Repo, Total Return Swaps and collateral competition (Premium)
For some dealers, repo is now viewed as part of the collateral businesses and not an independent function. It can already be part of a broader business unit including Total…
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Finadium Big Ideas Quarterly Q4 2020 now online
Our quarterly presentation on research, news and events. Continue reading
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Key takeaways from our webinar “UMR and Securities Finance in Europe” (Premium)
Our October 6, 2020 webinar on uncleared margin rules (UMR) and securities finance in Europe yielded some new insights along with data on how market participants are approaching the convergence…
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Synthetic prime brokerage revenue now bigger than physical financing revenue for the first time (Premium)
A new study from Finadium finds that for the first time, prime brokerage revenues from synthetic financing have outstripped revenues from physical securities financing including securities borrows and margin lending.…
Read More Finadium: Total Return Swaps and Bank Resource Optimization
This Finadium report investigates current dynamics in the Total Return Swaps market with a focus on bank resource optimization. We deliver market sizing through H2 2020 and analyze the dynamics…
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UMR and Securities Finance in Europe
Finadium held a webinar on the market forces driving collateral integration of OTC derivatives, securities finance and repo, with uncleared margin rules as one of several drivers. Presented in partnership…
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Implications of ISDA’s proposal, “Collaboration and Standardization Opportunities in Derivatives and SFT Markets” (Premium)
ISDA released a proposal paper today that should be considered carefully by every market participant in OTC derivatives, securities finance and repo for its pros and cons. In Collaboration and…
Read More Preview: webinar on UMR and Securities Finance on 06 October (Premium)
We are looking forward to our 06 October webinar on uncleared margin rules (UMR) and securities finance, produced with Eurex and Natixis and featuring speakers from MN and Citi. This…
Read More Finadium, Eurex and Natixis to host webinar on UMR and securities finance on 6 October
Finadium subscribers and friends of Natixis and Eurex are invited to attend a discussion on Uncleared Margin Rules and their impact on the securities finance market, including repo and securities…
Read More Finadium: Leverage Ratios, SA-CCR and Securities Finance: The New Regulatory Costs of Business
The cost of balance sheet from different types of financial transactions that have a similar economic impacts drives how business gets done. In this report, Finadium delves into the Leverage…
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LIBOR “end game” strategizes for fallbacks, compounded indexes and tough legacy contracts (Premium)
Far from throwing the LIBOR transition off track, COVID-19 has only made it more pressing as authorities consider how scarce term lending transactions became during the global pandemic’s period of…
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Repo Liquidity as a Solution to (Un)cleared Derivatives Cash Margin Requirements
Entities in the scope of phases five and six of the Uncleared Margin Rules (UMR) will need reliable and efficient access to cash in order to manage their daily OTC…
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What’s next: Axoni on equity swaps processing using DLT and ISDA’s CDM (Premium)
Early this year, a distributed ledger network for equity swap processing went live when Citi and Goldman Sachs used Axoni’s infrastructure to process trades. We speak with Carl Forsberg, head…
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Coronapocalypse: volatility makes a comeback, are markets ready? (Premium)
There’s only one thing that’s certain about the markets: volatility is back. We talk to a hedge fund trading it, and dig into some of the most recent stats, strategies…
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Global force majeure creep into the collateral world (Premium)
China’s Council for the Promotion of International Trade (CCPIT) has issued a record number of force majeure certificates, now at 1,615, covering $15.7 billion in transactions. An expansion of the…
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Higher swaps margin costs + lower RWA for CCPs = more securities finance volumes (Premium)
In the most positive turn of events for securities finance in some time, there is reason to think that the next few years should see a nice uptick in volumes…
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The door opens for an SA-CCR in securities finance
The European Systemic Risk Board published last week an innocuously titled document called “Mitigating the procyclicality of margins and haircuts in derivatives markets and securities financing transactions“. The early pages,…
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We size the global collateral markets at $19.8 trillion (Premium)
Finadium conducted a market sizing exercise of the global collateral markets, including a diversity of collateral product types held by private sector market participants. Here’s what we found. Continue reading
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US adoption of SA-CCR means easing for derivatives clearers and incremental liquidity for big banks
You could hear the collective sigh of relief: at last US regulators have issued final rules for adopting the Standardized Approach for measuring counterparty credit risk (SA-CCR). Here’s a review…
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The representative model: a key UMR solution to support sell-side pledging to the buy-side
The introduction of Uncleared Margin Rules (UMR) for Phase 5 and 6 firms presents a new challenge to the financial services market: how to meet the legal, collateral and on-boarding…
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SOFR linked paper issuance had a good June but questions remain on curves and pricing
SOFR linked issuance is starting to pick up. June data, compiled by the CME and published in the June/July 2019 ARRC newsletter, showed just over a cumulative $123 billions of paper…
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LIBOR to SOFR: what will make the swaps market transition?
The SOFR swaps data isn’t pretty. In the week ending July 5, 2019, as per the ISDA SwapsInfo data, a notional of $9.2 billion in SOFR swaps and $0.1 billion…
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SGX launches Total Return Futures: why Asia, why now and what’s next (Premium)
Singapore Exchange is first to launch a Total Return Futures product in Asia, following in the footsteps of CME in the US and Eurex in Europe. It’s based on the…
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Is there any value in uncleared margin rules for phase 5 market participants?
