Liquidity Management

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

We’ve seen not one but three announcements or promotions of real-time collateral and liquidity analytics and valuations services this week, and its still just Wednesday. These services are an important…

How important is netting to banks anyhow (Premium Content)?

October 16, 2014

Derivatives, Featured, Liquidity Management, Primary Dealers, Prime Brokerage, Repo

netting, OTC derivatives, Repo, topstory

We’ve been looking at bank quarterly filings for a number of data points, and one thing that surprised us was how different bank profiles were in the importance of netting…

Fed's Potter outlines how they will raise rates….using higher IOER as a magnet. We think RRP is a better tool.

October 8, 2014

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

Fed Funds, IOER, RRP, topstory

Simon Potter spoke at the SIFMA Conference on Securities Financing Transactions yesterday in New York. Potter is the Fed’s man in charge of open market operations and he explained how…

What should be part of the LCR buffer: risk managers say no to covered bonds

October 2, 2014

Basel III, Europe, Featured, Liquidity Management, Regulatory

LCR, topstory

An article in Risk by Lukas Becker, dated Oct. 1st “Banks avoiding covered bonds for LCR buffer over liquidity fears” caught our attention. For those not familiar with covered bonds – they are…

Two papers from the ECB on liquidity crunches and stress indices

September 2, 2014

ECB, Europe, Liquidity Management, Regulatory, Systemic Risk

ECB, financial regulation, Liquidity, stress tests

The European Central Bank released two working papers yesterday, each of which has something interesting to say about understanding financial markets. These papers add to the conversation of how regulators…

Too big to fail and bank funding costs: results of a new GAO study (Finadium subscribers only)

August 5, 2014

Dodd-Frank, Liquidity Management, US

bank funding, Dodd-Frank, too big to fail, US GAO

The US Government Accountability Office (GAO) released a study last week that looked at US bank funding costs in light of recent financial regulatory reforms. The study showed no 100% conclusive…

Thursday news roundup: defining liquidity, Moody’s, seclending CCPs, non-bank financial credit providers

July 31, 2014

CCP, Credit Exposure, Derivatives, Europe, Liquidity Management, Regulatory, Securities Lending, Shadow Banking

Bank of England, credit ratings, Liquidity, MiFID, Moody's, Securities Lending CCPs, Shadow Banking

Interesting news and articles from the last week that we haven’t gotten a chance to talk about elsewhere, including MiFID and liquidity, a suggestion that Moody’s has preferenced ratings of…

Unleashing buy-side contingent liquidity in securities lending

June 17, 2014

Liquidity Management, Securities Lending

asset managers, contingent liquidity, Securities Lending

This Finadium research finding tackles the interesting idea of buy-side firms developing their own mechanisms for contingent liquidity. A longer version of this article originally appeared in Calypso Intelligence, June…

Crane Data releases April Money Market Fund numbers — repo takes it on the chin

May 12, 2014

Cash management, Europe, Featured, Federal Reserve, Liquidity Management, Money Market Funds, Regulatory, Repo

CD, Cranes, Fitch, money market funds

On May 9th Crane Data released their May Money Fund Portfolio Holdings report. There were some interesting numbers. Continue reading

Ideas on pricing illiquid collateral assets (Finadium subscribers only)

May 6, 2014

Collateral Management, Federal Reserve, Investments, Liquidity Management, Tri-Party Repo

collateral, Federal Reserve, Liquidity, tri-party, valuations

We are revisiting an old question that has come up again as we are working on due diligence of tri-party collateral managers: how should illiquid collateral assets be priced? At…

IOSCO report: preparing the corporate bond market for lower liquidity

April 22, 2014

Corporate Bonds, IOSCO, Liquidity Management, Shadow Banking

Corporate Bonds, IOSCO, liquidity risk

A new research report from IOSCO looks at major trends in the corporate bond market over the last 13 years and going forward. While the study overall has some solid…

The solution to the fire-sale problem is buy and hold, but who will put up the cash?

April 17, 2014

Federal Reserve, Liquidity Management, Regulatory

Federal Reserve, fire sales, Liquidity, risk mitigation, TARP

The Fed posted an interesting article on their blog Tuesday that solidified some of our thinking about how to resolve the fire-sale problem. There is an opportunity for fire-sale risk…

A look at the new ISDA Margin Survey: cash vs. securities and who is doing the collateral optimization

April 14, 2014

Cleared Interest Rate Swaps, Collateral Management, Credit Exposure, Derivatives, Dodd-Frank, Liquidity Management

collateral shortages, ISDA, ISDA Margin Survey, operations

ISDA has just published their 2014 Margin Survey. There is plenty to look at and discuss. In this post, we focus on the use of cash as collateral and who…

The SEC's proposed rules on CCPs: tough new requirements or just business as usual?

