Newsletter April 09: Retaliation fear over UK’s proposed liquidity rules

LONDON – The danger that Britain’s proposed tough new liquidity regime for banks might trigger retaliation from other countries has emerged as a major concern among bankers and capital market participants. In a joint letter responding to a consultation on the new liquidity rules, issued in December by Britain’s financial regulator, the Financial Services Authority (FSA), three leading industry associations say the proposed approach could “trigger regulatory retaliation, in which each jurisdiction seeks to ring fence more and more liquidity within its own borders in more and more prescriptive ways.”