CCP

CCP, Collateral Management, Derivatives, Market infrastructure, OTC Derivatives Clearing

collateral management, CSAs, Finadium, OTC derivatives, topstory

A push/pull situation between dealers, ISDA and the buy-side has reached a new crescendo in recent months as Basel Committee/IOSCO rules have forced a large-scale repapering of bilateral Credit Support…

EU relaxes derivatives rules – smart economic policy or a reaction to global competition?

May 8, 2017

CCP, Collateral Management, Derivatives, EMIR, Europe, Investments

CCPs, Clearing, collateral, derivatives, EMIR, Europe, topstory

The European Union last week proposed simpler and more efficient derivatives rules, a move that is widely accepted as helpful for a wide range of corporations, pensions and smaller banks.…

Finadium: Scenarios for the Next Collateral Crisis – download a free excerpt

May 4, 2017

CCP, Collateral Management, Derivatives, Investments, Liquidity Management, Market infrastructure, Regulatory, Repo, Technology

CCPs, Central Banks, collateral management, dealers, Regulatory, Repo, technology, topstory

A new research report from Finadium looks at scenarios for a full-blown collateral crisis that could arise over the next two years. These scenarios are all based on real-world situations…

Is the failed Deutsche Boerse/London Stock Exchange merger good or bad for European repo? (Premium)

March 29, 2017

CCP, Europe, Repo

CCPs, Deutsche Borse, Eurex Clearing, European Commission, LCH, London Stock Exchange, Repo, topstory

The European Commission soundly rejected the proposed merger of Deutsche Boerse Group and London Stock Exchange today, ending over a year’s worth of work and planning on a proposed integration.…

OFR publishes data on repo dealer netting with the buy-side on CCPs – is it worth the new costs? (Premium)

March 13, 2017

CCP, Repo, US

CCPs, netting, OFR, Repo, topstory

The OFR is in a great spot for data collection. With the strength of the US regulatory establishment, they can politely ask for the open books of repo dealers and…

Margin Optimization and the Cost of the Trade

February 9, 2017

CCP, Collateral Management, Derivatives, Technology

CCPs, collateral optimization, Margin, Margin optimization, OTC derivatives, technology, topstory

Banks have largely absorbed the Leverage Ratio and the Liquidity Coverage Ratio and are taking on the next challenge: maximizing their balance sheet efficiency in a return to profitability. One…

CCP deposits at the Fed: good theory but bad practice

November 30, 2016

CCP, Federal Reserve, Interest rates, Investments, US

CCPs, Federal Reserve, hedge funds, IOER, topstory

The WSJ’s Katy Burne published an article this week on CCPs that are being paid interest on large amounts of cash placed at the Fed. We covered this when the…

Thursday news roundup: The Fed on liquidity (AGAIN); CCP stress tests (Premium)

November 17, 2016

Basel III, CCP, cover 2, cover all, Federal Reserve, Regulatory

CCP, CFTC, Cover 2, Federal Reserve, Flash Crash, Liquidity, stress tests, topstory

We are big fans of Federal Reserve Vice-Chairman Stanley Fischer, but we just can’t understand why he and others keep saying there is no problem with market liquidity in the…

MSCI's Carlo Acerbi: get subjective decision making out of risk management

November 9, 2016

Basel III, CCP, Risk Management

Acerbi, MSCI, NSFR, risk management, stress testing, topstory

We are very pleased to welcome Dr. Carlo Acerbi of MSCI to one of our private events today. We first got to know his work on the Expected Shortfall method…

Spreads of 76 bps in repo indices show challenge of best execution in US repo markets (Premium)

November 3, 2016

CCP, Investments, Money Market Funds, Repo, RRP, Tri-Party Repo

BNY Mellon, GCF Repo, Repo, topstory, tri-party

We’ve completed an analysis on the last three months of data from DTCC’s GCF Repo(R) index and BNY Mellon’s tri-party repo index, focusing on US Treasuries. The spread on these…

