Fink Says More Trading Venues Needed to Avoid Liquidity Crisis

BlackRock Inc. Chief Executive Officer Larry Fink said regulators need to push for market participants to develop more electronic-trading venues and other alternatives to bank dealers to avoid a liquidity crisis in the fixed-income markets.

“We are going to have a liquidity crisis” at some point, Fink said at a panel sponsored by the International Monetary Fund in Washington. BlackRock is the world’s largest money manager, with more than $4 trillion in assets under management.

The largest banks, facing new capital rules, are charging more for liquidity and use of their balance sheets, leading to wider spreads in the corporate bond market, Fink said. While market participants will eventually find other sources of liquidity, like electronic-trading platforms, regulators also need to focus on the future structure of the markets, he said.

Fink also said regulators need to better analyze the full market “ecosystem” and focus on activities rather just institutions. They also need to be more transparent about rules regarding the resolution of banks, which would lead to higher price-to-earnings ratios for the lenders as shareholders such as BlackRock would have more confidence, he said.

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