Securities Finance Monitor is producing a series of articles on Securities Lending CCPs commissioned by Eurex Clearing and Pirum. The articles are listed below, the most recent first.
September 22, 2015
The dizzying array of new regulation in financial markets is forcing change on all market participants. Securities technology vendors that think through not only today’s challenges but also tomorrow’s are best positioned as key partners for their bank and brokerage clients.
September 10, 2015
A recent survey of asset managers in securities lending showed that executives were interested in CCPs but lacked the information necessary to create a cost/benefit analysis and build their business cases. Part of this business case relies on data from a functional CCP, but other parts require an understanding of the main components. This article provides key points and a methodology for creating this analysis.
May 21, 2015
As banks, brokers and beneficial owners begin to get serious about signing on to Eurex Clearing’s Lending CCP, we evaluate what’s required to go live. We spoke with early participants and evaluated Eurex Clearing and Pirum documents on the boarding and integration phase, IT, legal and risk requirements.
January 13, 2015
2015 is shaping up to be the year of the securities lending CCP; banks, agent lenders and beneficial owners are all now preparing themselves for this important market move. While repetitive to say, it remains true that the more seriously banks look at capital, the more they are evaluating all available alternatives for capital cost management.
September 10, 2014
As securities lending CCPs gain momentum, a critical feature, perhaps the most important feature at this point, is their ability to accept beneficial owners as direct participants without having to post margin or contribute to the default fund. To paraphrase Bill Clinton’s 1992 campaign slogan, “its the beneficial owners, stupid.”
July 22, 2014
Securities lending CCPs are at the intersection of major changes to liquidity and leverage in financial markets. Aside from requirements for increasing bank capitalization, Basel III is introducing new liquidity metrics such as the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). These shake-ups have already begun to change relationships between borrowers and lenders in securities lending.
June 23, 2014
Beneficial owners are in a tough spot with securities lending CCPs. For years they have thought that CCPs were unattractive – loss of counterparty control, uncertain operations and too much margin were deal killers. Agent lenders were generally supportive of this view. But the market has fundamentally changed due to regulations, and that means that old ways of thinking are no longer sound for a successful lending organization. We look at five interrelated areas where beneficial owners should review their approach to CCPs: distribution, beneficial owner costs, agent lender costs, borrower costs and transactional pricing.