Liquidity Management

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, Featured, Liquidity Management, Money Market Funds, Repo, Risk Management

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

2

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, Central Counterparties, Cleared Interest Rate Swaps, Credit Exposure, Derivatives, Dodd-Frank, Featured, 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, Featured, 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

Featured, 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, Featured, 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

Featured, 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

1

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

Featured, Federal Reserve, Liquidity Management, Market infrastructure, Regulatory

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, Featured, 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

Featured, 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, Featured, 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

Featured, 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, Featured, 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

Featured, 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

Featured, 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, Featured, 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)

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

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, Central Counterparties, Collateral Management, Liquidity Management, Repo, Risk Management, Systemic Risk

committed liquidity facility, Liquidity, OCC, Repo, topstory

A US CCP has filed a request with the US SEC to create a US$1 billion committed liquidity facility using a bilateral repo transaction with a non-bank counterparty. This is…

Part II: The Fed releases rules on capital for GSIBs, includes extra requirements for securities financing trades

This is part II of our post on the Fed’s new capital rules. We look at the calculation methodology and some observations about the rules. Continue reading

Part I: The Fed releases rules on capital for GSIBs, includes extra requirements for securities financing trades

The Fed has released the latest capital rules for Global Systemically Important Bank Holding Companies (GSIBs). One critical part of this set of rules is the inclusion of a second…

Finadium launches Finadium for Investors, a new subscription series

Finadium for Investors is a new service from Finadium designed for asset managers, hedge funds, plan sponsors and other purchasers of bank services, equities and fixed income products. This subscription…

The impact of Europe’s banking reforms; liquidity will take a big hit

December 3, 2014

Corporate Bonds, Europe, Liquidity Management

AFME, Corporate Bonds, funding costs, Liquidity, PricewaterhouseCoopers, ring-fencing, topstory

PricewaterhouseCoopers has published a monster of a report, “Impact of bank structural reforms in Europe,” sponsored by the Association for Financial Markets in Europe (AFME). This beast is a big…

Fed releases request for public comment on regulating GE Capital. These rules will keep GECC busy for a while.

December 2, 2014

Basel III, Dodd-Frank, Featured, Federal Reserve, Financial Stability Board, Liquidity Management, Regulatory, Systemic Risk

CCAR, eSLR, Financial Stability Oversight Council, GECC, General Electric Credit Corporation, living will, resolution plan, SIFI, topstory

The Federal Reserve just came out with a request for public comment on the regulation of General Electric Capital Corp (GECC) as a Sifi, “Application of Enhanced Prudential Standards and…

Wednesday news roundup: corporate bond liquidity; the leverage ratio; asset managers and capital requirements (Premium Content)

November 26, 2014

Asia, Bank of England, CCP, Europe, Investments, Liquidity Management, Regulatory

asset managers, CCPs, Corporate Bonds, Leverage Ratio, stress tests, topstory

Its been a big week in securities finance news with many notable points that we haven’t gotten a chance to cover yet. When stories like Fed Governor Tarullo talking about…

The Fed’s Tarullo: beefing up liquidity regulation wherever liquidity emerges

November 24, 2014

Basel III, Federal Reserve, Liquidity Management, Regulatory, Repo, Securities Lending

Basel III, Federal Reserve, Liquidity Management, Repo, securities finance transactions, Securities Lending, topstory

Federal Reserve Governor Daniel Tarullo gave a speech last week on liquidity regulation at The Clearing House 2014 Annual Conference. He laid out some pretty big themes, including the value…

The big flaw in the real-time collateral analytics boom (Premium Content)

November 5, 2014

Big Data, Collateral Management, Liquidity Management, Risk Management, Technology

Analytics, Big Data, collateral management, Liquidity, risk management, topstory