Editor’s Note: Now this is a curious thing. The complaint is not yet publicly available but we’ll look forward to analyzing it shortly. The initial wording gives rise to some early suspicions about what’s going on but we’ll have to wait until more information becomes available before commenting. From the Mortgage Professional America magazine website:…
One of the Federal Reserve’s top policymakers has attacked attempts to reverse the post-crisis drive for tougher regulation, calling efforts to loosen constraints on banks “dangerous and extremely short-sighted”. Stanley Fischer, the vice-chairman of the Fed’s board of governors, said in an interview with the Financial Times that 10 years after the crisis there are…
The European Commission (EC) published amendments to its Bank Recovery and Resolution Directive (BRRD 2) at the end of last year that are intended to harmonize the use of moratoria powers by resolution authorities in the European Union. But these amendments – which propose to introduce two new moratoria powers – will put European financial institutions at a severe…
CloudMargin has released the FlightPlan microsite designed to help financial institutions navigate uncleared margin rules and other regulations impacting their collateral management function. The site enables visitors to identify and tailor information most pertinent to their business and plan for the continued roll-out through 2020 of regulations and mandates, including those coming into effect in September. The…
After a world-record-setting half decade of negative interest rates, Denmark still has a few surprises up its sleeve that show how such a monetary regime works in practice. Though corporate clients need to pay to place their savings with the bank, Danske is struggling to deal with near-record amounts of deposits. Corporate and institutional clients…
LCH has introduced CustodialSeg, a new type of client account within its SwapClear service. The account allows buy-side clients to deliver collateral directly to the clearing house and to retain beneficial title to it. Segregation at an ICSD ensures that such securities collateral remains client-specific. This increases operational efficiency and also eliminates the transit risk…
The US Treasury Department’s plan to significantly increase debt issuance in the fourth quarter is likely to make it more costly for banks and asset managers to borrow in the crucial $2.5 trillion repurchase agreement market, which could tighten credit conditions across the economy. Last month, the Treasury said its debt issuance would swell to…
There seems to be an agreement among both academics and policy makers that limited regulation of non-depository financial institutions, or shadow banks, was one of the major causes of the subprime mortgage crisis and the ensuing Great Recession. As a result, they argue that financial regulation needs to move into a more global, macro-prudential direction. However, most of the…
NEX has launched a solution to support the EMIR Regulatory Technical Standards (RTS) rewrite as part of its regulatory reporting business. Due to come into effect on 28 October 2017, ESMA’s EMIR RTS rewrite aims to improve the transparency of the OTC derivatives market and reduce associated risks such as the mandatory clearing of some asset…
Clearstream has announced the rollout of securities lending into OneClearstream as part of the ICSD’s effort to harmonize connectivity channels, streamline its custody network and improve its asset servicing, collateral management and securities lending services. The latest securities lending feature is ASL principal. This move follows Clearstream’s TARGET2-Securities (T2S) migration in February. The migration to the T2S…
Euronext is to renew its agreement for derivatives clearing with LCH’s CCP and become a minority shareholder. At the same time, the pan-European exchange announced it is terminating its derivatives clearing agreement with Intercontinental Exchange. The agreement covers the clearing of financial derivatives and commodity derivatives for a period of 10 years. Its long term…
ESMA has published the responses received to its consultation on draft technical advice, implementing technical standards and guidelines under the MMF (Money Market Fund) Regulation. Read the responses
In a report to Congress, the SEC wrote that evidence for the impact of regulatory reforms on market liquidity is mixed, with different measures of market liquidity showing different trends. Many of the observed changes in these measures are consistent with the combined impacts of several factors besides new rules and regulations, including, among others, electronification of markets,…
Research from the Federal Reserve Bank of New York suggests that the implementation details of financial regulations can have important implications for global financial markets. Differences in implementation of the leverage ratio in the US compared to Europe appear to have a significant impact on the US repo market. Another important lesson is that financial…
The Federal Reserve Bank of New York’s Open Market Trading Desk is conducting a small value contingency securities lending operation for the purpose of testing its contingency operation infrastructure. The small value contingency operation will be conducted in addition to the regularly scheduled securities lending operation, and will occur on Thursday, August 10, 2017, beginning at 12:30 PM…
