- The ECB is stepping up scrutiny of significant risk transfer (SRT) trades and warns that banks not keeping SRTs simple will face slower approvals.
- Banks use SRTs to offload credit risk to investors. Hedge funds and others turn to insurers for guarantees that cut the cost of bank loans used to finance these trades, as competition for high-yield SRT instruments heats up.
Quotes
“The market for significant risk transfers is booming”