US large exposures rule could stop banks trading with RBS

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US banks could stop trading with Royal Bank of Scotland (RBS) – or reduce their role as market-makers for UK government bonds – as a result of Federal Reserve Board proposals that limit large single-counterparty exposures.

As drafted, the rules could lump together exposures to RBS and those to the UK, causing US banks to breach their limit. RBS warned of the possible consequences of the rules in a comment letter on April 30, and two US banks that spoke to Risk confirm the rules could affect

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