Hedge fund closures down in 2018, assets are up but performance is muted
The hedge fund industry is seeing an uptick in assets and fewer funds closed in 2018 than 2017, but only a portion of those funds posted positive returns. As hedge…
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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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Best practices for buy-side securities lending at FISL NYC and London – not just a good idea but important for revenues and risk management
Securities lending has strong legitimacy in capital markets as a revenue generating activity for clients, and for passive funds can make the difference between a top ranking and falling near…
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Top commercial transactions of the last week (Premium)
Custodians, asset managers, hedge funds and vendors all made some notable trades in the middle of Q1. We offer an analysis of three important deals for the industry including who…
Read More Securities finance as an alpha generator on the buy-side? A FISL NYC and London afternoon session
Can hedge funds and asset managers generate meaningful alpha for their portfolios using securities finance? This is an important question for both the funds themselves and the professionals that work…
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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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The plot thickens: the first amended complaint on US banks alleging collusion in securities lending shows the fruits of discovery (Premium)
We’ve been tracking the complaint against US prime brokers and EquiLend by what are now four pensions and a hedge fund. The latest amendment shows new depth to the argument,…
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Finadium Report: Analysis from the US Rates & Repo 2017 Conference
Finadium has documented the questions and feedback from our November 1, 2017 Rates & Repo event in New York as a research report. The event drew 145 attendees, with 34%…
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Our analysis of IOSCO’s latest hedge fund survey (Premium)
IOSCO released their 2016 data analysis of hedge fund assets, leverage and liquidity. While this document always feels a bit dated compared to current markets, it also has some kernels…
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Recap of Finadium’s Rates & Repo Conference 2017 in New York
We are pleased to report that our first Rates & Repo Conference, held last week in New York, was by all accounts a great success. We had 162 registrations by…
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There are impacts from the US securities lending lawsuit no matter what happens (Premium)
The lawsuit against six banks and EquiLend, with some big pensions signed on as plaintiffs, already has likely outcomes and plausible winners regardless of any judgement. Some market participants and…
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Does the lawsuit against US banks alleging collusion in securities lending make sense? (Premium)
On August 17, 2017, law firm Cohen Milstein Sellers & Toll filed a Federal class action lawsuit against six US banks saying that they conspired for years to keep new…
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Are the buy side and sell side on the same page about the direction of prime brokerage?
BNY Mellon released the results of a buy-side survey on liquidity and financing on June 26th. How closely do the concerns and attitudes of investors towards their liquidity and financing…
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How important is balance sheet management in prime brokerage today? Look at compensation packages (Premium)
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…
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The Five Cs of Bank and Client Success in Securities Finance
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…
Read More Slides from our webinar on Securities Finance Market Structure (Premium)
We delivered a webinar, Securities Finance Market Structure Trends, on June 13, 2017. Finadium clients can download the presentation below. Continue reading
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Are hedge funds really that risky as counterparties in collateralized trading?
Collateral Management, Custodians, Hedge Funds, Prime Brokerage, Repo, Securities Lending, Technology
As Peer to Peer markets make their play, credit departments at buy-side firms around the world are looking askance at the very idea of a collateralized trade directly with a…
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Next Steps for Hedge Funds in Cost Management
These are legitimately complex times for hedge funds. Between macropolitical turmoil, negotiating fees and managing their daily activities, hedge fund managers must pay attention to a wide range of factors…
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What hedge funds think about Direct/Peer to Peer platforms (Premium)
We heard from several hedge funds over the last week on Direct and Peer to Peer platforms. While these platforms are interesting, there are some significant issues that must be…
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Would brokers move back into prop trading without Dodd-Frank? (Premium)
If changes to the Volcker Rule come to pass, what is the likelihood that brokers will dust off the prop desks and draw back trading talent that fled to the…
Read More SS&C's acquisition history should give pause to banks in alternatives management and fund technology
SS&C’s acquisition of Conifer Securities, announced last week, shows again the firm’s strategic growth path in the alternatives, fund administration and financial technology sector. The collection of Conifer’s 200 clients…
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Prime brokers, credit intermediation and new trading networks in securities finance (Premium)
Back in April 2016 we laid out our ideas for Agency Prime Brokerage, a business model where prime brokers provide a range of operational functions in financing without credit intermediation.…
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Falling leverage and low volatility threaten Europe’s hedge funds
For European hedge funds, already under pressure for below-target returns, low volatility and falling leverage threaten to add up to a toxic mix. Regulators may be happy with less leverage…
Read More The technical details on how direct/peer-to-peer borrowing increases US customer trading leverage (Premium)
In this article we look at the benefits a US trading customer gains by borrowing to cover their own short positions. Like Fully Paid Lending, direct borrowing and lending is…
Read More Finadium: Update on Direct and Peer to Peer Transactions in Securities Lending and Repo
This Finadium Executive Briefing presents the opinions of asset managers on lending to hedge funds and their peer institutions, and provides commentary on the offerings of three large agent lenders…
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Redeploying brokerage infrastructure for Direct securities finance transactions (Premium)
The latest in a long line of once unthinkable changes in securities finance is the concept of direct lending and borrowing between beneficial owners and hedge funds. US brokers have…
