The U.K. Treasury has announced its plans to introduce new regulations for the U.K. covered bond market. The new rules are broadly aimed at enhancing the creditworthiness of covered bonds and making U.K. banks more cost efficient.

The Treasury said that the legislation will comply with the Undertakings for Collective Investment and Transferable Securities (UCITS) directive that allows for authorized investors in European Union (EU) member states to risk weight U.K. covered bonds at 10%, as opposed to the 20% these bonds are currently weighted at.

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