Leverage ratio  If a broker-dealer firm faces a binding leverage ratio, this constraint can act as a significant tax on two types of SFTs that are largely untouched either by risk-based capital requirements or by liquidity regulations.
The first is when the dealer, acting as a principal, uses repo to finance its holdings of Treasury securities or agency mortgage-backed securities, assets that generally have only modest risk weights when held as trading positions. The second is when the dealer acts as an intermediary and has a matched repo book.