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Rates face regulatory headwinds

It is becoming more expensive for the banks to deal in fixed-income products

Rates divisions will experience the full force of the tsunami of regulation coming in as part of the G20’s post-crisis programme of financial reform.

The market is dominated by bulge-bracket dealers, which have the expertise, relationships and balance sheet to take on risk, particularly in the more illiquid products. A company will issue only one type of equity, but corporate and government bonds come in a variety of sizes and maturities, meaning that some trade only occasionally.

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