Nomura won an Insurance Risk innovation award for 2014 and we offer our congratulations. The interesting part is what they did to earn the award. This is part of an…Read More
Fed releases request for public comment on regulating GE Capital. These rules will keep GECC busy for a while.
The Federal Reserve just came out with a request for public comment on the regulation of General Electric Capital Corp (GECC) as a Sifi, “Application of Enhanced Prudential Standards and…Read More
Federal Reserve Governor Daniel Tarullo gave a speech last week on liquidity regulation at The Clearing House 2014 Annual Conference. He laid out some pretty big themes, including the value…Read More
Manmohan Singh, the IMF economist, has published a new paper “Limiting Taxpayer “Puts”—An Example from Central Counterparties” (IMF Working Paper WP/14/203), November 2014. We have long admired his work on…Read More
Corporates: how to invest their cash? Is non-intermediated access to centrally cleared tri-party repo coming?
Two articles on how corporates invest their cash caught our attention. Both were published on November 3, 2014. The first is from the Wall Street Journal “New Rules, New Corporate…Read More
The Bank of England has just updated the Sterling Monetary Framework “Red Book”, adding explicit language about providing liquidity support to CCPs. This new liquidity backstop makes sense, but its easy…Read More
We spotted this visual guide to the Supplementary Leverage Ratio (SLR) in the Harvard law School Forum. It was produced by the law firm Davis Polk and is great background…Read More
An article in Risk by Lukas Becker, dated Oct. 1st “Banks avoiding covered bonds for LCR buffer over liquidity fears” caught our attention. For those not familiar with covered bonds – they are…Read More
The topic of netting for repo, securities lending and prime brokerage has been alternately praised and attacked in financial markets. Proponents argue that it strengthens risk management by encouraging safe,…Read More
The latest incarnation of the Liquidity Coverage Ratio (LCR) rules were released. “Liquidity Coverage Ratio: Liquidity Risk Measurement Standards” clocks in at 399 pages – there is a lot minutiae…Read More
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The Federal Reserve’s Daniel Tarullo, in testimony today before the US Senate’s Committee on Banking, Housing, and Urban Affairs on Dodd-Frank implementation, had some tough words for banks that rely…Read More
The European Repo Council just published their semi-annual survey of European repo market participants. This is always a great piece of work. There is an overhang to this year’s figures…Read More
TRS as the next financing tool? Reuters and the FT have the story and we have some conclusions (Finadium subscribers only)
A revealing article in the Financial Times last week, “Goldman to sell up to €10bn bonds with new swap,” by Tracy Alloway and Michael Mackenzie, discussed Goldman’s plans to get…Read More
WSJ writes about increase in bank UST positions being a Volcker Rule dodge. We wonder if it might be about LCR compliance?
A July 21st article in the Wall Street Journal “The Volcker Risk Bubble” by John Carney described a study by economists Jussi Keppoy and Josef Kortez about how banks are taking…Read More
A series of conversations over the last two months have crystalized for us the idea of the Balance Sheet Haves versus the Balance Sheet Have-Nots. We now have enough evidence…Read More
In the last two posts on Single Treasury Futures (STFs), we reviewed the structure of the instrument as well as who might use them. In this post we will look…Read More
A June 24th article in the ISDA blog derivatiViews “A MIFID brainteaser: define liquidity” caught our eye. It explains how the European Securities and Markets Authority (ESMA) is thinking about what is…Read More
Finadium has released a new report on strategic planning for non-cleared derivatives risk-based margining. This report is publicly available with free registration, courtesy of Murex. Continue readingRead More
Last week there was an interesting post in the New York Fed’s Liberty Street Economics blog. Entitled “What’s Your WAM? Taking Stock of Dealers’ Funding Durability” by Adam Copeland, Isaac…Read More
OTC Derivatives Market Notional Tops $700 trillion. But Gross Credit Exposure — the number to watch — drops to $3 trillion.
The global derivatives market is undoubtedly large. In the BIS “Statistical release: OTC derivatives statistics at end-December 2013” (May, 2014) the total derivatives market, as of the end of December,…Read More
The fall in corporate bond liquidity has been well documented. Dealer inventory and market liquidity has plummeted in spite of enormous issuance. All that paper seems to be getting put…Read More
The Basel Committee on Banking Supervision has released 48 comment letters in response to its consultative document, “Basel III: the Net Stable Funding Ratio,” published January 12, 2014. These letters…Read More
A recent Basel Committee document revisited a big unanswered question in counterparty credit limit exposures: what should the limit be to CCPs? We evaluate the recent Basel position, provide some…Read More
Can hedge funds get a break? It looks like they are not getting much love from LCR or NSFR.Continue readingRead More
This is our second post on the recently published ISDA 2014 Margin Survey. The part of the ISDA survey on collateral rehypothecation was really interesting. It all comes down to…Read More
The Net Stable Funding Ratio (NSFR) and repo market liquidity: A Basel accident or an effort at extreme risk mitigation?
