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Basel III

The future of global regulatory agencies in an era of fragmentation

October 31, 2019

Basel III, Financial Stability Board, IOSCO, Regulatory

Basel Committee, BCBS, Financial Stability Board, FSB, IOSCO, topstory

The Basel Committee on Banking Supervision (BCBS) is not a regulator – it is set up to produce frameworks that individual jurisdictions then adopt – but even so, its directives…

Winners and losers from the Basel Committee’s Leverage Ratio changes on margin and window-dressing

July 1, 2019

Basel III, Regulatory

Basel Committee, Leverage Ratio, OTC derivatives, Repo, SA-CCR, securities financing transactions, topstory

The Basel Committee on Banking Supervision (BCBS) issued changes to the Leverage Ratio last week that will have impacts to the derivatives and securities finance industries. Like any regulation, this…

Finadium: The US SA-CCR, Derivatives and Securities Finance Competition

May 13, 2019

Basel III, Regulatory, US

Basel III, CEM, SA-CCR, securities finance, topstory

New US balance sheet rules for OTC derivatives come into force in January 2020. The US Standardized Approach for measuring counterparty credit risk, better known as SA-CCR, applies Basel III…

For US banks, is CCAR or the Leverage Ratio the binding constraint on securities finance

February 20, 2019

Basel III, Federal Reserve, Regulatory, US

CCAR, Leverage Ratio, topstory, US

The Federal Reserve’s Comprehensive Capital Adequacy Review (CCAR) stress test are more of a binding constraint on bank’s use of capital than the Leverage Ratio for some activities, for example…

Comments on whether the US NSFR will be a binding constraint on securities finance

February 6, 2019

Basel III, Regulatory, US

NSFR, Regulation, topstory, US

The final US Net Stable Funding Ratio (NSFR) rules have been expected for some time. Although US regulators produced draft NSFR rules in 2016, the market has still been in…

How final are the Basel Committee’s market risk rules?

January 17, 2019

Basel III, Regulatory, Risk Management

Basel Committee on Banking Supervision, BCBS, Leverage Ratio, Market Risk, topstory

The Basel Committee’s “Minimum capital requirements for market risk” is a statement of finalization for important bank risk management rules. But is this really a finalization or another stop on…

Europe readies for CRD-V (Premium)

November 14, 2018

Basel III, Europe, Regulatory

Basel III, CRD-V, Europe, Leverage Ratio, topstory

The European Parliament and the European Council are in discussions to amend the Capital Requirements Directive and Regulation rules (CRD-IV) to create CRD-V. This latest iteration recognizes recent Basel Committee…

The ECB on repo in the Leverage Ratio: taking a strong stand today may not turn out well tomorrow

October 8, 2018

Basel III, Europe, Regulatory

ECB, Leverage Ratio, Repo, topstory

The ECB’s publication last week of “The implications of removing repo assets from the leverage ratio” creates a conundrum. On the one hand, the findings stick true to the Basel…

How the Basel change on settled-to-market will impact balance sheets (Premium)

September 26, 2018

Basel III, Regulatory

Basel Committee, LCR, Leverage Ratio, NSFR, Settled to market, topstory

The Basel Committee has issued a new FAQ on how banks need to treat settled-to-market derivatives transactions in the Liquidity Coverage Ratio and Net Stable Funding Ratio. This will renew…

Defining “strong regulation” for safe banks

August 14, 2018

Basel III, Regulatory

Europe, Regulation, topstory, US

In an interview with Welt am Sonntag last week, ECB Executive Board Member Sabine Lautenschläger argued that strong bank regulation leads to strong banks. US regulators would agree but have…

Where do SFTs fall in the FRTB? There appears to be more than one answer

June 26, 2018

Basel III, Regulatory

FRTB, Regulatory, Repo, securities finance transactions, Securities Lending, topstory

In this article we look at arguments for where Securities Finance Transactions (SFTs) fall in the Fundamental Review of the Trading Book (FRTB). The answer is either the trading book…

