Asset managers are rushing to fill the gap left by a looming ban on widely popular if little-understood bank hybrid securities after the prudential watchdog found they may create a systemic risk in a crisis.

The $43 billion hybrid market will be phased out by 2032 in an overhaul that has angered investment advisers. Hybrids – or additional tier 1 capital (AT1) – are a core part of bank funding. They can be issued as debt to investors and pay out interest over time, but can be converted to equity or wiped out entirely if required in a crisis, like what happened with the collapse of Credit Suisse early last year.