Posts by Josh Galper

Federal Reserve, Liberty Street Economics

The Value of Opacity in a Banking Crisis – Liberty Street Economics Haelim Anderson and Adam Copeland During moments of heightened economic uncertainty, authorities often need to decide on how…

Opalesque: Impact of the Fed’s programs on credit markets

April 2, 2020

Credit Markets, Federal Reserve, Finadium, Opalesque

Interview with Josh Galper, Managing Principal, Finadium The Federal Reserve said last week it would launch several several programs to “support households, businesses, and the U.S. economy overall in this…

BIS: Leverage and margin spirals in fixed income markets during the Covid-19 crisis

April 2, 2020

BIS, Leverage, Margin, US Treasuries

Key takeaways For a two-week period in mid-March 2020, government bond markets experienced uncharacteristic turbulence, sometimes selling off sharply in risk-off episodes when they would normally attract safe haven flows. Evidence in…

Analysis of the Fed’s decision to exempt US Treasuries from the Supplementary Leverage Ratio

April 1, 2020

Federal Reserve, Supplementary Leverage Ratio, topstory, US Treasuries

Federal Reserve, Regulatory, Repo

The Fed announced today a major change in the calculation of the Supplementary Leverage Ratio, allowing US regulated banks to exempt US Treasuries in the denominator of the formula through…

OCC seclending CCP activity up 2% in March 2020 year over year

April 1, 2020

CCP, OCC, Securities Lending

The average daily loan value at OCC in March 2020 was $76,174,841,455 a 2.03 percent increase compared to March 2019. Securities lending CCP activity increased by 4.04 percent in new…

BIS: Dollar funding costs during the Covid-19 crisis through the lens of the FX swap market

April 1, 2020

BIS, dollar funding, FX Swaps

Key takeaways Since the start of the Covid-19 pandemic, indicators of dollar funding costs in foreign exchange markets have risen sharply, reflecting both demand and supply factors. The demand for…

DataLend launches daily securities finance market overview

March 31, 2020

DataLend, securities finance, Securities Lending

Equities data for March 30, 2020 For more DataLend updates, visit https://datalend.com/datalend-daily-market-overview/

Fed launches temporary repo facility for foreign monetary authorities’ US Treasury holdings

March 31, 2020

Federal Reserve, Repo, US Treasuries

The Federal Reserve on Tuesday announced the establishment of a temporary repurchase agreement facility for foreign and international monetary authorities (FIMA Repo Facility) to help support the smooth functioning of…

FT: Regulators across Europe clash over bans on short selling

March 31, 2020

Europe, FT, Short selling

France, Spain and Italy issued one-day prohibitions against betting on falling share prices for selected companies — and then longer bans of between one and three months, applied to all stocks…

FT: Wobbles in collateralised loan obligations pose problems for lenders

March 31, 2020

CLOs, FT

Lenders on both sides of the Atlantic have upwards of 100 open credit lines to vehicles known as collateralised loan obligations, which are among the biggest sources of funds for businesses…

Forecasting a great central bank debt eradication program

March 31, 2020

Central banks, Interest rates, Regulatory

Central Banks, Federal Reserve, government debt, MMT, topstory

When a central bank prints money to buy the bonds of its own government, a loop gets created whereby the Treasury issues paper, the central bank buys it, the Treasury…

Risk: Asia CCPs forced to hike margins rapidly during equities rout

March 30, 2020

Asia, CCPs

Asia’s largest clearing houses had to hike margins dramatically during the March coronavirus equities rout, forcing clearing members to meet large intraday margin top-up calls – and vindicating long-held concerns…

Alphacution: Parplus demise attributed to equity collateral, variance swaps and Ronin relationship

March 30, 2020

Alphacution, equity collateral, Parplus, Ronin, variance swaps

Parplus Impersonates LTCM, Drags Ronin Down The overlay – the “plus” in Parplus – is believed to have been variance swaps comprised of strips of short VIX options (at the…

Basel Committee postpones Basel III implementation

March 30, 2020

The Basel Committee’s oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), has endorsed a set of measures to provide additional operational capacity for banks and…

The Euro project is also under attack from COVID-19 (Premium)

March 30, 2020

ECB, Europe, Regulatory

COVID-19, Euro, European Central Bank, topstory

Strong arguments have emerged for why the Euro will not survive the COVID-19 crisis and if it does, why economic and fiscal policy in Europe would be changed for a…

FIS Astec shows European equity seclending volumes up 110% since Feb 1, US equities seclending up 16%

