'U.S. Weighs Leaning On Banks To Curb Hedge Fund Leveraged Trading; Officials Floated Bigger Haircuts For Some Secured Borrowing; Lenders Could Also Have To Collect More Data On Exposures' - Bloomberg News
Portfolio Pulse from Benzinga Newsdesk
US regulators are considering measures to curb highly leveraged hedge fund trades, focusing on the basis trade strategy. This involves using leverage to profit from the price gap between Treasury futures and the underlying cash market. The borrowing in the repurchase market using US Treasuries as collateral has increased to nearly $3 trillion.
October 19, 2023 | 3:31 pm
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NEGATIVE IMPACT
The potential regulatory measures to curb leveraged trading could impact banks, potentially affecting the performance of the SPDR S&P Bank ETF (KBE).
The potential regulatory measures could limit the ability of banks to engage in certain types of leveraged trading, which could reduce their profitability and thus negatively impact the performance of the KBE ETF, which tracks the banking sector.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The potential regulatory measures to curb leveraged trading could impact regional banks, potentially affecting the performance of the SPDR S&P Regional Banking ETF (KRE).
The potential regulatory measures could limit the ability of regional banks to engage in certain types of leveraged trading, which could reduce their profitability and thus negatively impact the performance of the KRE ETF, which tracks the regional banking sector.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The potential regulatory measures to curb leveraged trading could impact the broader market, potentially affecting the performance of the SPDR S&P 500 ETF (SPY).
The potential regulatory measures could limit the ability of market participants to engage in certain types of leveraged trading, which could reduce overall market activity and thus negatively impact the performance of the SPY ETF, which tracks the S&P 500 index.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 60
NEGATIVE IMPACT
The potential regulatory measures to curb leveraged trading could impact the financial sector, potentially affecting the performance of the Financial Select Sector SPDR Fund (XLF).
The potential regulatory measures could limit the ability of financial institutions to engage in certain types of leveraged trading, which could reduce their profitability and thus negatively impact the performance of the XLF ETF, which tracks the financial sector.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80