Tougher Broker-dealer Rules Needed, Fed’s Rosengren Says
A top Federal Reserve official said on Wednesday, a serious re-evaluation of how broker-dealers are supervised is overdue and should bring about higher capital requirements given the threat broker-dealers still pose to the U.S. financial system. Eric Rosengren, the president of the Boston Fed and among the U.S. central bank’s most influential voices on regulating wholesale markets, floated several rule changes that would limit the firms’ reliance on short-term wholesale funding and reduce the risk of runs. The Fed and other regulators have been pushing firms to bulk up their capital to avoid a repetition of the 2008 financial crisis, in which Lehman Brothers’ failure highlighted how quickly broker-dealers can lose investors’ confidence and access to cheap funds.
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