BBA takes lead on liquidity swaps regulation

Author: | Published: 18 Oct 2011

British banks have criticised the UK Financial Services Authority’s (FSA) handling of liquidity swaps between banks and insurers.

Around half a dozen deals have been held up while the FSA considers liquidity swaps and consults with the market, while Phoenix and Lloyds have each had transactions blocked in the last week.

The British Banking Authority (BBA) and Association for Financial Markets in Europe (Afme) have issued a consultation response, available to view here.

The response argues that the FSA’s fears over increased interconnectedness are perhaps over-cautious.

"Insurance companies may already have large exposures in the form of unsecured debt. Liquidity swaps are likely to raise fewer...