Notes from CASLA: NSFR, Corporate Bonds and Cannabis (Premium)

June 12, 2018

Basel III, Corporate Bonds, Securities Lending

cannabis, CASLA, Corporate Bonds, NSFR, single counterparty credit limits, topstory

The Canadian Securities Lending Association (CASLA) held its annual conference last Thursday. This was a very well put together event that benefitted from strong attendance including Canadian, US and a…

Analysis of new regulatory thinking at the Federal Reserve (Premium)

May 8, 2018

Basel III, Federal Reserve

Federal Reserve, Hoover Institution, Quarles, Tarullo, topstory

What a difference an administration makes. Under former Vice-Chair for Financial Supervision Daniel Tarullo, the Federal Reserve operated with a clear cut vision of financial regulation that viewed leverage as…

Don’t delay: it’s time to adopt SA-CCR

May 7, 2018

Basel III, Regulatory

CEM, SA-CCR, topstory

The Standardised Approach to measuring counterparty credit risk (SA-CCR) was proposed in 2014 by the Basel Committee as an alternative to the Current Exposure Method (CEM) for measuring derivatives risk.…

No one is happy about US deregulation except these people (Premium)

April 24, 2018

Basel III, Dodd-Frank, ECB, Federal Reserve, Regulatory, US

Basel III, deregulation, Dodd-Frank, ECB, House, Senate, topstory, US

As US deregulation moves into gear, international regulators are voicing their deep concern with the breakdown of the attempted finalization of Basel III. Meanwhile, the US Congress pushes ahead while…

Fed’s Randal Quarles outlines face of banking regulation to come while the Fed issues a new SLR proposal

April 12, 2018

Jonathan Cooper

Basel III, Dodd-Frank, Federal Reserve, Liquidity Management, Regulatory, Systemic Risk, Uncategorized

Federal Reserve, Leverage Ratio Volcker Rule, Randal Quarles, TLAC, topstory

Randal Quarles, Vice Chairman for Supervision at the Federal Reserve spoke last month at the American Bar Association Banking Law Annual Meeting. The speech, “Early Observations on Improving the Effectiveness of…

The Basel Committee thinks there are five bank scenarios for fintech disruption; only one matters in capital markets (Premium)

February 21, 2018

Artificial Intelligence, Basel III, Big Data, Blockchain, Regulatory, Technology

AI, Basel Committee, disruption, fintech, technology, topstory

In a report released this week, the Basel Committee on Banking Supervision evaluated the implications of fintech developments for banks and supervisors. This healthy analysis came up with five scenarios…

Man on a mission: the Bundesbank’s Andreas Dombret has a clear vision of Europe’s financial future

February 20, 2018

Jonathan Cooper

Basel III, ECB, Europe, Regulatory

Andreas Dombret, Basel III, Brexit, Bundesbank, globalization, topstory

The Bundesbank’s Dr. Andreas Dombret, responsible for banking, financial supervision and risk control, is presenting a vision of Europe’s financial future that should be heeded. We track some of his…

Finadium Survey: Better Regulation for Europe’s Securities Financing Transactions

February 14, 2018

Basel III, Collateral Management, ECB, Europe, Repo, Securities Lending

Basel III, Europe, Finadium, Leverage Ratio, Liquidity Coverage Ratio, Repo, securities financing transactions, Securities Lending, topstory

European regulation of Securities Financing Transactions (SFTs) is having its desired effect, which is a near gold standard of risk management. Unfortunately, it’s at the cost of market vibrancy. A…

News Update: dividend taxes in Switzerland, the US and Germany; and what’s next for the Basel Committee (Premium)

January 30, 2018

Basel III, Europe, Regulatory, Tax, US

Basel Committee, Germany, Regulation, Switzerland, taxation, topstory, US

This week’s News Update is on taxation and regulation. There’s a lot going on in the world and the details matter. Here’s the latest from Switzerland, the US, Germany and…

