International regulators and supervisors have started drawing up plans to make it far more expensive for investment banks to hold large volumes of complex financial instruments, such as mortgage-linked securities, in their trading books. The move is intended to prevent a recurrence of the type of massive, unexpected losses that emerged at banks such as UBS in recent months. The new measures, being spearheaded by the Financial Stability Forum – a committee of global regulators and supervisors – could force banks to rethink the business models they use to repackage assets such as mortgages into complex financial securities.

This entry was posted by Gwen Robinson on Monday, June 2nd, 2008 at 5:41 and is filed under Capital markets. Edit this entry.