BoE to pub­lish re­view of reg­u­la­tion im­pact on mar­ket liq­uid­ity

The Pak Banker - - FRONT PAGE -

The Bank of Eng­land said it will pub­lish an as­sess­ment of how reg­u­la­tion is run­ning up against the ef­fi­cient func­tion­ing of UK bond mar­kets this year.

Mea­sures of liq­uid­ity in gov­ern­ment and cor­po­rate-bond mar­kets are de­te­ri­o­rat­ing, with lower mar­ket depth, smaller trade sizes and greater price im­pact on as­set sales, the cen­tral bank's Fi­nan­cial Pol­icy Com­mit­tee said in a state­ment Tues­day. Of­fi­cials are pre­par­ing to pub­lish the re­view of how post-cri­sis rules could be re­fined to en­cour­age bet­ter mar­ket ef­fec­tive­ness.

Ano­ma­lies in the mar­ket, par­tic­u­larly in de­riv­a­tive in­stru­ments, are be­com­ing more per­sis­tent as mar­ket mak­ers are less will­ing to pro­vide fi­nanc­ing to lever­aged in­vestors, the BOE said.

The re­pur­chase mar­ket -- where banks use debt as col­lat­eral to back short-term loans -- is shrink­ing in size and the price of re­ceiv­ing this ser­vice from banks is in­creas­ing.

"This in­crease in the cost in­curred by lever­aged in­vestors to ob­tain fi­nanc­ing us­ing gilt col­lat­eral could re­duce ac­tiv­ity in fi­nan­cial mar­kets go­ing for­ward, with po­ten­tially ad­verse im­pli­ca­tions for mar­ket liq­uid­ity," sta­bil­ity of­fi­cials said in a state­ment pub­lished in Lon­don on Tues­day.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.