A Proposal for Smart Regulation in European SFT Markets

January 25, 2018

Basel III, Collateral Management, Europe, Regulatory, Repo, Securities Lending

Europe, LCR, Leverage Ratio, Michael Cyrus, NSFR, Regulation, SFT, SFTR, topstory

In a post-crisis era, Europeans must focus on efficient and smart regulation in Securities Financing Transactions (SFT) to support competitive financial markets. This can be achieved but requires regulatory attention…

Success stories this week in securities finance (Premium)

January 18, 2018

Basel III, Dodd-Frank, Europe, Repo, Securities Lending, US

Dodd-Frank, Germany, ICMA, ISLA, LCR, topstory

After what seems like years of difficult news, we would like to publicly recognize situations and groups of people that are moving the collateralized trading markets in the right direction.…

The Minneapolis Fed wants a 15% Leverage Ratio and a 1.2% tax on secured financing. That’s one way to reduce risk…

January 16, 2018

Basel III, Regulatory, Shadow Banking, US

Federal Reserve Bank of Minneapolis, Leverage Ratio, Minneapolis Fed, Shadow Banking, systemic risk, TBTF, too big to fail, topstory

The Federal Reserve Bank of Minneapolis has released a plan to end Too Big to Fail (TBTF) on a comprehensive basis. The choice is again between strengthening bank balance sheets…

More firms get serious about real-time exposure management for collateral (Premium)

December 21, 2017

Basel III, CCP, Collateral Management, Technology

Baton, Citi, CME, collateral management, exposure management, Pirum, topstory

A press release from Baton Systems last week echoes what Pirum has been saying for a while: there is a significant amount of cash to be saved in real-time exposure…

The Basel Committee works to figure out sovereign risk on bank balance sheets

December 20, 2017

Jonathan Cooper

Basel III, Liquidity Management, Risk Management

Basel Committee, sovereign risk, topstory

Sovereign risk has proven to be a double edged sword. How much risk is there really, and should sovereign debt be included at face value in the Leverage Ratio? Or…

A quick primer on “settled-to-market” vs. “collateralized-to-market” in counterparty credit risk (Premium)

December 18, 2017

Basel III, CCP, Collateral Management, Derivatives

capital, CEM, collateralized to market, Leverage Ratio, Settled to market, topstory

CCPs have changed or are changing their rules on Variation Margin to allow “settled-to-market” (STM). This is a useful change that will save money, and complements the desire of firms…

Finalizing Basel III: the revised Leverage Ratio gets a thumbs down and really isn’t final anyhow

December 11, 2017

Basel III, Regulatory

Bank for International Settlements, Basel Committee, Basel III, Leverage Ratio, SFTs, Supplementary Leverage Ratio, Tier 1 capital, topstory

The Basel Committee on Banking Supervision released their “final” Basel III post-crisis reform documentation last week, and there is a lot to unpack. Already, the Quantitative Impact Study shows that…

Finadium webinar replay and slides: Implementing Change in 2018 (Premium)

December 7, 2017

Basel III, Collateral Management, Prime Brokerage, Repo, Securities Lending, Technology, Tri-Party Repo

collateral management, Finadium, Repo, Securities Lending, topstory

We delivered two client webinars today on implementing change in 2018. 2017 was a big year, with many moving parts in the collateralized trading markets across the business, regulation and…

What does “recalibrating” the Leverage Ratio mean?

December 7, 2017

Basel III, Regulatory

Basel III, Europe, Leverage Ratio, Supplementary Leverage Ratio, topstory, US

There has been a lot of talk lately about recalibrating the Leverage Ratio, especially in the US where the enhanced Supplementary Leverage Ratio (eSLR) of 5% for holding companies and…

Our thoughts on CCPs and repo market efficiencies

December 6, 2017

Basel III, CCP, Repo, RRP, Tri-Party Repo

Bank for International Settlements, BIS, DTCC, FICC, GCF, Repo, topstory, tri-party

The Bank for International Settlements (BIS) had a piece in their just-released Quarterly Review on CCPs and repo market efficiencies. The question is whether they help or hurt. This is…

Is the FRTB on semi-permanent hold?

