Liquidity Management

Interest rates across Europe are widely expected to stay low for the foreseeable future, with even the possibility of further easing on the horizon, as the ECB asset purchase programmes…

Monday news update: Central Banks on liquidity; the Lender of Last Resort; CSD-R

February 15, 2016

Bank of England, Europe, Federal Reserve, Liquidity Management, Regulatory

Bank of England, Bloomberg, CSD-R, ECB, Federal Reserve, Liquidity, LOLR, topstory

This edition of our news update focuses on a new articles series on liquidity from the Federal Reserve and a conference on the Lender of Last Resort held last week.…

Regulators, please adjust the rules to preference the underlying markets, not the derivatives markets

January 27, 2016

Bank of England, Basel III, Derivatives, Fixed Income, Liquidity Management, Regulatory, Repo, Securities Lending

derivatives, Liquidity, securities finance, topstory, volatility

collateral modelling, complexity, high performance computing, non-cash collateral, topstory

There is a fundamental liquidity problem in financial markets with a conceptually easy fix. The problem is that regulators have accidentally preferenced the use of derivatives over physical financing transactions…

2016 collateral tech trends: a view from the buy side (Premium)

January 21, 2016

Anna Reitman

Blockchain, Collateral Management, Derivatives, Liquidity Management, Technology

Buy-side innovation in collateral management continues to be driven by firms’ needs to align with the business, control costs and provide transparency. In an interview with Securities Finance Monitor, Grigorios…

The Big Short: ancient history or modern warning on derivatives?

January 12, 2016

Derivatives, Liquidity Management, Regulatory

derivatives, Liquidity, Regulation, The Big Short, topstory

The movie The Big Short, based on Michael Lewis’s book of the same name, tells the story of three early short sellers of the US housing market running up to…

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…

Should we be worried about equity ETFs as the next big potential crisis? (Premium)

January 4, 2016

Derivatives, Liquidity Management

ETFs, Liquidity, topstory

collateral management, collateral management systems, collateral management technology, Collateral Optimisation, topstory

The press has been abuzz about potential systemic risk concerns stemming from ETFs of all sorts, and this crept into our holiday conversations as well. The events of August 24,…

4Sight Collateral Management: Benchmarking Your Systems and Processes

November 19, 2015

Martin Seagroatt

Collateral Management, Derivatives, Liquidity Management, Technology

Collateral management is changing rapidly to meet the demands of the new post-crisis environment. It can be difficult for firms to know where to start when defining a target operating…

Extending the 48 hour collateral liquidation stay to financing trades: cash lenders won’t be happy

November 12, 2015

Basel III, Liquidity Management

Collateral Management, Credit Exposure, Liquidity Management, Money Market Funds, Repo, Risk Management

collateral liquidation, FDIC, FSB, OLA, safe harbor, topstory

ICMA, FSB, ISDA and Bloomberg are talking about the extension of the 48 hour rule in derivatives – where if a counterparty goes bust, liquidating the collateral is subject to…

Mind the gap: building evergreen style portfolios throughout the operational value chain

November 4, 2015

Tobias Duchscherer

evergreen, HQLA, LCR, topstory

Evergreen financing structures are gaining popularity as a way to manage the complexity of Liquidity Coverage Ratio (LCR) funding requirements. However, most trading and post-trade systems are not set up…

Derivatives, Securities Financing and the Law of Conservation: Transforming Counterparty Risk into Liquidity Risk

November 3, 2015

Basel III, CCP, Cleared Interest Rate Swaps, Credit Exposure, Derivatives, Dodd-Frank, Liquidity Management, Regulatory, Repo, Risk Management

Law of Conservation, Physics, topstory

A former physicist, now Wall Street risk and regulation quant, said at a recent conference that when thinking about regulation, he is reminded of the Law of Conservation. That is…

Should we stop talking about collateral optimization now in favor of something bigger? (Premium Content)