Europe's buy-side responds to Eurex's ISA Direct Clearing model

October 26, 2016

Paul Amery

CCP, Collateral Management, Europe

buy-side, CME, Direct Clearing, Eurex, ISA Direct, topstory

New membership models for buy-side participants at central derivatives counterparties (CCPs) may help alleviate recent capacity and cost constraints. However, the buy-side still faces an existential choice about its future…

Finadium: Analysis of Eurex and CME Buy-side Direct Clearing Models

October 13, 2016

CCP, Credit Exposure, Derivatives, Investments

buy-side, Clearing, CME, Eurex, topstory

This Finadium report presents the direct clearing plans of Eurex’s ISA Direct and the CME’s Direct Funding Participant model. We look at who wins and who loses, impacts on the…

Can a blockchain be a CCP? One company says yes but may be missing a critical point (Premium)

October 12, 2016

Blockchain, CCP, Market infrastructure, OTC Derivatives Clearing, Risk Management, Systemic Risk, Technology

blockchain, CCP, Central Counterparties, distributed ledger technology, topstory

A new company is making the argument that their blockchain system can replace a CCP. This is a big assertion and deserves some fact checking. We evaluate what CCPs do, what…

CFTC roundtable: transparency, Skin In The Game important for CCPs

October 11, 2016

CCP, CFTC, Market infrastructure, Regulatory, US

Blackrock, CCPs, Citadel, Goldman Sachs, IOSCO, JPM, PIMCO, topstory

Last week, the CFTC hosted a public roundtable with leading industry experts to discuss the IOSCO guidance on CCP resilience and recovery. The agenda covered a few major areas: stress…

An expensive and odd quarter end for US repo including equities (Premium)

October 6, 2016

Basel III, CCP, Repo, US

bilateral, CCP, Equities, Repo, term, topstory, US Treasuries

The rising cost of US Treasury repo at quarter end is now well documented but something strange happened last week between the bilateral and CCP market. Trends in S&P 500…

Do CCPs increase dealer capacity? Sometimes but not always (Premium)

October 5, 2016

CCP, Collateral Management, Derivatives, Market infrastructure, Repo, Securities Lending

bank capital, CCP, collateral, OTC derivatives, Repo, Securities Lending, topstory

At a recent industry conference, one of the speakers offered the opinion that Central Counterparties (CCPs) increase dealer capacity. Like most broad statements it is generally true but we heard this…

Why is the NSFR so negative on CCPs, after everything else regulators have done to drive business in that direction? (Premium)

September 7, 2016

Basel III, CCP

Basel III, CCPs, NSFR, topstory

Basel III’s Net Stable Funding Ratio (NSFR) presents an odd dilemma in its negative treatment of CCP exposures. After regulators have piled support onto CCPs at all instances, why would this…

Help Wanted: Finadium is looking for a Research Analyst

August 31, 2016

CCP, Collateral Management, Prime Brokerage, Regulatory, Repo, Securities Lending

collateral management, Delta One, Finadium, Prime Brokerage, Repo, Securities Lending, topstory

Finadium is looking for a Research Analyst. If you are an entrepreneurial, detailed researcher and have a demonstrated ability to write effectively, you should consider joining the Finadium team. Continue…

Should CCP default reserves be funded by debt or securitization?

August 17, 2016

Basel III, CCP, cover 2, Credit Exposure, Derivatives, Dodd-Frank, Europe, IOSCO, Market infrastructure, OTC Derivatives Clearing, Regulatory, Risk Management

CCP, Central Counterparties, counterparty risk, systemic risk, topstory

Default reserve funding at CCPs remains an on-going topic of interest in collateralized funding and other centrally cleared markets. In recent years, regulators and others interested in the systemic risks…

CME proposes its own Direct Clearing program for the buy-side (Premium)

August 15, 2016

CCP, CFTC, US

CCP, CME, Direct Funding Participant, Eurex, topstory

The CME recently proposed a new direct clearing program for the buy-side. This expected move has the potential to create a momentous change in how futures and cleared swaps are…

Which are less expensive for banks, cleared or non-cleared derivatives trades?

