Governor Tarullo recently outlined a much-anticipated regulatory initiative to limit short-term wholesale funding risks. The proposal would impose increased capital requirements and additional prudential standards on firms dependent on short-term wholesale funding, with a focus on securities financing transactions – repos, reverse repos, securities borrowing/lending and securities margin lending.
The attached memo discusses the outlined policy proposals and the implications of the proposed scope of application to all short-term wholesale market participants, rather than only banking organizations.