March 27, 2020

FIS, Securities Lending

The world is getting shorter: the last two months have seen asset borrowing volumes rise fast. European equity volume is up 110 percent since February 1, with US equities rising…

US regulators speed up adoption of SA-CCR, extend CECL

March 27, 2020

CECL, Federal Reserve, SA-CCR

The federal bank regulatory agencies today announced two actions to support the U.S. economy and allow banking organizations to continue lending to households and businesses: Allowing early adoption of a…

Standard Chartered creates new Financing and Securities Services unit

March 27, 2020

Standard Chartered announced today that it is combining Securities Services (currently within Transaction Banking) with Portfolio Risk Management in the Financial Markets business to form the new Financing and Securities…

ESMA launches consultation on EMIR REFIT trade reporting

March 27, 2020

EMIR Refit, ESMA, Trade repositories

This Consultation paper covers the technical standards on reporting requirements, procedures to reconcile and validate the data and access by the relevant authorities under EMIR REFIT. Additionally, ESMA proposes to…

21 industry associations ask regulators to delay Initial Margin phase-in timeline

March 27, 2020

In response to the COVID-19 pandemic, ISDA submitted a letter on behalf of 21 industry associations and their members requesting BCBS, IOSCO and global regulators to suspend the current timeline…

Bloomberg: Japan Repo Rates Hit Most Expensive on Record in Dollar Rush

March 26, 2020

Bank of Japan, Bloomberg, Japan, Repo

Rates in Japan’s repurchase market — where bond holders connect with investors looking to borrow them — hit a record Tuesday. The introduction of cheaper, more regular dollar-swap auctions has…

ABN AMRO Clearing posts $200 million net loss on closing out Parplus Partners positions

March 26, 2020

As a result of the unprecedented volumes and volatility in financial markets following the outbreak of COVID 19, ABN AMRO Clearing will incur a USD 250 million pretax incidental loss…

Hazeltree reports hedge fund leverage down from 230% pre-crisis to under 200% in March 2020

March 26, 2020

HazelTree, hedge funds, Leverage

Are we living through another 2008 crisis? Is it a deeper crisis? How long will it last? Are you betting that the safeguards put in place to protect against global…

Banking Law: Fed Beats Narrow Bank Lawsuit

March 26, 2020

Federal Reserve, Narrow Bank

A New York federal judge on Wednesday threw out a lawsuit from a “narrow bank” startup that alleges federal regulators have unfairly blocked it from opening a business-critical account at…

ESMA clarifies position on SFTR backloading

March 26, 2020

ESMA, SFTR

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has issued a revised version of its 19 March Public Statement on coordinated supervisory actions on the application…

Six charts you should see this week (Premium)

March 26, 2020

Collateral Management, Federal Reserve, Money Market Funds

collateral, Federal Reserve, Repo, topstory

Lots of unprecedented market movements this week. Here are a number of charts that collateral trading professionals should review. The big question is how far have the Fed’s liquidity programs…

Bank of Japan announces additional measures to stabilize repo and securities lending markets

March 25, 2020

Bank of Japan, Repo, Securities Lending

The Bank of Japan released “Market Operations toward the End of March” and announced measures to maintain stability of the repo market on March 13. In addition, the Bank has…

Reuters: Fed hires BlackRock to help execute mortgage-backed securities purchases

March 25, 2020

Blackrock, Federal Reserve, mortgages

Over the past week, the central bank has released a volley of measures to boost liquidity in the financial markets and get cash into the hands of small businesses and…

Bank of England launches Contingent Term Repo Facility

March 24, 2020

Bank of England, Repo

In response to financial market conditions the Bank of England is today activating the Contingent Term Repo Facility (CTRF) – a temporary enhancement to its sterling liquidity insurance facilities. This…

Agency REITs see margin stress in mortgage and repo markets

March 24, 2020

FT: The mortgage Reits entered the coronavirus crisis owning an estimated $500bn of bonds backed by property loans and have come under pressure because they use short-term borrowings to squeeze…

SEC issues temporary rules allowing mutual funds to borrow funds from affiliates and to make collateralized loans

March 24, 2020

coronavirus, mutual funds, sec

The current outbreak of coronavirus disease 2019 (COVID-19) has disrupted activities around the world. In light of the current situation, we are issuing this Order providing exemptions from certain requirements…

ESMA approves Austria’s short selling ban

March 24, 2020

Austria, ESMA, short selling ban

In particular, FMA notifies that the concerned measure bans any legal or natural person from entering into or increasing a short sale or a transaction other than a short sale…

Initial securities lending impacts from the coronavirus (Premium)

