Latest news with #leverage
Bloomberg
3 days ago
- Business
- Bloomberg
Lubin Considers Adding Leverage to Ethereum Treasury Firm Sharplink
Ethereum co-founder Joe Lubin said that he might introduce leverage to Sharplink Gaming Inc., the sports betting and gaming technology firm that recently turned into an Ether treasury company, which Lubin serves as chairman. 'Sharplink isn't leveraged,' Lubin, also the founder and chief executive officer of Ethereum software infrastructure provider Consensys, said in an interview on Bloomberg Television on Thursday. 'We may do some things that bring a bit of leverage into the situation, convertible equity potentially. We will do bond issuance at low rates with long duration. We will not put the strategy at risk.'
New York Times
3 days ago
- Business
- New York Times
Wall Street's Regulatory Reins Start Loosening as Fed Proposes New Rule
For years, the country's biggest banks lobbied against a post-2008 financial crisis rule that was intended to shore up their stability and ensure they could withstand steep losses in times of turmoil. This week, financial regulators led by the Federal Reserve agreed to ease the rule, embarking on what is expected to be an extensive push to loosen the regulatory reins on Wall Street. The rule in question, the supplementary leverage ratio, mandates that lenders maintain a buffer of easy-to-access money against their total leverage. That measure includes assets such as loans and Treasuries as well as exposures that do not appear on a bank's balance sheet but generate income, like derivatives. It is not the first time that the Fed has given the banks a big break on this front. As financial markets melted down at the onset of the Covid-19 pandemic, the Fed offered a temporary reprieve so that banks had more leeway to lend to businesses while staying active in the all-important U.S. government bond market at a time when the economy was reeling from a big shock. But in loosening the rule in a permanent way, which the Fed voted 5 to 2 in favor of doing on Wednesday, opponents warn that it risks making the financial system more fragile at a time when President Trump's policies are stoking extreme volatility. 'You lower capital requirements, you build up leverage in this system, which by definition, is going to create less resilience,' said Sheila Bair, who served as chair of the Federal Deposit Insurance Corporation between 2006 and 2011. 'You should have a really good reason to do it, and I don't see the reason.' Want all of The Times? Subscribe.
Zawya
3 days ago
- Business
- Zawya
Fed plan to ease leverage rule offers windfall for big US banks, Morgan Stanley says
A Federal Reserve plan to relax leverage rules could free up $185 billion in capital and unlock nearly $6 trillion in balance sheet capacity for large U.S. global banks covered by Morgan Stanley, the brokerage estimated on Thursday. The U.S. Fed unveiled a proposal on Wednesday that would overhaul how much capital large global banks must hold against relatively low-risk assets, as part of a bid to boost participation in U.S. Treasury markets. The plan, approved by a 5-2 Fed vote, marks the first in a possible series of deregulatory moves led by the central bank's new vice chair for supervision, Michelle Bowman. The proposal would reform the so-called "enhanced supplementary leverage ratio" so that the amount of capital banks must set aside is directly tied to how large a role each firm plays in the global financial system. "SLR reform is the first of many capital proposals we expect over Michelle Bowman's tenure," Morgan Stanley analysts led by Betsy Graseck wrote in a note, adding that in a positive for banks the Fed chose the rule change with the biggest increase in excess balance sheet capacity. Fed officials described the changes as a necessary fix to a rule introduced after the 2008 crisis, saying the leverage requirement had grown over time to occasionally limit bank activity, especially as government debt surged in recent years. "The Fed's proposal to calibrate eSLR should give the banking system meaningful capacity to expand its balance sheet in low-risk assets," analysts at brokerage Barclays said. "It makes sense for banks to utilize the theoretical leverage capacity as long as the return from investing in low-risk assets/activity is sufficient," they said. (Reporting by Manya Saini in Bengaluru; Editing by Sriraj Kalluvila)
Bloomberg
4 days ago
- Business
- Bloomberg
AQR Bets on Levered Trades in First New US Mutual Funds in Years
AQR Capital Management is doubling down on a strategy that seeks to juice returns with leverage for its first new US mutual funds in four years. The Greenwich, Connecticut-based quant pioneer debuted three funds Wednesday after launching one last week, all of which employ an asset-allocation approach known as 'portable alpha.'
Zawya
4 days ago
- Business
- Zawya
Fed kicks off effort to ease bank leverage rules
The Federal Reserve meets on Wednesday to advance a proposal that would ease leverage rules for banks, which would grant the industry a long-sought win they say will help big firms facilitate Treasury market trading. The central bank's Washington board will consider a plan to revamp the so-called supplementary leverage ratio (SLR), which directs banks to hold capital against assets regardless of their risk level. Originally designed as a backstop to ensure banks hold some capital on even relatively risk-free assets like U.S. Treasury debt, the industry complains it has become a constraint that actually impedes their ability to facilitate trading in U.S. Treasury markets during times of stress. The Fed had previously flagged that the SLR may need some tweaks after it exempted some requirements amid market strains during the COVID-19 pandemic, and now Fed officials plan to advance a more lasting solution. "It would be better if we had a leverage ratio that was a backstop rather than a binding thing, and that's what this proposal is going to do," said Fed Chairman Jerome Powell at a congressional hearing Tuesday. Powell told lawmakers the Fed is expected to advance a proposal that would tweak the formula calculating the "enhanced" SLR (eSLR), which requires the nation's largest banks to hold an extra layer of capital. Specifically, the Fed is expected to mirror an effort regulators pitched in 2018 that failed to advance, which would tie leverage requirements to the overall risk each bank is deemed to pose on the financial system. However, he added the Fed would seek feedback on alternative methods of relief, such as broadly exempting Treasury securities from the requirement altogether. A Fed spokesperson declined to comment ahead of the board meeting. "We believe regulators want to provide banks with more space before riskless assets could make the eSLR a binding constraint," Jaret Seiberg, an analyst with TD Cowen, wrote in a note. The leverage changes are the first of what is expected to be a broad deregulatory agenda from the Fed's new top regulatory official, Vice Chair for Supervision Michelle Bowman. President Donald Trump, who nominated Bowman for the post, has made trimming regulations a top priority in a bid to boost economic growth. On Monday, she said the leverage rewrite is a first step in overhauling "distorted" capital requirements on banks, which were drastically ratcheted up after the 2008 financial crisis. Other future changes could include weakening an additional surcharge imposed on large global banks and tweaking thresholds under which banks face increasingly strict rules as they grow in size. However, the new plan has its critics, who argue stepping back rules intended to keep banks stable injects unnecessary risk into the system at the behest of the industry. Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, said in a letter to regulators on Tuesday she had "grave concerns" about the plan. "If the banking agencies gut this requirement, the big banks will load up on more debt, pay out more money to shareholders and executives, and put the entire economy at risk of another financial crash," she wrote. "There is no valid rationale for your agencies to impose these risks on the American public." (Reporting by Pete Schroeder; Editing by Sam Holmes)