August 3, 2016

Basel III, CCP, Collateral Management, cover 2, cover all, Regulatory

Basel III, bilateral, CCPs, collateral, guarantee funds, netting, OFR, OTC derivatives, topstory

A new paper from the US Office of Financial Research (OFR) has re-opened the debate about whether cleared or non-cleared OTC derivatives will be less expensive for bank balance sheets.…

We review the FSOC's 2016 annual report (Premium)

June 23, 2016

Blockchain, CCP, Regulatory, Repo, Securities Lending, Trade Repositories, US

annual report, blockchain, CCPs, FSOC, Office of Financial Research, OFR, Repo, Securities Lending, topstory

The US Financial Stability Oversight Council (FSOC) released their 2016 annual report this week. While much of it is a recap of prior activities, there were several important forward-looking points…

How Eurex’s new buy-side membership model (ISA Direct) helps to address structural problems resulting from the changing structure of the marketplace

June 21, 2016

Philip Simons

CCP, Derivatives, Europe, Regulatory, Technology

CCPs, Clearing, Eurex, Eurex Clearing, ISA Direct, topstory

Market structure results from a wide range of inputs, from the preferences of individual firms to the rules that govern each trading venue. At no time in the past however…

If BNYM hits it big with DBV-X, where does that leave GCF(R) Repo? (Premium)

June 20, 2016

CCP, Repo, Technology, Tri-Party Repo

BNY Mellon, DBV-X, DTCC, GCF, Repo, standardized baskets, topstory, tri-party

With all the changes currently going on in the market, if BNY Mellon’s recent purchase of DBV-X goes through and is a success, will that impact the DTCC’s GCF(R) Repo…

Taking bets on buy-side adoption of CCPs for direct membership (Premium)

June 15, 2016

CCP, Derivatives, Repo, Securities Lending

CCPs, OTC derivatives, Repo, Securities Lending, topstory

How likely is it that buy-side firms will become direct members in CCPs across repo, securities lending and OTC derivatives when given the chance? We are analyzing our 2016 survey…

Regime Change! The democratization of the clearing landscape

June 15, 2016

Michael Cyrus

CCP, Collateral Management, Credit Exposure, Derivatives, Europe, Prime Brokerage, Regulatory

Balance sheet, Clearing, credit intermediation, derivatives, topstory

Banks will see their clearing business become bifurcated by tail–risk and credit intermediation, part of which will stay on their balance sheet, alongside a service and infrastructure piece that will…

The CFTC proposal on Federal Reserve banks holding CCP client deposits

June 9, 2016

CCP, Dodd-Frank, Federal Reserve, Regulatory, US

Central Banks, CFTC, commercial banks, Federal Reserve, topstory

The CFTC has issued a minor proposal and request for comment that Federal Reserve banks be exempted from certain provisions of the Commodities Exchange Act and hold segregated client assets.…

We review the OFR’s “A Map of Collateral Uses and Flows.” What is this paper telling us? (Premium)

May 31, 2016

CCP, Collateral Management, US

collateral, funding, OFR, topstory

The Office of Financial Research (OFR) released a white paper last week, “A Map of Collateral Uses and Flows.” This paper, written by Morgan Stanley’s Tom Wipf and Andrea Aguiar;…

CCP collateral holdings of US$650 billion – our analysis on new filings (Premium)

May 25, 2016

CCP, Collateral Management, IOSCO

cash, CCPs, collateral, CPMI-IOSCO, IOSCO, non-cash, topstory

We recently gathered up the latest CCP CPMI-IOSCO quantitative disclosures to see what they told us about CCP collateral holdings at the end of Q4 2015. We found $650 billion…

A look at the latest OTC derivatives statistics from the BIS

May 18, 2016

CCP, Delta One, Derivatives

Bank for International Settlements, ISDA, OTC derivatives, topstory

The Bank for International Settlements recently published its statistics on OTC derivatives trading activity as of end-December 2015. While the headline figure is an 11% decline in OTC activity from…