March 24, 2020

Securities Lending

Agent Lenders, cash collateral, prime brokers, Securities Lending, topstory

While agent lenders report that securities lending volumes are up (adjusted for the fall in equity prices), there are also reasons to heighten readiness for some hard to manage aspects…

Fed revises TLAC requirements for US banks

March 23, 2020

Federal Reserve, TLAC

In light of recent disruptions in economic conditions caused by the coronavirus disease 2019 (COVID-19) and current strains in U.S. financial markets, the Board is issuing an interim final rule…

What’s illiquid? Tracking the credit crunch impact on money market funds

March 23, 2020

Federal Reserve, Money Market Funds, Regulatory

BNY Mellon, cash management, Federal Reserve, Goldman Sachs, money market funds, topstory

Authors of the rules that went in to protect money market fund investors after 2008 must be feeling pretty vindicated about now. Credit markets are freezing and there are fire…

Federal Reserve announces more extensive measures to support US markets

March 23, 2020

coronavirus, Federal Reserve

The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time. The coronavirus pandemic is causing…

Coronavirus puts another dent in dollar’s role as reserve currency (Premium)

March 23, 2020

Liquidity Management, US

dollar liquidity, reserve currency, topstory, US

American’s economic competitors are seeing dollar liquidity stress this month as a sign to evaluate their plans: should they continue to rely on the dollar as their reserve and trading…

Treasury Borrowing Advisory Committee wants Fed to expand purchases including MBS

March 22, 2020

Federal Reserve, Treasury Borrowing Advisory Committee

Reuters: Members of the Treasury Borrowing Advisory Committee believe the central bank will need to take further drastic action to get credit into the hands of small businesses and American…

FT: BNY Mellon steps in to support money market fund after outflows

March 21, 2020

BNYM Mellon, Dreyfus, money market funds

BNY Mellon stepped in to support one of its money market funds amid sharp outflows from parts of the sector this week, buying $1.2bn of the fund’s assets so it…

Ronin LLC fails, positions auctioned by CME

March 21, 2020

CME Group confirmed that, pursuant to its rules, CME Clearing auctioned off portfolios of Ronin, LLC. The auction process was completed this morning, March 20, 2020. Though Ronin is a…

Bloomberg: Before Fed Acted, Leverage Burned Hedge Funds in Treasury Trade

March 21, 2020

basis trade, Bloomberg, hedge funds, Leverage, Repo

When coronavirus panic kicked off unprecedented turmoil in Treasuries last week, hedge fund leverage was lurking. The firms use borrowed money from the repurchase market for the popular basis trade,…

Six central banks increase frequency of dollar swap lines from weekly to daily

March 20, 2020

Bank of England, dollar swaps, Federal Reserve, Liquidity

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action…

Fed to provide liquidity for state and muni bonds

March 20, 2020

Federal Reserve, MMLF, munis

The Federal Reserve Board on Friday expanded its program of support for the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial…

Bank of England actions to combat coronavirus downturn

March 20, 2020

Bank of England, Basel III, coronavirus

Reuters: The Bank of England promised 200 billion pounds of bond purchases [Covid Corporate Financing Facility (CCFF)] and cut its key interest rate to 0.1% in a second emergency move…

FT: Two former London bankers convicted in first cum-ex scandal trial, jail sentences suspended

March 19, 2020

Two former London bankers were found guilty of tax evasion in the first German trial to rule on the legality of a controversial set of share trades that authorities claim…

Basel Committee assesses Hong Kong, Singapore and Indonesia implementation of the Net Stable Funding Ratio and large exposures framework

March 19, 2020

Basel Committee, Hong Kong, Indonesia, NSFR, Singapore

The Basel Committee on Banking Supervision has today published assessment reports on the implementation of the Net Stable Funding Ratio (NSFR) and the large exposures framework (LEX) in Hong Kong SAR (NSFR, LEX),…

Fed establishes dollar liquidity swap lines with nine other central banks, but not China

March 19, 2020

dollar liquidity swaps, Federal Reserve

The Federal Reserve on Thursday announced the establishment of temporary U.S. dollar liquidity arrangements (swap lines) with the Reserve Bank of Australia, the Banco Central do Brasil, the Danmarks Nationalbank…

Fed provides emergency support to Money Market Funds, creates new facility for asset purchases

March 19, 2020

Federal Reserve, money market funds, Money Markets

The Federal Reserve Board on Wednesday broadened its program of support for the flow of credit to households and businesses by taking steps to enhance the liquidity and functioning of…

ESMA postpones SFTR until 13 July 2020

March 19, 2020

ESMA, securities finance, SFTR