On the 7th of April, Risk Magazine published a piece by Lukas Becker entitled “Repo Desks Up In Arms About NSFR.” The article explains that Basel Committee on Banking Supervision’s…Read More
“Matching Collateral Supply and Financing Demands in Dealer Banks” in the NY Fed’s Economic Policy Review. They really don’t like repo netting.
A fascinating article appeared in the NY Fed’s March 2014 (Volume 20, Number 2) Economic Policy Review. “Matching Collateral Supply and Financing Demands in Dealer Banks” by Adam Kirk, James…Read More
Is the talk of enormous collateral needs — and an impeding collateral shortage — based on reality? We are starting to wonder…and have some interesting numbers to look at. Continue…Read More
Recent speeches by US and UK regulators support the idea of regulatory “Balkanization,” or multiple regulatory rules and jurisdictions covering the same market participants and activities. This seems like backwards…Read More
Below is the introductory presentation made at yesterday’s Finadium 2014 Conference, “Innovating for the Basel III and Dodd-Frank World.” Continue readingRead More
Some time ago we posted Now Everyone Can Be a SIFI, a look at new FSB proposals expanding the definition of a Significant Financial Institution. That’s the regulatory part. Now…Read More
The BIS published their long awaited update to capital rules and the securities financing world is cheering. “Basel III leverage ratio framework and disclosure requirements” (January, 2014) permits netting of…Read More
Reading the news this morning we were struck by how far Shadow Banking has spread into the popular financial lexicon. We point out five recent observations from the spot-on to…Read More
Following the initial reactions of regulators to protect market stability and dial down risk, we are seeing several points suggesting that the tide is turning: maintaining market liquidity is being…Read More
This conversation keeps coming back around and we’re not yet satisfied with the conclusions that we are hearing. Most recently, Fed Governor Jeremy Stein brought it up again. The tricky…Read More
Tuesday news roundup: modeling risk assets, illiquid collateral, EU money markets and CCP transparency
This edition of News Roundup covers some important issues in securities finance and regulation, including how banks model risk assets, posting illiquid collateral for bilateral trades, the ECB’s money market…Read More
The Bank of England may have gotten into the collateral transformation business…will the Fed follow?
Several news sources reported on last week’s speech by Mark Carney, the former Canadian central banker, now head of the Bank of England. Governor Carney spoke at a function celebrating…Read More
The Federal Reserve came out with their LCR proposals today. Comments on the 100 page plus document are due back by January 31, 2014. We took a look and have…Read More
Eurex interview with Finadium: “Market participants are most concerned about netting of counterparty exposures”
Eurex Clearing conducted an interview with Josh Galper of Finadium to discuss the recent Finadium research report, “A Cost/Benefit Analysis Roadmap for Securities Lending CCPs.” Given the recent market interest…Read More
White paper argues up to 97% savings from using a securities lending CCP, but best to look a little closer before repeating those figures
In a move that has both marketing and political implications, SL-x hired Promontory Financial Group, staffed with a substantial number of senior ex-regulators, to write a white paper in favor…Read More
The CFTC and liquidity rules for DCOs: do they need committed repo facilities for their US Treasuries?
There is a battle brewing between the CFTC and DCOs over collateral liquidity. And its impact on repo will potentially be enormous. Continue readingRead More
There was an interesting article in September 28th IFR on equity repo: “Repo dislocation hits delta one desks” by Helen Bartholomew. We think it is worth a read. Continue readingRead More
Why gross up exposures for fully collateralized transactions? The ICMA and ISLA respond to new Leverage Ratio proposals.
Two comment letters last week on the Leverage Ratio from ICMA and ISLA draw important attention to how projected Basel III capital rules impact exposure netting. With netting, banks are…Read More
Finadium held its London repo event this past Thursday, and we thought it went very well – many thanks to the panelists and attendees. Below we offer final notes and…Read More
A comment made by a recent panelist caught our attention: would brokers be better off if they were forced to spin off from banks? So far the attention seems to…Read More