Report highlight: securities lending agents on banks sharing balance sheet benefits in loan fees (Premium)

May 12, 2016

Basel III, CCP, Collateral Management, Prime Brokerage, Securities Lending

Agent Lenders, CCPs, prime brokers, Securities Lending, topstory

As banks work to optimize their balance sheets, agent lenders are a source of possible assistance. The conversation is all about collateral and term: what collateral will agents accept on…

Securities Lending Agents on Prime Broker Borrowers: A Finadium Survey

May 11, 2016

CCP, Collateral Management, Securities Lending

Agent Lenders, CCPs, Finadium, prime brokers, Securities Lending, topstory

A new survey from Finadium finds that 89% of securities lending agents say that technology is now an important consideration in who receives securities loans; 78% say they are willing…

Responses to Treasury Market Structure RFI encourage repo clearing (Premium)

May 5, 2016

CCP, Fixed Income, Investments, Repo, SEC, US

market structure, repo CCP, topstory, treasuries, US Treasury

In January 2016 the US Treasury issued an RFI, “Notice Seeking Public Comment on the Evolution of the Treasury Market Structure.” The questions were pretty broad, covering “changes in technology,…

Financing tools for synthetic prime brokerage in derivatives and physical markets

April 18, 2016

Salim Nemouchi

CCP, Delta One, Derivatives, Prime Brokerage

BTIC, CME, Delta One, Prime Brokerage, Societe Generale, synthetic financing, topstory

Delta One and synthetic financing businesses continue to command attention at prime brokerage firms, the result of a complex web of regulations and client needs that direct business to these…

Eurex’s ‘special membership’ for buy side shifts counterparty risk

April 14, 2016

CCP

Clearing, Deutsche Borse, Eurex, Eurex Clearing, insurance companies, ISA Direct, pension funds, topstory

Deutsche Borse’s derivatives clearing house, Eurex Clearing, is set to provide direct access to the buy side with a new category of clearing membership called ISA Direct. Until July, the…

Funds Transfer Pricing and the Quest for Term Funding: Working Towards New Solutions

April 13, 2016

Michael Cyrus

CCP, Collateral Management, Repo, Technology

CCPs, collateral optimization, DekaBank, Funds Transfer Pricing, Michael Cyrus, Repo, topstory

Funds Transfer Pricing (FTP) is emerging as not just a nice to have, helpful tool in managing a financial services business, but in some cases has become a regulatory necessity.…

What would blockchain mean for "cash" and "credit" in funding? (Premium)

March 8, 2016

Bitcoin, Blockchain, Cash management, CCP, Collateral Management, Credit Exposure, Liquidity Management, Risk Management, Securities Lending, Technology

blockchain, cash management, Credit Exposure, credit intermediation, Settlements, topstory

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GSF Summit: What the shift to collateral driven markets means for repo (Premium)

February 11, 2016

CCP, Collateral Management, Derivatives, Repo

BNP Paribas, Citigroup, Clearstream GSF, Leverage Ratio, Societe Generale, topstory

Cash has almost become a secondary consideration in the shift to a secured world, and that means collateral is grabbing the steering wheel in driving the market forward. Such a…

The CCP skin in the game debate continues: sources say it isn't helpful (Premium)

January 14, 2016

CCP, Financial Stability Board, Regulatory

CCPs, Financial Stability Board, recovery, Resolution, skin in the game, topstory

Banks and buy side firms have been calling for an increase to the slice of the risk waterfall stumped up by CCPs. They reckon this would make CCPs more resilient,…

The DTCC old stock borrow program could be a solution to new capital problems (Premium)

January 11, 2016

CCP, Credit Exposure, Market infrastructure, Securities Lending

CCPs, Central Securities Depositories, DTCC, Securities Lending, topstory

What if there was a centrally cleared facility through a US Central Securities Depository (CSD) that would automatically allow a broker with excess availability to lend securities to another broker…

