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What's Driving Dealer Balance Sheet Stagnation?

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Abstract

Securities brokers and dealers (“dealers”) engage in the business of trading securities on behalf of their customers and for their own account, and use their balance sheets primarily for trading operations, particularly for market making. Total financial assets of dealers in the United States have not shown any growth since 2009. This stagnation in their balance sheets raises the worry that dealers’ market-making capacity could be constrained, adversely affecting market liquidity. In this post, we investigate the stagnation of dealer balance sheets, focusing particularly on the boom and bust of the housing market.

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  • Tobias Adrian & Michael J. Fleming & Daniel Stackman & Erik Vogt, 2015. "What's Driving Dealer Balance Sheet Stagnation?," Liberty Street Economics 20150821, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87057
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    Cited by:

    1. Silvia Bressan, 2017. "A Short Note on the Funding of Investment Firms Across the Crisis: Did the Turmoil Bring Changes?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 7(1), pages 1-3.
    2. Anderson, Nicola & Webber, Lewis & Noss, Joseph & Beale, Daniel & Crowley-Reidy, Liam, 2015. "Financial Stability Paper 34: The resilience of financial market liquidity," Bank of England Financial Stability Papers 34, Bank of England.
    3. Bank for International Settlements, 2016. "Regulatory change and monetary policy," CGFS Papers, Bank for International Settlements, number 55, december.
    4. Lael Brainard, 2016. "An Update on the Outlook, Liquidity, and Resilience : a speech at the Institute of International Bankers Annual Washington Conference, Washington, D.C., March 7, 2016," Speech 893, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    Keywords

    balance sheet growth; security brokers and dealers;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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