October 7, 2015

Collateral Optimisation, collateral optimization, Collateral Transfer Pricing, fund transfer pricing, topstory, yield enhancements

Big Data, Blockchain, Collateral Management, Credit Exposure, Liquidity Management, Market infrastructure, Operations, Technology

We’ve had several discussions over the last two weeks about collateral optimization and its role in the market. One result of these conversations is that maybe collateral optimization is largely…

The FSB takes on fund leverage and liquidity

September 29, 2015

Financial Stability Board, Fixed Income, Investments, Liquidity Management, Risk Management, SEC, Securities Lending, Shadow Banking

Financial Stability Board, FSB, fund management, Leverage, Liquidity, Securities Lending, Shadow Banking, topstory

The Financial Stability Board (FSB) issued a press release outlining what they discussed at their Sept. 25th meeting in London. Leverage and liquidity is still on their mind. Securities lending…

Finadium: Can the Blockchain Work for Securities Finance, OTC Derivatives and Other Collateralized Transactions?

Finadium has released a new research report on blockchain, a potentially exciting new technology in financial markets. Blockchain promises to be revolutionary, disruptive and a way to fundamentally change financial…

Five reasons why prime brokers say different things about balance sheet scarcity to their hedge fund clients (Premium Content)

September 23, 2015

Basel III, Credit Exposure, Hedge Funds, Investments, Liquidity Management, Prime Brokerage, Regulatory

Balance sheet, corporate bond liquidity, hedge funds, Liquidity, prime brokers, Regulation, topstory

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…

How the Fed will really raise rates, and immediate impacts on securities finance and rates businesses (Premium Content)

September 17, 2015

Federal Reserve, Investments, Liquidity Management, Repo, RRP, US

DTCC, Fed Funds, Federal Reserve, GCF, Interest on Excess Reserves, interest rates, IOER, New York Times, Reverse Repo Facility, RRP, topstory

An excellent article in the New York Times this week detailed the mechanics of how the Fed will raise rates in this post-Quantitative Easing environment. The main point of the…

Two solutions to the Hot Cash / operational deposits problem (Premium Content)

September 9, 2015

Basel III, Cash management, Hedge Funds, Investments, Liquidity Management, Prime Brokerage, Repo, Systemic Risk

Basel III, Citi, Hot Cash, LCR, short-term cash, SPVs, structured notes, topstory, UBS

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…

The NY Fed’s Liberty Street Economics blog: is there evidence of UST liquidity in decline?

August 31, 2015

Federal Reserve, Liquidity Management, Market infrastructure, Regulatory

Federal Reserve Governor Powell, Flash Crash, Liberty Street Economics, Michael Lewis, taper tantrum, topstory, US Treasury markets

Earlier this month there was a series of five articles on market liquidity in the Federal Reserve Bank of New York’s Liberty Economics Street Blog. So much has been written…

Utilities in securities finance: taking an old dog for a new walk (Premium Content)

August 5, 2015

Collateral Management, Derivatives, Investments, Liquidity Management, Market infrastructure, Operations, Repo, Securities Lending, Technology

Clearing, collateral management, financing, outsourcing, topstory, utilities

This is no slight on utilities – they are a very good idea to share industry resources with a pay as you go model. Rather, this article looks at the…

BNPP: what’s next in risk management for asset owners? Its a Big Data problem.

August 3, 2015

Big Data, Investments, Liquidity Management, Risk Management

asset owners, Big Data, BNP Paribas, risk management, topstory

BNP Paribas released a survey of asset owners and risk management last week. We read from back to front for what asset owners expect will be the next phase of…

Measuring the impact of LCR and other liquidity regulation on banks – a new study by the Bank of England

July 27, 2015

Bank of England, Liquidity Management, Repo

Bank of England, banks, Individual Liquidity Guidance, LCR, Liquidity, topstory

The Bank of England has released a first-of-its-kind study on the empirical impact of liquidity regulations (LCR, and in the UK, Individual Liquidity Guidance or ILG) on bank activities. In…

Report: what really happened to Treasury Bond liquidity on October 15, 2014? (Premium Content)

July 22, 2015

Investments, Liquidity Management, US

dealers, Liquidity, market makers, topstory, US Treasuries, volatility

The US Treasury, CFTC and others have released their findings on what happened to US Treasury Bond trading on October 14, 2015 that resulted in an unheard-of spike in prices…

Regulators make work plans on market liquidity but to what end?

