Through-the-cycle haircut in securities financing likely, says senior regulator

Supervisors look to keep a firmer grip on securities lending haircuts to prevent asset bubbles from forming.

A senior official at a European regulator believes it is likely a through-the-cycle supervisory haircut will be adopted in securities financing to prevent margin being lowered in boom periods.

"I think the chances are quite likely that it will be adopted. The proposals fall short of saying the banks should not be allowed to set the haircuts: it is still giving the leeway that is already in the Basel II document - some banks might be allowed to set their own haircuts. However, it would be very