European proprietary trading firms are fearful of the potential impact on liquidity of the EBA's new prudential regime
Proprietary trading firms are becoming
increasingly worried about new prudential regulations proposed
by the European Banking Authority as the early February
deadline for commentary looms.
In November, the European Banking
Authority’s (EBA) proposed a new prudential regime
for investment firms to supplement the existing capital
requirements directive and capital requirements regulation
(CRR) in the European Union.
The EBA wants to reform the capital
rules for firms that are not banks or systemically important,
the main focus of its capital reforms to date.
All firms have until February 2 to
submit their feedback to the banking regulator.
While there is disagreement about the
nature of the proposals, the consensus among European props is
that, while the spirit of the EBA's November discussion paper
is in itself sensible, the details need work.
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