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Banks May Lose `Shock Absorber' Role With New Capital Costs: BIS

  • Changes to make sovereign-bond trading more difficult: Survey
  • BIS releases findings of informal survey of 40 banks

New regulations are set to push up costs of capital for government-bond dealers, potentially making trading and market-making more difficult, according to a Bank for International Settlements survey.

The informal poll, conducted between August and September among 40 banks, showed respondents expected the increase when they move from the initial Basel II rules to a fully phased-in Basel III, the report published on Thursday said. The survey was part of the BIS’s study on fixed-income market liquidity as it sought to assess various factors that may affect dealers’ ability to take on risk and facilitate trading.