SRTs are booming because they helps banks free up capital and boost measures of profitability. But the fast expansion of the market is also prompting authorities to seek greater oversight — and to better understand what risks or contagion could emerge if bad loans surge.
(May 26): Banks are going big on a product that’s drawing ever-closer regulatory scrutiny.
Lenders have stepped up their reliance on so-called significant risk transfer (SRT) trades, complex deals in which banks offload some of the default risk from their loan books to hedge funds and other investors.
