Fixed Income Commentary First Quarter 2012
The ever?changing regulatory environment must be watched closely. The new, onerous capital requirements directed at the broker?dealer community will make it more costly for broker?dealers to hold inventory on their balance sheets. This will affect the cost of liquidity by making transactions more expensive in the marketplace. In addition, potential changes to money market regulations, which could include allowing the net asset value to float, could force a number of market participants to seek alternative fixed income solutions such as cash or short duration strategies.