November 29, 2017

Basel III, Europe, Regulatory, US

European Union, FRTB, regulatory arbitrage, topstory

The Fundamental Review of the Trading Book (FRTB) – part of the big Basel III master plan on bank balance sheet, market risk and operational risk management – may be…

CM2025: the physical market rebounds

It’s the year 2025. Following the passage of Dodd-Frank and related Basel III capital rules, banks did what they were supposed to do: they reduced Shadow Banking risk by cutting…

Finadium: European Prime Brokerage Survey: Customers, Capital and Business Models

November 15, 2017

Basel III, Liquidity Management, Prime Brokerage

Europe, Finadium, Prime Brokerage, topstory

This Finadium research report is a survey of European prime brokers’ thinking towards capital and clients. We investigate how much prime brokers are aware of their balance sheet requirements and…

Are carve-outs in national versions of the Leverage Ratio a good idea?

November 8, 2017

Basel III, Liquidity Management, Regulatory

carve-outs, Leverage Ratio, SLR, topstory

There has been discussion in recent months about the possibility of large carve-outs in the US Supplementary Leverage Ratio; this follows years of carve-outs in the European version of Basel…

Debating solutions to the US Supplementary Leverage Ratio problem (Premium)

November 1, 2017

Basel III, Derivatives, Liquidity Management, US

SLR, Supplementary Leverage Ratio, topstory, US, US Treasury

The US Supplementary Leverage Ratio (SLR) isn’t working very well, that much we know. As a non-risk based measurement of risk, it captures every asset with the same risk weighting…

Hong Kong, Singapore or EU post-Brexit: will Advanced Approach bank capital models be a consideration? (Premium)

October 25, 2017

Asia, Basel III

Advanced Approach, Basel III, capital costs, Hong Kong, Leverage Ratio, NSFR, Singapore, Standardized approach, topstory

The news that London-based banks are considering Hong Kong as a new APAC “booking entity” trading hub brings up an important qualification for banks looking for an expanded Asian base…

The Basel Committee’s “national discretion” for NSFR derivatives liabilities is not enough to justify implementation

October 10, 2017

Basel III, Regulatory

ASF, Basel Committee, NSFR, RSF, topstory

The Basel Committee on Banking Supervision has a couple of big problems related to the Net Stable Funding Ratio. First, they created terrible regulation that they now have to figure…

Our slides from the Oct 3 London event, “Market Competition, Europe and US regulations” (Premium)

October 4, 2017

Bank of England, Bank of Japan, Basel III, Europe, Liquidity Management, Regulatory, Repo, Risk Management, Securities Lending, US

Europe, Finadium, London, Regulation, tapering, topstory, US

Thanks to our clients who attended our event in London this week on market regulations and their impact on competition between the US and Europe. Our slides are available for…

The layering of regulatory cost on Securities Financial Transactions

September 19, 2017

Basel III, Collateral Management, Europe, Repo, Securities Lending

DekaBank, Europe, Leverage Ratio, Michael Cyrus, NSFR, regulatory cost, securities finance, SFTs, topstory

It is now part of financial textbook wisdom that collateralization is a favored tool to reduce unsecured exposures in financial systems and thereby promote systemic stability. However, in stark contrast,…

How fast could deregulation occur in US financial markets? Comments from Fed Vice-Chair Stanley Fischer suggest some answers

August 22, 2017

Basel III, Federal Reserve, Regulatory

Federal Reserve, Leverage Ratio, Regulatory, Stanley Fischer, topstory, US Treasury

While there may be some excitement in the air about US deregulation, last week Federal Reserve Vice-Chairman Dr. Stanley Fischer eviscerated critics of Dodd-Frank by saying that deregulation would be…

What kind of Fed Governor would Randal Quarles be? (Premium)

August 2, 2017

Basel III, Dodd-Frank, Federal Reserve, US

Federal Reserve, Quarles, Randal Quarles, Tarullo, topstory, US

Randal Quarles, former Carlyle Group Partner and Under Secretary of the Treasury for Domestic Finance, appeared before the US Senate Banking committee last week for a confirmation hearing to be…

TLAC bond requirements get tougher – will investors still want them?

