Of Special Interest
16th December 2011
State Street exits UK & German bonds
State Street Corporation is to exit the UK and German bond markets shortly after becoming an official dealer for the bonds. The move is not due to risk worries over the bonds issued by the countries but instead caused by the Volcker rule. The UK market makers in this field are required to buy a small percentage of the total issues every six months. The 'no trade on your own account' rules contains an exception for US bonds but not other sovereign bonds. Many banks worry over the distinctions between market making and proprietary trading. Other banks are expected to follow.
State Street is the largest custodian bank in the US.