Uncleared margin rules (UMR) for phase 4 and 5 market participants are coming, and service and infrastructure are rolling out a host of solutions to help buy-side firms be prepared.…
Read More Finadium Big Ideas Quarterly Q2 2019 now online
Our quarterly presentation on research, news and events. Finadium Securities Finance, Collateral and Derivatives subscription clients can log in and download the presentation here. This edition covers: Reports Total Return…
Read More Finadium: Total Return Futures, Total Return Swaps and the Repo Market
Total Return Futures (TRF) are emerging as a competitive product to repo and Total Return Swaps, as reported by Delta One trading desks and witnessed at exchanges and CCPs that…
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Three ways to read the ENSO Data Insights launch (Premium)
ENSO, now a division of CME Group, announced yesterday a new securities finance data product based on hedge fund collected rates. This could be a significant new entrant in the…
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Three ways to jump-start securities finance volumes (Premium)
Securities finance volumes are in the doldrums after a robust Q1-Q3 2018, leaving some market participants wondering when revenues will return. Solutions are around the corner however, and can reasonably…
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Maybe term SOFR based on repo rates doesn’t really matter
An important part of the Alternative Reference Rates Committee’s (ARRC) work on the adoption of the Secured Overnight Financing Rate (SOFR) has been the creation of a term SOFR. Repo…
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Five predictions for securities lending for 2019 (Premium)
2018 was a good year for securities lending both financially and in the evolution of the business. 2019 promises to offer more interesting times. We offer our predictions for market…
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Panelists: options products will get easier to understand but process complexity will remain
The future of options is going to reflect demands for the financial industry to pivot towards neutralizing moral hazard in a post-financial crisis world, said panelists at a conference reviewing…
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The buzz on Total Return Futures (Premium)
The markets are starting to talk more about Total Return Futures (TRF) as a realistic alternative to Total Return Swaps (TRS), which themselves are competition for securities finance products. TRFs…
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Why it’s time to stop quoting 30 year LIBOR (Premium)
It’s hard to take LIBOR seriously anymore in its current formulation. We analyzed some recent data and find a lack of credibility in overnight LIBOR rates compared to the Secured…
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Several blows this week to London as a financial center post-Brexit (Premium)
The odds for London thriving as a financial center post-Brexit got worse this week. Here’s what happened and where things seem to be going. Continue reading
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Introducing the Semantic Blockchain in Capital Markets
Technological advances have made a “Semantic Blockchain” feasible. This is the ability to map smart contracts on the blockchain to qualitative information about the underlying data. It’s a realistic solution…
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It’s go time for signing stay resolution agreements in securities finance (Premium)
Deadlines are approaching: since securities finance contracts were included in the definition of a Qualified Financial Contract (QFC), the market knew that one day the great paperwork review would come.…
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Rebuilding tri-party repo for an open architecture model
The tri-party repo market was initially developed in the US in the late 70s, early 80s to drive efficiency gains in settlement and reduce operational risks. It then moved across…
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European roundup: some weighty news for the end of July (Premium)
As July wound down, European market participants released some important news items. We look at Euro clearing moving to Frankfurt, UCITS funds and collateral and the FT’s article on SFTR.…
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Market consolidation in derivatives and financing on both sides of the Atlantic (Premium)
Market consolidation of banks and dealers has been discussed for a while, but we’re now seeing some moves that make us think we are at the beginning of a significant…
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Top five trends in collateral management for 2018
Collateral management has broadened far past simple margin processing; collateral now impacts a majority of financial market activity from determining critical capital calculations to impacting customer experience to driving strategic…
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The potential for dollar funding stress at Japanese banks is causing regulatory concern (Premium)
Interest rates in Japan have remained at historic lows, as the Bank of Japan continues to hope for inflation of 2% at some time in the future. Meanwhile, both private…
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The BIS numbers on the size of the OTC derivatives market show continued declines in Gross Market Value
The Bank for International Settlements (BIS) recently released “Statistical release: OTC derivatives statistics at end-December 2017”. Just looking at notional values, the OTC derivatives market is little changed. But we…
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Lessons from FISL 2018: alpha generation in securities lending takes on new importance (Premium)
“Alpha” in the context of securities lending is itself a controversial term, with some participants arguing that it’s a euphemism for optimizing transaction costs. But in a purely definitive sense,…
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Manmohan Singh’s latest, “Leverage – A Broader View,” shows that build up in the banking system from off-balance sheet trades is huge
Manmohan Singh and Zohair Alam of the IMF have written an important white paper “Leverage—A Broader View” (March 19 2018, IMF Working Paper WP/18/62) that looks at off-balance sheet leverage.…
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US tax code section 871m is making changes in the swaps markets
In the world of tax reform and financial markets, 871m is an important one to keep track of. This change to the US Internal Revenue Code aims to stop an…
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Is Asia coming of age in securities finance and collateral at last?
For more years than we can remember, the promise of Asia as a securities finance marketplace has been bigger than the reality. Without getting too optimistic this time around, there…
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The ‘wriggle parameter’ in derivatives: futures pricing formula takes on new importance
Aside from specialist trading desks, the wriggle parameter is little-known in financial markets. Yet, this part of a derivatives formula now plays a critical role in understanding pricing dynamics at…
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SFM Magazine, Winter 2018, is now online
Artificial Intelligence, Asia, Collateral Management, Derivatives, Europe, Repo, Securities Lending, US
Securities Finance Monitor Magazine, Winter 2018, is now online. This edition, our Technology Special, features articles on what protectionism means for efficiency in global capital markets, a proposal for smart…
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New data on prime brokerage financing revenues (Premium)
As part of our report this month on Total Return Swaps (TRS), we sized prime broker revenues for physical (cash) financing and synthetic financing. We were aided in this task…
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The US Senate’s obvious Volcker Rule arbitrage for trading and financing
The rationale is justifiable: reduce the regulatory burden for banks with under US$10 billion in assets. But the upshot from a US Senate bill now passed the Senate Banking Committee…
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