Robert Stheeman, head of the UK Debt Management Office, warned that the US Volcker rule could hinder the sovereign-debt market. "If you ban prop trading, you take a sledgehammer to the entire liquidity edifice," Stheeman said. "It's notable that the Volcker rule has one little exemption -- for the trading of US government bonds. Isn't that curious?" He also said a financial-transaction tax in Europe could have the same result. "If the FTT as originally suggested were imposed on government-bond trading, it could have been extremely damaging," he said.
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