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Synthetic Risk Transfer Still Kicking, Just Not As High

Published on March 22, 2024

Bloomberg News reports that growing issuance of Synthetic Risk Transfers (SRTs), used by large banks to manage regulatory capital requirements, had been expected to surge this year. However, Fed Chair Jerome Powell’s recent testimony on proposed Basel III capital requirements has diminished anticipated SRT issuance. While SRTs may continue their recent rise, issuance is unlikely to surge by 40% as BlackRock and others had predicted.

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