SEC leverage ratio meetings alarm broker-dealers

US Treasury spread trades could face 850-fold jump in capital requirements

SEC plans would be "punitive for US Treasuries", say traders

The US Securities and Exchange Commission (SEC) has discussed imposing a 6.66% leverage ratio on non-bank broker-dealers in a series of private meetings with market participants and industry bodies – a move that some warn could have a damaging impact on market liquidity.

Capital requirements for simple US Treasury bond spread trades could increase by 850 times, warns one broker-dealer, which could cause these entities to retreat from the market.

"If this was proposed as discussed today, I think

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