July 6, 2015

Bank of England, Federal Reserve, Liquidity Management, Regulatory, Risk Management

Bank of England, Federal Reserve, Fixed Income, Liquidity, Regulation, topstory

Regulators worldwide now recognize that market liquidity in fixed income is a Problem with a capital P. The interesting part is that in spite of the evidence, there is a…

Why has liquidity decreased in the markets? Daniel Tarullo says he isn’t sure.

June 30, 2015

Federal Reserve, Fixed Income, Investments, Liquidity Management, Regulatory, Repo

Council on Foreign Relations, Federal Reserve, Flash Crash, Liquidity, Tarullo, topstory

An interview last Thursday with Federal Reserve Board Governor Daniel Tarullo, discussing possible reasons for the October 15, 2014 Flash Crash in US Treasuries, shows regulatory uncertainty for why, at…

Securities Finance Monitor Magazine Edition 1 is now online

We are pleased to announce the launch of Securities Finance Monitor Magazine. Hard copies were distributed at ISLA and to subscribers who completed their registration information. Download your free copy…

Central banks as market makers: an incredibly bad idea

June 23, 2015

Investments, Liquidity Management, Regulatory

Central Banks, IMF, Liquidity, Reuters, topstory

Reuters reported that Jose Vinals, director of the IMF’s capital markets department, said last week that central banks may need to become market makers to counteract very low liquidity in…

T2S launches today: our podcast series on T2S, collateral and liquidity with Clearstream

June 22, 2015

Collateral Management, ECB, Europe, Liquidity Management

Clearstream, ECB, T2S, topstory

Finadium and Clearstream have produced a series of podcasts on T2S, collateral and liquidity. Need to get smart about today’s launch of T2S and what it means for your collateral…

LCH.Clearnet is running out of repo capacity. Maybe they can join LCH.Repoclear?

June 18, 2015

Europe, Federal Reserve, Liquidity Management, Repo, RRP

CCP, HQLA, LCH RepoClear, LCH.Clearnet, RRP, topstory

In the June 16, 2015 FT there was an article by Joe Rennison and Philip Stafford, “LCH.Clearnet sounds alarm over declining use of repo” (sorry behind the pay wall) that…

What we learned at our Clearing and Market Infrastructure for Repo, Funding and Liquidity event (Premium Content)

June 15, 2015

CCP, Collateral Management, Liquidity Management, Market infrastructure, Repo

CCPs, collateral, Finadium, funding, Global Collateral Ltd, Liquidity, netting, Options Clearing Corp, Repo, topstory

Last week we held a panel and reception in New York City, “Clearing and Market Infrastructure for Repo, Funding and Liquidity,” co-sponsored by the Options Clearing Corporation and DTCC-Euroclear Global…

T2S, the ECB and Quantitative Easing

June 1, 2015

Collateral Management, ECB, Europe, Liquidity Management, Market infrastructure, Regulatory, Settlements

Clearstream, collateral, ECB, Liquidity, Quantitative Easing, Settlements, T2S, topstory

The European Central Bank’s recent Quantitative Easing (QE) program is putting a squeeze on European repo markets. QE takes securities out of the market. T2S will help repo by aggregating…

Can bank financial statements tell us anything about collateral efficiency? (Premium Content)

May 27, 2015

Collateral Management, Investments, Liquidity Management

Bank of America, Citi, collateral efficiency, collateral management, Goldman Sachs, JP Morgan, Morgan Stanley, Repo, topstory, Wells Fargo

