Dealers warn of trouble ahead as Treasury issuance swells

Repeat of February’s ‘Black Thursday’ likely if Fed ends leverage ratio exemptions, banks say

The foundation of the global financial system is showing some cracks.

On February 25, US Treasuries suffered a bout of extreme turmoil and illiquidity that took many by surprise and hinted at fragility in a market on which all others depend. Bond dealers say further tremors are inevitable – unless, at a minimum, regulators tackle a known side-effect of post-crisis rules.

The rule in question is the supplementary leverage ratio (SLR). By constraining the growth of banks’ balance sheets, it

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