Capital-relief trades see higher demand

Demand is increasing for capital-relief trades, also known as regulatory-capital trades, particularly in Europe, as regulators require banks to hold more capital. The trades are generally structured as credit default swaps. "These trades allow the banks to go to regulators and say the risk is gone," said Anat Admati, a Stanford University professor of finance. "But it's not gone at all; it's just been pushed into a murky corner of the market."

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