Market feedback on Eurex's Lending CCP: so far so good but more work is needed (Premium)

January 7, 2016

CCP, Europe, Securities Lending

Eurex Clearing, Lending CCP, Securities Lending, topstory

Eurex’s Lending CCP remains the market’s leading option for bringing the sell-side and buy-side together for cleared securities lending. While experts and participants believe widespread adoption is inevitable and are…

Finadium announces 2016 annual conference date, releases agenda

January 6, 2016

Blockchain, CCP, Collateral Management, Delta One, Derivatives, Investments, Liquidity Management, Market infrastructure, Prime Brokerage, Regulatory, Repo, Securities Lending, Technology

conference 2016, Finadium, topstory

Finadium’s 10th annual conference will be held on March 15, 2016 in New York City. This program features leading participants in the securities finance and collateral management markets and is…

Dealers tackle year-end repo, part 2 (Premium)

December 23, 2015

CCP, Repo, RRP, Tri-Party Repo

CCPs, Commercial Paper, Direct repo, GCF, Repo, topstory

As the repo market moves towards year-end, a number of cross currents are creating tricky dynamics that dealers will have to come to terms with. We have compiled a list…

Monday news roundup: repo settlement; variation margin at CCPs; the Open Ledger Project and more (Premium)

December 21, 2015

Blockchain, CCP, Derivatives, Market infrastructure, Repo, Securities Lending, Technology

CCPs, DTCC, Repo, RRP, topstory

Its been a busy end of the year with corporate announcements and thought leadership coming out at a fast pace. Here’s a collection of articles we found important but haven’t…

“The Ballad of the Repo Trader” by Bloomberg’s Tracy Alloway

December 3, 2015

Basel III, CCP, Cleared Interest Rate Swaps, Collateral Management, Derivatives, Dodd-Frank, Federal Reserve, Lehman, Regulatory, Repo

Bloomberg, Repo, topstory, Tracy Alloway

We couldn’t let the week pass without acknowledging Bloomberg’s November 25th article by Tracy Alloway “The Ballad of the Repo Trader”. Published just before Thanksgiving, we wonder if a lot of people…

Non-cleared margin rules will have serious knock-on effects to securities financing markets

December 2, 2015

Basel III, CCP, Collateral Management, Custodians, Derivatives, Dodd-Frank, Market infrastructure, Regulatory, Repo, Risk Management

ISDA, non-cleared derivatives, PwC, topstory

Late in October, US regulators announced final rules for margining of non-cleared dereivatives. This topic has been controversial since it imposes margin requirements where there often weren’t any before and…

Fed Governor Powell on repo CCPs: the opportunities and challenges ahead

November 19, 2015

Federal Reserve, Federal Reserve Governor Powell, topstory

CCP, Collateral Management, Dodd-Frank, Federal Reserve, Hedge Funds, Market infrastructure, Money Market Funds, Regulatory, Repo, Securities Lending, Tri-Party Repo

Earlier this week Fed Governor Jerome Powell gave an interesting speech at the Clearinghouse annual meeting, “Central Clearing in an Interdependent World”, addressing expanding central clearing for repo.Continue reading

More on the SFT stay protocol and the buy-side. Is this Hobson’s Choice?

November 18, 2015

CCP, Derivatives, Dodd-Frank, Europe, Financial Stability Board, Repo, Risk Management, Securities Lending

CCP, Eurex, FICC, OCC, topstory

The adaptation of the ISDA stay protocol to securities financing trades won’t be welcome news for buy-side participants. Adding a delay before executing a liquidation adds incremental risk, even if it…

Inter-clearer FICC tri-party trading at DTCC will come to an end in July, 2016. Did the Fed just get impatient?

November 11, 2015

CCP, Collateral Management, Credit Exposure, Federal Reserve, Regulatory, Repo, Systemic Risk, Tri-Party Repo

BNY Mellon, FICC, JP Morgan, Repo, topstory, tri-party repo