We recently undertook a study of US bank SEC filings to learn if anything could be said about how efficient banks are with their in-house collateral. Our thesis was that…

T2S, Equities and Collateral

May 27, 2015

Collateral Management, ECB, Europe, Liquidity Management, Market infrastructure, Settlements

Clearstream, collateral, Equities, Liquidity, Settlements, T2S, topstory

T2S opens many doors in the world of collateral and liquidity. At its simplest, financial intermediaries will soon be able to open up one account for settlement purposes and one…

T2S, Collateral and Business Model Change

May 26, 2015

Collateral Management, ECB, Europe, Liquidity Management, Market infrastructure, Settlements

Clearstream, collateral, Liquidity, Settlements, T2S, topstory

Despite a common currency, Eurozone securities do not have a single settlement system. That will soon be changing. TARGET2-Securities (T2S), the European Central Bank’s (ECB) settlement initiative, tackles the fragmented…

Finadium: T2S, Collateral and Liquidity: Building a Strategy for Growth

May 14, 2015

Collateral Management, Custodians, ECB, Europe, Liquidity Management

Agent Banks, collateral, Custodians, European Central Bank, Finadium, financial intermediaries, Liquidity, Payment Banks, T2S, topstory

Collateral and liquidity management under TARGET2-Securities (T2S) is an emerging work stream that requires attention from market participants. Settlement mechanisms under T2S are now generally understood, including how settlement will…

Do US Treasuries need dealers or is there enough liquidity already?

May 11, 2015

Fixed Income, Investments, Liquidity Management, Primary Dealers

BrokerTec, eSpeed, Fixed Income, ICAP, topstory, US Treasuries

We’ve seen a few news items that revisit the conversation about whether US Treasuries, the most (theoretically) liquid product in the markets, need credit intermediation. That is to say, should…

Finadium announces June events on clearing for repo and funding; T2S, Collateral and Liquidity

April 29, 2015

CCP, Collateral Management, Europe, Liquidity Management, Repo, US

CCPs, Clearing, Clearstream, collateral management, Finadium, Frankfurt, Global Collateral Ltd, Liquidity, London, Market infrastructure, New York, OCC, Paris, Repo, T2S, topstory

Finadium is pleased to announce four events coming up in June. We’re coming to New York, Frankfurt, London and Paris, with compelling programs on new and innovative topics in securities…

Event recap: Collateral Management and Craft Beer in Chicago (Premium Content)

April 27, 2015

CCP, Collateral Management, Liquidity Management, Market infrastructure, Securities Lending, US

Analytics, CCPs, collateral management, Collateral Transfer Pricing, Finadium, Options Clearing Corporation, SunGard, topstory

Finadium held its first panel and reception event in Chicago last Thursday, April 23, with our colleagues from SunGard and the Options Clearing Corporation (OCC). The audience was primarily buy-side…

Good to see central bankers looking closely at their own role in the collateral markets

April 16, 2015

Collateral Management, Liquidity Management

Bank for International Settlements, BIS, Central Banks, collateral management, topstory

We’ve had central banks on the brain lately, so a new paper from the Bank for International Settlements, “Central bank operating frameworks and collateral markets”, was right up our alley.…

The Systemic Risk Council publishes an interactive tool for looking at bank stats. We especially like “Short Term Noncore Funding as a Percent of Total Assets”.

April 14, 2015

Liquidity Management, Prime Brokerage, Regulatory, Repo, Risk Management, Systemic Risk

Bank of America, Bank of New York Mellon, Citibank, GE Capital, Goldman Sachs, JP Morgan, Morgan Stanley, Systemic Risk Council, topstory, Wells Fargo

The Systemic Risk Council recently came out with a “Systemic Risk Council Interactive Tool”, an interesting way to look at banks. Continue reading

The IMF on non-leveraged asset manager risk: for heaven’s sake, where can people safely invest?

