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“UNDER PRESSURE”: BASEL III’S CAPTIAL ADEQUACY REQUIREMENTS SQUEEZE BROKER-DEALER RETURNS ON EQUITY, INCREASE NEED FOR THE IMPOSITION OF UNIFORM FIDCUIARY DUTIES
John Marshall Law Journal (2013)
  • Cory Howard
Abstract
The most recent round of international banking regulations promulgated by the Basel Committee on Banking Supervision, called Basel III, is an attempt to prevent future global recessions by implementing tougher capital requirements on financial institutions. However, these regulations have also been made applicable to broker-dealer operations, and new methods of calculating capital reserves will choke available liquidity, both in-house and on the repo market, which in turn will reduce broker-dealer profitability, as measured by returns on equity (ROE). While this is troublesome for broker-dealer shareholders and bank managers, it is even more troubling for the SEC, FINRA, and the clients of broker-dealers, who will likely have to deal with increased instances of fraud as broker-dealers try intently to achieve pre-Basel III profitability.
Publication Date
Summer July 27, 2013
Citation Information
Cory Howard. "“UNDER PRESSURE”: BASEL III’S CAPTIAL ADEQUACY REQUIREMENTS SQUEEZE BROKER-DEALER RETURNS ON EQUITY, INCREASE NEED FOR THE IMPOSITION OF UNIFORM FIDCUIARY DUTIES" John Marshall Law Journal Vol. 7 Iss. 1 (2013)
Available at: http://works.bepress.com/cory_howard/5/