Federal regulators moved swiftly today and finalized new “liquidity coverage ratio” rules while also starting the process of tackling one of the biggest and most catastrophic risks facing the world economy: big bank derivatives exposure. The new leverage ratio rule The Leverage Ratio rule requires nearly 35 banks to maintain a large percentage of highly liquid assets. As a result, the large banks will likely be required to alter their investment portfolio and raise by $100 billion highly liquid assets. As previously reported in ValueWalk, the goal of the rule is better protection during a market crash. If markets were…
Federal Regulators Finalize Bank Rules, Eye Messy Derivatives
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.