Bank regulation could have a negative impact on bond investors, According to Standard Life Investments. SLI says among the issues investors could face are higher banking funding costs, lower profitability with the sectors and a reduction in the investor base for raising capital and funding. “The new regulation has been put in place to reduce the risk that the taxpayer will again be required to bail-out troubled financial institutions,” says Andrew Fraser, investment director for fixed interest. “But the new terms and conditions may be off-putting for some institutional investors.”

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