Bank Says New Funding Rule Makes Trading More Expensive
Ren Benavidez | | Sep 02, 2014 03:03 PM EDT |
(Photo : Wikimedia)
A new global rule is being proposed to force banks into safer funding, which will reportedly make short-selling more expensive.
Industry analysts predict that the new rule will create a massive dip in the shares of investors since several equity transactions will be more costly.
Like Us on Facebook
In a letter released by two major industry lobbyists, Global Financial Markets Association and the Institute of International Finance, it said the rule would also make it more difficult for banks to provide stock exchanges because of the steeper price.
Because of the new funding rule, banks are trying to avoid a repeat of the financial crisis in 2008 by trying to create banking modifications by amending the Basel Committee's Net Stable Funding Ratio (NSFR).
The letter, which was addressed to the Basel Committee, stated that banks' are beginning to have "serious concerns" regarding equity trading under the NSFR management.
NSFR could create a major "increase in transaction costs across equity markets for all participants," according to the letter.
The NSFR is a banking committee whose aim is to make sure that banks maintain a minimum and stable funding relative to its assets.
The amendment in the NSFR is set to take effect in 2018, a move that is expected to prevent funding restrain such as the one that lead to the failure of Northern Rock's British bank.
The measure comes at the same time as Liquidity Coverage Ratio's move to ensure that bank's maintain enough assets that are easily convertible to cash.
In January, financial regulators proposed a revised version of the NSFR, saying the revisions will be essential in ensuring that banks become more resilient.
TagsBANK, banking, regulators, Federal Reserve
©2015 Chinatopix All rights reserved. Do not reproduce without permission
EDITOR'S PICKS
-
Did the Trump administration just announce plans for a trade war with ‘hostile’ China and Russia?
-
US Senate passes Taiwan travel bill slammed by China
-
As Yan Sihong’s family grieves, here are other Chinese students who went missing abroad. Some have never been found
-
Beijing blasts Western critics who ‘smear China’ with the term sharp power
-
China Envoy Seeks to Defuse Tensions With U.S. as a Trade War Brews
-
Singapore's Deputy PM Provides Bitcoin Vote of Confidence Amid China's Blanket Bans
-
China warns investors over risks in overseas virtual currency trading
-
Chinese government most trustworthy: survey
-
Kashima Antlers On Course For Back-To-Back Titles
MOST POPULAR
LATEST NEWS
Zhou Yongkang: China's Former Security Chief Sentenced to Life in Prison
China's former Chief of the Ministry of Public Security, Zhou Yongkang, has been given a life sentence after he was found guilty of abusing his office, bribery and deliberately ... Full Article
TRENDING STORY
-
China Pork Prices Expected to Stabilize As The Supplies Recover
-
Elephone P9000 Smartphone is now on Sale on Amazon India
-
There's a Big Chance Cliffhangers Won't Still Be Resolved When Grey's Anatomy Season 13 Returns
-
Supreme Court Ruled on Samsung vs Apple Dispute for Patent Infringement
-
Microsoft Surface Pro 5 Rumors and Release Date: What is the Latest?