For the first time since the 2008 financial crisis, financial institutions have begun to reduce headcount in compliance. And while it is impossible to determine any one specific driver of this rollback, it is likely that as the volumes of fines levied in the sector abates—after reaching a staggering cumulative total of $321 billion—senior management may see an opportunity…
Banks in Hong Kong are still waiting for new global rules to be finalized, and as a result, hoarding cash rather than returning it to investors, or making use of it in more profitable ways. Local lenders likely to be more affected than larger Hong Kong banks, due to lower capital levels and less expertise. Last…
Reuters has announced a “trio of partnerships” that provides customers the resources to grow managed accounts revenue, and bolsters portfolio of service provider partnerships. Agreements with FolioDynamix, Helix Financial Systems, and Vestmark mark over 150 service providers Thomson Reuters offers North American wealth management customers. The addition of these three firms to the partner roster…
Nex Markets reported a 35% increase in European repo volumes to €228 billion in July. US repo lifted slightly 7% to $225.2 billion. NEX Electronic Markets Volumes – July 2017 Average daily volume (in USD billions, single count) July YoY% change June MoM% change 12 Months ended 31 July % change 2016 2017 2017 2016 2017 US Treasury 153.8…
OneChicago, a securities finance exchange, today announced its July 2017 volume of 1,425,769, an increase of 67% year-over-year. July 2017 highlights include: On July 24, 2017, OneChicago launched its new No Dividend Risk Friday Futures (NDR Friday Futures). NDR Friday Futures settle to stock on a T+3 basis. (T+2 starting in September) OneChicago is a…
Biggest African bank expects to have five clients by year end Lender adds brokerage to global markets unit with two hires Standard Bank plans to start a prime brokerage next month to benefit from regulatory changes in South Africa it expects will boost the hedge fund industry. The bank anticipates having five hedge-fund clients by…
There’s a good chance your credit card, floating-rate mortgage, car loan and even the investment funding for the company where you work are all influenced by an arcane interest rate known to market professionals as Libor. Once called the London interbank offered rate, Libor is meant to reflect the interest rate that large banks must…
The Basel Committee on Banking Supervision will postpone their next meeting in another bid to agree on global capital rules, taking more time to try to overcome objections from European banks to minimum capital levels, people familiar with the talks said. The next meeting of the BCBS was set for mid-September but it is now expected…
The European Securities and Markets Authority (ESMA) has published an opinion to the EU Commission, Council and the Parliament setting out possible clarifications of legislative provisions under the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive. The suggested clarifications relate to the asset segregation requirements in case of…
The FDIC issued a guidance document for businesses ahead of the change of regular settlement cycle from T+3 to T+2 for many US securities including equities, corporate bonds, unit investment trusts—and financial instruments composed of these products—when these securities are traded on the secondary market. The change comes into effect September 5. These rule changes, made in conjunction…
ICE intends to keep the interest rate benchmark open for good despite UK regulators’ plans to bring the system to an end, and believes it has turned the scandal-hit index into a sustainable, modern part of the financial system. One option which some financiers want to use is SONIA, the sterling overnight index average. But…
In autumn, Clearstream will apply for new licenses to operate under the Central Securities Depositories Regulation (CSDR). CSDR obligations require Europe’s CSDs to submit their application files to local regulators by 30 September 2017. Authorisations are expected to be granted from mid-May 2018 onwards. This will be a first step to even further bolster safety…
BOSTON, July 27, 2017 — Fidelity Clearing & Custody Solutions (FCCS) — the division of Fidelity Investments® that provides clearing and custody services to registered investment advisors (RIAs), broker-dealers and family offices — today announced that it has entered into strategic relationships with U.S. Bank and Goldman Sachs to provide access to loans for eligible…
In a speech at Bloomberg in London, Andrew Bailey examined important questions about the future of LIBOR, and commented that while significant improvements have been made to since April 2013, the absence of active underlying markets raises a serious question about the sustainability of the LIBOR benchmarks that are based upon these markets. He added that panel…
The International Organization of Securities Commissions (IOSCO) released a report on the progress jurisdictions have made in adopting legislation, regulation and other policies in relation to IOSCO’s Recommendations Regarding the Protection of Client Assets (the 2014 Report or the Principles). The Principles outline: • The intermediary’s responsibility to ensure compliance with rules and regulations governing client assets, including the development…