Read More Finadium for Hedge Funds: Tools and Information for Alternative Investors
For our June 2016 Finadium Executive Briefing report, we provide a PowerPoint presentation on important topics in securities finance for alternative investment managers. The presentation covers: Continue reading
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Why direct repo and securities lending may be the best thing that has happened for asset holders in a long while (Premium)
There is a sea change coming to the market in direct repo and securities lending, at least for many firms that want to continue to earn reliable revenues. The term…
Read More Changes in hedge fund leverage according to IOSCO
IOSCO released their third hedge fund survey last week with some expected results and some new information. Most importantly, we have to get used to their definitions of leverage and…
Read More Finadium: Regulatory Costs of OTC Derivatives vs. Securities Finance Transactions
Basel III, Delta One, Derivatives, Featured, Hedge Funds, Prime Brokerage, Regulatory, Repo, Securities Lending
This Finadium report evaluates regulatory costs in order to determine whether internal balance sheet treatment will push the market towards OTC derivatives in place of Securities Finance Transactions (SFTs, including…
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Fed Governor Powell on repo CCPs: the opportunities and challenges ahead
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
Read More Finadium: Balance Sheet Optimization Strategies (Self-Funding) for Hedge Funds and Other Alternative Asset Managers
Finadium has released a new Executive Briefing report on balance sheet optimization strategies for hedge funds. Hedge funds and other alternative asset managers have been hearing about balance sheet optimization,…
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Reporting date differences allow non-US broker dealers to arb repo markets
Late last month the OFR published a paper, “Regulatory Arbitrage in Repo Markets” by Benjamin Munyan (October 29, 2015) that got a decent amount of press. The paper looked at…
Read More An abundance of Special Purpose Vehicles (Premium Content)
We continue to note a growth in the number of Special Purpose Vehicles in the market, the majority of which (but not all) are sponsored by banks and brokers. We…
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Five reasons why prime brokers say different things about balance sheet scarcity to their hedge fund clients (Premium Content)
Basel III, Credit Exposure, Featured, Hedge Funds, Investments, Liquidity Management, Prime Brokerage, Regulatory
We were recently asked why prime brokers are reporting different information to their hedge fund clients on why balance sheets have been tightening. The “balance sheet is scarce” story might…
Read More Two solutions to the Hot Cash / operational deposits problem (Premium Content)
The problem of prime brokers and custodians holding hedge fund cash and other operational deposits is becoming acute. We are now seeing two sets of solutions emerge to solve this…
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Connecting corporate cash with repo. Why has it been so hard?
There was in interesting article in the May 2015 Treasury Today “Do you have time for tri-party repos?”. What struck us was the difficult time corporate cash investors have setting…
Read More The SEC’s ADV data: hedge fund edition (Premium Content)
The SEC recently released their Form ADV data on investment managers including a large number of hedge funds. The data err on the side of conservatism in non-disclosure and can…
Read More Finadium: The Securities Lending Industry in 2015
Central Counterparties, Collateral Management, Hedge Funds, Investments, Prime Brokerage, Securities Lending
A new report from Finadium provides a data-oriented overview of the securities lending industry in 2015 including the players, market size and regulatory drivers affecting participant behavior. Data are sourced…
Read More Finadium: Custody for long/short funds
Finadium has released a new research report, “Evaluating and Selecting a Custodian for Long/Short Investment Funds.” This report is a discussion of important points for long/short funds to consider in…
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We need simple new names for financial market institutions (Premium Content)
Credit Exposure, Featured, Hedge Funds, Investments, Liquidity Management, Securities Lending, Shadow Banking, Systemic Risk
We argue for better language to describe various functions in financial markets. There are banks and bank holding companies that offer a wide variety of credit intermediation and agency services.…
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The CME starts to get serious about repo clearing (Premium Content)
We heard last week from three different market participants that the CME is engaging with market participants on a repo clearing project. CME’s involvement has been known publicly for some…
Read More Finadium: Perspectives on Direct Borrowing and Lending
Finadium has released a new report in our Finadium for Investors series, “Perspectives on Direct Borrowing and Lending”. The report defines Direct Borrowing and Lending, sizes the market, evaluates pros…
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Bleeding Oil: Securities Finance Industry Analysis
By Chris Benedict, Director, DataLend. Lower oil prices due to a glut of supply and a strong dollar are an early Christmas gift to consumers but a big lump of…
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Finadium: Capitalizing on Synthetic Financing Demand (free via SunGard)
Delta One, synthetic financing and synthetic prime brokerage have long been a part of financial markets, but the upcoming introduction of Basel III capital rules is increasing their popularity. On…
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Repo CCPs for the buy-side – what will it take?
Repo CCPs already exist. LCH and FICC run repo CCPs; so does the Canadian Derivatives Clearing Corp. But they only serve banks and broker-dealers. Why not investors too? Well, the…
Read More More innovative products and ideas in securities finance
CCP, Collateral Management, Equities Repo, Featured, Hedge Funds, Prime Brokerage, Single Treasury Futures
It is no secret that regulatory change brings out innovation (necessity and all that). Lately we’ve been seeing more proof of this in the securities finance space. Besides product launches…
Read More Citi report on hedge funds and collateral: modeling an efficient counterparty
Citi Investor Services released a big hedge fund study, “Opportunities and Challenges for Hedge Funds in the Coming Era of Optimization,” the other week. While much of this contains older…
Read More WSJ article on leveraging CLOs — haven't we seen this movie before?
A May 5th Wall Street Journal article, “Banks Revive Role in Complex Debt, Lenders Had Eschewed Loan-Bond Leverage Since Crisis, but New Rules Spur Them to Seek Buyers” by Katy…
Read More Fed Q1 SCOOS report: synthetic prime brokerage in the spotlight
The Q1 Fed’s Senior Credit Officer Opinion Survey (SCOOS) just came out. We take a look. Continue reading
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