Opportunities for SFTR data in the private sector (Premium)
We’ve been thinking about what the markets will do with SFTR data when it is published by Trade Repositories. In particular, we’ve been thinking about what Finadium plans to do…
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The Eurosystem Collateral Management System (ECMS) and tri-party: good, bad or indifferent? (Premium)
The ECB recently took the next step in their Eurosystem Single Market Infrastructure Gateway (ESMIG) project, which itself progresses the aims of the Eurosystem Collateral Management System (ECMS). We look…
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Finadium: European Delta One Trader Survey
The Delta One business is a type of market making for liquidity and risk management clients that seek economic exposure of a security without the complexity of carrying the underlyings.…
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A European challenge to the dollar highlights the breakdown of the Bretton Woods order
Most Americans don’t understand the immense benefit they receive from the dollar as the world’s reserve currency, nor the fact that this global choice is the result of the US-led…
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What we learned at yesterday’s securities finance event in Zurich (Premium)
That was really interesting. We held our fifth annual securities lending and repo update yesterday in Zurich. Discussion centered on SFTR and the evolution of the securities finance business in…
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Progress on Frankfurt as the next big banking hub
Arguments are growing in favor of Frankfurt as a larger financial hub post-Brexit. A regional lobbyist is saying that 750 to 800 billion Euros in assets will transfer from London…
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Europe readies for CRD-V (Premium)
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…
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Protectionist government policies and the impact on financial markets
As Brazil’s election this week shows, the trend towards electing governments that diverge from historical norms is not yet over, and protectionism and nationalism remain popular. We ask, what can…
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Trends in European vs. US tri-party repo
The latest ICMA European repo market survey showed a sharp drop in the percentage of business going to tri-party, just 6% down from 12% in December 2016. There are several…
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The Cum-Ex trade, CCPs, FTTs and other rough roads in European regulation (Premium)
Just when you thought things were settling down and European regulation was becoming predictable, a string of news suggests the opposite. The end of 2018 clear through into 2019 could…
Read More The ECB’s Cœuré walks through ESTER: time is short to solve some tricky problems
The ECB’s Benoit Cœuré recently spoke about ESTER, the ECB’s new overnight rate. Benchmark reform is all the rage, and Europe, while initially setting itself some tough deadlines, is now…
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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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The ECB on repo in the Leverage Ratio: taking a strong stand today may not turn out well tomorrow
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…
Read More Sanction backfire: a non-US payment system would change the balance of financial power
The idea has been floated that Europe should create its own payments system so that European firms doing business with Iran could separate themselves from the US payment system. The…
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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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The SFTR win for firms that don’t trade with European counterparties
The Securities Financing Transaction Regulation (SFTR) will be global regulation by default as the majority of market participants trade with a European entity or subsidiary and hence are captured by…
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More on handicapping the odds of a repo carve out for the US Leverage Ratio
At our Rates & Repo 2017 conference, we proposed taking bets on whether regulators would adopt the US Treasury’s recommendation of excluding Treasuries from the calculation of the Supplementary Leverage…
Read More The ECB swings a big stick on supervision of repo CCPs
We understand the impulse: if a CCP’s potential failure could cause severe damage to a region’s economy and monetary policy operations, then that region’s financial supervisors should want to have…
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SEC panelists: MiFID II not useful for credit markets yet and likely to get more complex (Premium)
Speaking at the SEC Fixed Income Market Structure Advisory Committee on Monday, several panelists noted that while MiFID II has introduced a new innovation in pre-trade transparency, in practice this…
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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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One golden source data repository is necessary for smart regulation
When discussing data for regulatory reporting, the European Union currently suffers from a burdensome approach to reporting across multiple and often inconsistent regulations. A golden source of data for regulatory…
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Electronic RFQ repo markets: The solution for reporting challenges and laying the building blocks for automation
Challenges faced by the repo market including regulatory reporting requirements, reduced balance sheet and fewer resources, have all been well documented. Therefore it comes as no surprise that the use…
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Regulatory reporting generates huge data sets, but what happens next?
The lure of big data to support regulatory oversight of risk, collateral chains and market behavior is strong, but regulators must be ready for big data analytics. This creates a…
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The future of European securities lending: it’s still about people
The European securities lending market continues to go through profound change as regulation and competitive pressures push firms to streamline their operations. Whichever way the market turns, we must remember…
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European and US repo markets are different, and that means one-size-fits-all-regulation is unwise
The US and European markets are not identical, although they are often made out to be just that. Besides macro differences, within Europe, transactions are subject to individual country laws,…
Read More Finadium: Is Frankfurt the Next Collateral and Liquidity Hub?
