easy · Debt Capital Markets secondary-trading-liquidity
Why would an investment bank's trading desk prefer to hold 'on-the-run' Treasuries over 'off-the-run' Treasuries, despite the lower yield of on-the-run securities?
- Higher regulatory risk-weightings for older debt
- Greater convexity for the same maturity
- Lower capital charges under the leverage ratio
- Superior liquidity and tighter bid-ask spreads
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