CFA Institute Systemic Risk Council (the Council) recently provided detailed comments to the Honorable Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, on the growing systemic vulnerabilities to the global financial system posed by credit derivatives known as credit risk transfer transactions (CRTs).
While the rapidly expanding use of these instruments by Global Systemically Important Banks (“GSIBs”) and other banks are meant to shift all or a portion of their credit and interest rate risks to private market investors, these transactions bring potentially harmful consequences for systemic stability.
Timely action is needed to better monitor and prevent these transactions from again creating many of the same problems that led to the global financial crisis in 2008.
Great letter to the Fed by the @CFAinstitute Systemic Risk Council in Support of Addressing the Growing Systemic Vulnerabilities Posed by Credit Risk Transfer Transactions @baselinescene https://t.co/IOFGWy2vGE
— Sheila Bair (@SheilaBair2013) October 6, 2024
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Citadel Securities told the SEC that trading tokenized equities should remain under existing market rules, a position that drew responses from various crypto industry groups. @ShannyBasar for @MarketsMedia:
SEC Commissioner Mark Uyeda argued that private assets belong in retirement plans, saying diversified alts can improve risk-adjusted returns and that the answer to optimal exposure “is not zero.” @ShannyBasar reporting for @MarketsMedia:
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