Curbs on bank trading activity hit liquidity
Restrictions on bank proprietary trading have caused liquidity to fall in both the cash and credit derivatives markets, forcing investors to adopt alternative strategies.
Bond investors say restrictions on bank proprietary trading, whether forced by regulators or resulting from internal business decisions, are causing liquidity to fall in the credit markets, making it more difficult to rebalance portfolios and deliver returns.
The controversial ‘Volcker rule’, intended to prevent US banks (and global financial institutions active in the US) from making risky speculative investments that put customer deposits at risk, was announced as part of the Dodd-Frank Wall
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