The US central bank has granted capital relief for a credit-linked note (CLN) issued by Morgan Stanley (MS), shortly after the release of new guidelines on CLN treatment.

The Board of Governors of the Federal Reserve System has approved a request to treat a CLN issued by MS Finance as synthetic securitization for purposes of calculating MS’ risk-weighted assets (RWA), according to a letter addressed to Davis Polk, the law firm that represents the US bank. [The FAQ] will provide another reason for a financial issuer to do a CLN as the issuer would have a regulatory capital reason for pursuing the transaction - Christopher Schell The approval marks the fi

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