Evolution of the liquidity exchange

Evolution of the liquidity exchange

Business exchange

When the Financial Services Authority (FSA) issued its final guidance on liquidity swaps earlier this year, its permissive stance was expected to reignite the market for these transactions after it ground to a halt during the regulator’s consultation. But since the guidance was issued in February, market participants report that the volume and scale of such deals – in which insurers exchange liquid assets, such as gilts, with banks’ illiquid assets, such as asset-backed securities (ABSs) – has b