April 13, 2015

Investments, Liquidity Management, Risk Management, Systemic Risk

asset managers, Global Financial Stability Report., IMF, Liquidity, systemic risk, topstory

The IMF released a chapter of their April 2015 Global Financial Stability Report “The Asset Management Industry and Financial Stability”. We read this with interest and dismay. On the one…

Its time to build a collateral and liquidity strategy

April 6, 2015

Collateral Management, Liquidity Management

asset managers, banks, CCPs, collateral management, Collateral Transfer Pricing, Liquidity, Strategy, topstory

Financial market participants of all sizes have moved out of the tactical phases and now need to focus on creating a long term collateral and liquidity strategy. This will require…

How far will the market go for centrally cleared funding products? (Premium Content)

March 30, 2015

Collateral Management, Liquidity Management, Repo, Securities Lending

Finadium, funding, Liquidity, securities finance, topstory

Panelists at the March 19 Finadium Conference in New York brought up an interesting concept: the demand for bilateral vs. cleared funding products isn’t one or the other but really…

The FDIC rejects living wills from the U.S. units of BNP, HSBC and RBS. The Fed was not very happy either.

March 24, 2015

Dodd-Frank, Liquidity Management, Regulatory, Risk Management

FDIC, Federal Reserve, Living Wills, topstory

The FDIC turned back the living wills for three foreign banks: HSBC, RBS, and BNP, saying they found the plans “not credible”. Had the Fed also made a similar finding,…

Monday regulatory roundup: asset managers as SIFIs; CCP stress tests; two from the Bank of England (Premium Content)

While some spent the winter hiding under the covers trying to keep warm, regulators clearly had a busy and productive season. This regulatory roundup provides highlights of new and revisited…

The Bank of England as the international source of last resort liquidity

February 23, 2015

Bank of England, Federal Reserve, Investments, Liquidity Management, Regulatory, Shadow Banking

Bank of England, CCPs, Central Banks, Liquidity, Shadow Banking, Sterling Monetary Framework, topstory, Zoltan Pozsar

Zoltan Pozsar’s recent paper on the macro view of Shadow Banking pointed out an important connection in financial markets – that the Bank of England is now the global backstop…

We need simple new names for financial market institutions (Premium Content)

January 27, 2015

Credit Exposure, Hedge Funds, Investments, Liquidity Management, Securities Lending, Shadow Banking, Systemic Risk

asset managers, banks, CCPs, credit intermediation, financial intermediation, hedge funds, insurance companies, maturity transformation, Shadow Banking, topstory

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.…

SEC Chair Mary Jo White on seclending transparency for asset managers, and our recommendations on specifics

January 12, 2015

Derivatives, Dodd-Frank, Investments, Liquidity Management, Regulatory, SEC, Securities Lending, US

derivatives, Securities Lending, topstory, US

On December 11, 2014, SEC Chair Mary Jo White gave a speech at a New York Times conference in New York, “Enhancing Risk Monitoring and Regulatory Safeguards for the Asset…

Debevoise & Plimpton publishes a guide to NSFR — providing some clarity to a confusing topic

January 6, 2015

Basel III, Liquidity Management, Market infrastructure, Primary Dealers, Prime Brokerage, Regulatory, Repo, Securities Lending

ASF, Available Stable Funding, Debevoise & Plimpton, LCR, Net Stable Funding Ratio, NSFR, Required Stable Funding, RSF, topstory

Last month Debevoise & Plimpton published a nice guide to the Net Stable Funding Ratio (NSFR), “Client Update Basel Committee Adopts Net Stable Funding Ratio: How Much Liquidity Is Enough?”.…

CCP files to creates a committed non-bank liquidity facility (Premium Content)

December 16, 2014

CCP, Collateral Management, Liquidity Management, Repo, Risk Management, Systemic Risk

committed liquidity facility, Liquidity, OCC, Repo, topstory