August 1, 2017

Richard Stinchfield

Basel III, Corporate Bonds, Europe, Liquidity Management, Regulatory, Risk Management, Systemic Risk, unsecured funding

Bonds, Funding/Liquidity, regulatory capital, TLAC, topstory

Total Loss Absorbing Capital (TLAC) is a core element of the Basel regulatory capital regime, which sets minimum liquidity reserve standards for banks. Banks are now issuing qualifying debt instruments…

We offer a proposal for Simple, Transparent and Comparable securities finance

July 13, 2017

Basel III, IOSCO, Regulatory, Repo, Securities Lending, Securitization

ABCP, BCBS, Comparable, IOSCO, securities finance transactions, securitizations, Simple, topstory, Transparent

Last week the Basel Committee on Banking Supervision (BCBS) and IOSCO released a discussion paper on Simple, Transparent and Comparable (STC) short-term securitization, along with a companion report on capital…

Asian regulators officially delay Basel III’s FRTB

July 11, 2017

Asia, Basel III, Regulatory

Asia, Basel III, FRTB, Leverage Ratio, topstory

We’ve been expecting this for a while and it has finally happened: Asian regulators are saying they will delay Basel III implementation of the Fundamental Review of the Trading Book…

As the US gets serious about deregulation, what will Europe do?

June 29, 2017

Basel III, Europe, Regulatory, US

deregulation, Europe, topstory, US

Recent speeches by US regulators show an apparently sincere effort underway to reduce bank regulation. The biggest proposal out there – taking US Treasuries out of the Supplementary Leverage Ratio…

How important is balance sheet management in prime brokerage today? Look at compensation packages (Premium)

June 27, 2017

Richard Stinchfield

Basel III, Dodd-Frank, Hedge Funds, Prime Brokerage, Regulatory, US

bank capital, Leverage, Prime Brokerage, Regulatory, topstory

In our survey of US prime brokers released today, we looked at the relationship between balance sheet optimization with hedge fund clients and employee compensation. We followed the thinking that…

Here’s what no US Treasuries in the Leverage Ratio means for US banks and US repo (Premium)

June 26, 2017

Basel III, Dodd-Frank, Regulatory, Repo, US

Basel III, Repo, Supplementary Leverage Ratio, topstory, US Treasuries

The US Treasury’s report recommending that US Treasuries (UST) be removed from the US enhanced Supplementary Leverage Ratio (eSLR) has some direct and positive implications for US banks. Here’s a…

IBM and Promontory bring Watson AI to regulatory technology

June 21, 2017

Richard Stinchfield

Basel III, Big Data, Credit Exposure, Dodd-Frank, Fintech, Regulatory, Risk Management, Technology

artificial intelligence, Digital Reasoning, financial technology, fintech, IBM, Regulatory, topstory

IBM provided a briefing on a major new initiative, announced on June 14th, that they are bringing their Watson technology to the realm of regulatory compliance. Here is what we…

Title Transfer Collateral Arrangements – European and US rules

June 19, 2017

Richard Stinchfield

Basel III, Collateral Management, Derivatives, Europe, Re-Hypothecation, Regulatory, Repo, Securities Lending

Basel capital rules, MiFID II, Regulatory, title transfer collateral arrangement, topstory, TTCA

Title Transfer Collateral Arrangements (TTCA) are executed between parties engaged in bilateral securities lending, bilateral repo or bilateral derivatives. While these arrangements are not new, having been enshrined in regulation…

The Five Cs of Bank and Client Success in Securities Finance

June 15, 2017

Basel III, Cash management, CCP, Collateral Management, Derivatives, Hedge Funds, Investments, Repo

ALM, CCPs, collateral, Natixis, Repo, topstory

Today’s global investment banking market continues to be shaped by the need for innovation and synergies driven by an evolving regulatory landscape. We have identified the Five Cs for success…

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