A new Finadium research report looks at Frankfurt as a financial center and some key aspects that may determine its competitiveness and future relevance post-Brexit and beyond. Does it have…
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FISL London is next week – here’s a status update
We look forward to welcoming 140 buy-side attendees and sponsors to the Finadium Investors in Securities Lending (FISL) Conference in London next week, May 9-10. This is our second year…
Read More SFTR reporting will cause trouble for the buy-side; delegated reporting could expose positions
NEX’s recently released report on the Securities Financing Transactions Regulation starts with an apt quote from an exhausted UK voter facing the 2017 election: “You’re joking! Not another one. Oh,…
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When looking at bankers leaving London post-Brexit, it’s computers as much as headcount (Premium)
We’ve been reading the numbers of bankers leaving Brexit (4,000 for Paris, 1,000 for Frankfurt) and something has seemed amiss. EU regulations require more than a token presence in order…
Read More What to make of the Deutsche Borse/HQLAx announcement on blockchain for securities lending (Premium)
Deutsche Börse Group and HQLAᵡ announced on Monday a partnership to build a new securities lending blockchain platform based on R3’s Corda technology. “The partners will build a fully integrated…
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We review the new European repo market survey: overall growth but uneven progress
The International Capital Market Association (ICMA) European Repo Market Survey for December 2017 was released last week. There was an encouraging amount of growth in the markets although it was…
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The EU General Data Protection Regulation (GDPR) sets a new, extraterritorial standard for client data protection
In a now recurring story, the European Union has created regulation that effectively captures the majority of transactions around the world. It will require a broad range of new compliance…
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Man on a mission: the Bundesbank’s Andreas Dombret has a clear vision of Europe’s financial future
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…
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SFTR, Trade Data Repositories and Transparency: An Industry Challenge from the Inside Out
Regulators have made a call for substantial transparency in the form of the Securities Financing Transaction Regulation (SFTR). The data that must be delivered to trade repositories is comprehensive, patchily…
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Finadium Survey: Better Regulation for Europe’s Securities Financing Transactions
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…
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The Changing Market Structure of Equity Repo Financing
Equity repo is different from its more well-known cousin, government bond repo: the operations of the trade are the same but the collateral and the rationale for engagement can vary…
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News Update: dividend taxes in Switzerland, the US and Germany; and what’s next for the Basel Committee (Premium)
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…
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MiFID II and Best Execution in SFTs: A Happy Ending After All?
MiFID II went live on January 3, 2018, but that doesn’t seem to be the end of the story. Keeping with the European Commission’s theme of “regulate first, refine later,”…
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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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A Proposal for Smart Regulation in European SFT Markets
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…
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Success stories this week in securities finance (Premium)
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.…
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Do EU margin requirements on anti-procyclicality for CCPs help or hurt risk management?
EMIR wants CCPs to hold more margin, in effect making CCPs into virtual fortresses. But the costs associated are high and the potential to push risk into markets or firms…
Read More Bank of England on hedge fund and PB risk: better than it used to be but issues remain
A recent publication from the Bank of England shows that hedge fund systemic risk is generally lower than it used to be; that’s a good thing for the markets. Hedge…
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How did US and European repo markets fare at the end of 2017? (Premium)
US and European repo markets got a bit tetchy last week as the year closed but not as bad as 2016. We review the data and offer some observations. Continue…
Read More ESMA Q&A updates on benchmarks and indirect clearing on CCPs
The European Securities and Markets Authority (ESMA) posted five updated Q&As on its website last week covering most of the major EU regulation. We highlight responses to questions on benchmarks…
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Finadium’s Zurich 2017 seclending and repo event: summary and our presentation (Premium)
Our great thanks to attendees, ZKB and SIX Securities Services for a successful Finadium event in Zurich last week. We discussed a range of important topics from a standardized Swiss…
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Regulatory roundup: Powell confirmation, UK Financial Stability, BoJ on local bonds, ECB on unsecured rates and more (Premium)
It’s been a brisk week for interesting regulatory announcements and discussions. This edition of regulatory roundup highlights key points for collateralized trading, including thinking about the direction of the Federal…
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Is the FRTB on semi-permanent hold?
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…
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The EU’s proposals on CCP location open the door to staggering new risks
The European Commission’s proposals to force large CCPs to submit to supervision or even move to the EU may send some shivers down the neck of anyone trading via a…
Read More 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…
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