Fed TLAC proposals put structured notes in limbo

Vague rules spark confusion; Morgan Stanley may face headaches

Draft Fed TLAC rules unclear on structured notes
Draft Fed rules leave dealers in the dark

The vague definition of structured notes in the US Federal Reserve's new loss-absorbing debt requirements has led to confusion among dealers about what can sit in the bail-in buffer. Others are worried the definitions may force some banks to revisit their capital structure.

The Fed published its draft requirements for banks' holdings of total loss-absorbing capacity (TLAC) debt on October 30. The rules, based on a Financial Stability Board (FSB) consultation paper from November 2014, require

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