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SEC May Cap Leverage for Brokers

Funding rules under consideration would be designed to prevent runs on broker-dealers.

By Dave Michaels, Bloomberg | Updated on March 20, 2014

U.S. regulators worried that banks and brokerage firms remain too dependent on risky types of short-term funding are weighing new rules designed to reduce reliance on parts of what is often called the shadow banking system.

Now the SEC is weighing new funding rules for brokers as well as a limit on leverage similar to those used by the Federal Reserve and other regulators for banks, according to a regulatory document and SEC officials familiar with the matter.

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