Brokers face restrictions on using clients' assets as collateral for other trades, as partof a push by global regulators to prevent the securities lendingmarket from sparking chain reactions that could cause a crisis.

Under recommendations published today by the Financial StabilityBoard (FSB), brokers wouldn't be allowed to tap client assets fortheir own trading, and they would have to provide “sufficientdisclosure” of plans to use the securities as collateral in othertransactions. They would also have to meet minimum standards inmanaging liquidity risks.

Regulators are seeking to rein in how traders use collateral ina bid to prevent any repeat of the turmoil that followed the 2008collapse of Lehman Brothers Holdings Inc., which was driven in partby confusion over who was owed what on outstanding trades. TheEuropean Union may seek to curb the number of times a single assetcan be passed on as collateral in trades, a person familiar withthe plans said last week.