CHICAGO, July 26, 2017 /PRNewswire/ — Following the Alternative Reference Rate Committee‘s (ARRC) recent recommendation that the broad Treasuries repo financing rate should serve as the reference rate in certain new U.S. dollar derivatives and other financial instruments, CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it will develop futures and options on…
KBZ Bank and Yoma Bank have entered into the first repo transaction in Myanmar. An overnight test trade of K1 billion (USD$720.3k) and weekly test trade of K500 million between the two banks on July 24 was successful. Settlement was conducted through CBM-NET, the Central Bank of Myanmar’s new clearing and settlement system. The move is…
Calypso Technology, a leading provider of capital markets and investment management software, announced today that it has acquired a minority stake in the capital of Sernova Financial, a provider of Cloud-based clearing and post trade services. The merged activity is expected to boost investor participation in centralized clearing. Powered by the Calypso Cloud platform, Sernova…
Bloomberg has upgraded the legal status of its credit trading business in Europe, falling into line with rivals as they prepare for new rules that will revamp the region’s markets. The US data and information group is among several of Europe’s big trading venues that have begun rolling out their new systems five months ahead…
Lending out ETFs is where institutions and individuals could be making a lot more money. While providers of exchange-traded funds battle for customers by offering the lowest fees on their products, there’s another way of reducing the cost of owning them where demand is booming. It’s the lending market, where institutions have long buttressed their bottom…
Regulators say the cost of research is in bid-offer spread Industry warns of less coverage, higher costs under MiFID II European bond investors are stuck in a quandary: how much should they pay banks for credit research after insisting for years that it has no price? With less than six months left before the start date…
Macropru is new. Although many countries have now used macroprudential tools, there is no well-established guidebook to help policymakers develop their reaction functions. The principles behind macroprudential strategy are still being explored, with recent speeches by Alex Brazier, Vitor Constancio, and a review by the IMF,FSB & BIS. This post illustrates how the balancing act at the heart of…
Euroclear released its figures for the first half of 2017, with record collateral outstandings of €1.2 trillion and increased investment in regulatory-driven and cyber security initiatives. Client assets held in safekeeping increased to €28.4 trillion and the group processed securities worth a total value of €369 trillion, benefitting from buoyant conditions in the markets served….
The European Securities and Markets Authority (ESMA) has published an opinion to the European Commission, the Council, and the Parliament (EU institutions) under Article 34 of the ESMA Regulation. The purpose of the opinion is twofold: to provide an EU framework with strong client asset protection, especially in insolvency, for the safe-keeping of assets which are, in…
The Bank of England has published a consultation Paper (CP) which sets out the Prudential Regulation Authority’s (PRA’s) proposals on a cash flow mismatch risk (CFMR) framework and other PRA methodologies for assessing firms’ liquidity risk, under the Pillar 2 liquidity framework. This CP is relevant to UK banks, building societies and PRA-designated investment firms. Of note to…
Counterparties benefit from execution at or near UK base rate over June quarter-end Elixium offered average Bid/Offer spreads 3bps around mid vs reported 40-50 bp spreads in traditional markets for buy side counterparties A number of counterparties trading regularly Counterparty list continues to expand – liquidity building Elixium, the leading global all-to-all secured financing and…
Interest rate benchmarks should in future be based on actual market transactions and not banks’ judgments, Bank of England Governor Mark Carney said in minutes of a meeting at the BoE’s Roundtable on Sterling Risk-Free Reference Rates. In the aftermath of the LIBOR fixing scandal, the BoE and other central banks started considering alternatives based on…
The recent disappearance of a five-year maturity gap from the set of bonds deliverable to the Chicago Board of Trade Treasury bond futures has resulted in a distinctive configuration, whereby a single T-bond will have the shortest remaining maturity in the delivery basket of bonds for a five-year period. This situation would be inconsequential were…
A six-year push to impose a tax on financial transactions in Europe may have run its course, with Germany and France dragging their feet as they prepare for Brexit and a redrawing of the financial map that has already begun. French Finance Minister Bruno Le Maire said earlier this month that Brexit could bring “thousands…
The Bank of England has developed a model of dealer intermediation in bond markets that takes account of how changing regulatory requirements for banks since the financial crisis, in particular, the introduction of minimum leverage ratio requirements, affect the cost and ability of dealer banks to provide intermediation services. The framework considers two distinct dealer…