5  The key problem revolves around the trigger for conversion. A trigger that was directly or indirectly exercised at the discretion of regulators would not necessarily be regarded by markets as predictable, but a trigger tied to a market measure could lead to a variety of unintended manipulative trading opportunities – including, in a worst case, a so-called death spiral.
6  In any case, it is absolutely clear that “bail-in” contingent capital – which converts at the point of non-viability of a firm in order to facilitate orderly resolution – would not be an acceptable substitute for common equity. 4  BIS central bankers’ speeches  notice and comment process on a proposed Federal Reserve rulemaking covering enhanced prudential standards for SIFIs.