2008 financial crisis. The Basel Committee’s NSFR aims to ensure banks hold a minimum amount of stable funding based on the characteristics of their assets. The measure, which aims to prevent funding squeezes such as the one that contributed to the downfall of the British bank Northern Rock, is expected to come into force in 2018”
http://on.ft.com/1toE3eo
FT’s Sam Fleming: “Banks are sounding the alarm about a proposed global rule aimed at forcing them to fund themselves more safely, warning that it could have ‘severe’ knock-on effects on short selling and other important equities market transactions. Industry lobbyists have warned the Basel Committee on Banking Supervision that proposed funding rules could make it five times more expensive for banks to facilitate short selling … The rule would also make it much more expensive for banks to provide equity swaps …
“If other financial institutions, so-called shadow banks, do not step into the breach, investors could be forced to pay more to bet on equity price moves. The banks are making a last-ditch effort to modify the Net Stable Funding Ratio, seen as the final plank of the ‘Basel III’ banking reforms that seek to prevent a repeat of the 2008 financial crisis. The Basel Committee’s NSFR aims to ensure banks hold a minimum amount of stable funding based on the characteristics of their assets. The measure, which aims to prevent funding squeezes such as the one that contributed to the downfall of the British bank Northern Rock, is expected to come into force in 2018”
http://on.ft.com/1toE3eo
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