March 19, 2014

CCP, Collateral Management, Credit Exposure, Liquidity Management, Regulatory, SEC

CCPs, clearing firms, collateral management, Liquidity, sec

Last week the SEC issued a 400 page proposed rule-making for CCP operations in the US – this is the US translation of CPSS-IOSCO’s Principles for Financial Market Infrastructure from…

What fees do CCPs charge clearing members on cash & collateral held? We have the answers for ICE

February 13, 2014

Cash management, CCP, Collateral Management, Derivatives, Featured, Federal Reserve, Liquidity Management, OTC Derivatives Clearing

CME, DTC, FICC, Financial Market Utilities, FMU, ICE, ICE Clear US, ICUS, NSC, OCC

So what are CCPs charging to hold collateral? For ICE Clear U.S., the answer on cash is 6bp plus a cut to ICE and 5bp on US Treasury balances.Continue reading

Will anything change going forward in the Fed’s role as lender of last resort?

January 7, 2014

Federal Reserve, Lehman, Liquidity Management

emergency lending, Federal Reserve, Liquidity

2

We took a close look at a new Federal Reserve draft document, “Extensions of Credit by Federal Reserve Banks,” issued December 23, 2013. This draft codifies Dodd-Frank Section 1101, which…

Regulatory pendulum starting to favor liquidity instead of Shadow Banking restrictions

December 12, 2013

Bank of England, Basel III, Europe, Liquidity Management, Regulatory, Shadow Banking

Andrew Haldane, Bank of England, EU Internal Market and Services, Patrick Pearson, Securitization, Shadow Banking, Volcker Rule

Following the initial reactions of regulators to protect market stability and dial down risk, we are seeing several points suggesting that the tide is turning: maintaining market liquidity is being…

Corporate cash starting to go to tri-party

November 21, 2013

Cash management, Liquidity Management, Tri-Party Repo

Euroclear

A November 15th article in The Trade “More corporates pumping cash into repo market” caught our attention. The article said that Euroclear sees 10% of the tri-party activity going through…

Zoltan Pozsar: "Shadow banking and the global financial ecosystem". A thoughtful new take on shadow banking.

November 20, 2013

Institute for New Economic Thinking, pension fund liability mismatch, Zoltan Pozsar

Cash management, Derivatives, Featured, Hedge Funds, Investments, Liquidity Management, Money Market Funds, Regulatory, Repo, Shadow Banking, Tri-Party Repo

We came across an article “Shadow banking and the global financial ecosystem“ (Nov. 7, 2013) by Zoltan Pozsar of the Institute for New Economic Thinking. This is one of the…

Tuesday news roundup: modeling risk assets, illiquid collateral, EU money markets and CCP transparency

This edition of News Roundup covers some important issues in securities finance and regulation, including how banks model risk assets, posting illiquid collateral for bilateral trades, the ECB’s money market…

Three conditions for pre-trade liquidity and collateral analysis tools hitting the market (Finadium subscribers only)

November 4, 2013

Collateral Management, Featured, Liquidity Management

collateral management, Liquidity Management, post-trade, pre-trade

With BNY Mellon’s new Liquidity Aggregator tool hitting the market last week, we got to thinking about what pre-trade collateral and liquidity management tools would look like and what it…

Evidence on whether the collateral transformation trade is slowly grinding to life (Finadium subscribers only)

October 30, 2013

Collateral Management, ECB, Federal Reserve, Liquidity Management, US

collateral transformation, Collateral upgrade, ECB, Euroclear, Federal Reserve, IOSCO, Newedge

Some recent news and comments point to indications of how far the collateral transformation trade has moved forward, and what look to be its prospects over the next year. Continue…

The CFTC and liquidity rules for DCOs: do they need committed repo facilities for their US Treasuries?

October 16, 2013

Basel III, CCP, CFTC, Collateral Management, Derivatives, Federal Reserve, Liquidity Management, Regulatory, Repo, Systemic Risk

CME, CPSS-IOSCO, LCR

There is a battle brewing between the CFTC and DCOs over collateral liquidity. And its impact on repo will potentially be enormous. Continue reading

Where will all that required CCP and resolution authority liquidity actually come from?

October 9, 2013

CCP, Collateral Management, Featured, Liquidity Management, Regulatory, Repo, SEC

CCPs, DTCC, fire sales, NSCC, orderly liquidations

1

We are increasingly concerned about where liquidity will come from to support the myriad of central counterparties that need it for backstop or regulatory purposes. Two recent suggestions we heard…

Demand for people with collateral management skills: banking's next hot job sector?

September 26, 2013

Cleared Interest Rate Swaps, Collateral Management, Derivatives, Hedge Funds, Liquidity Management, OTC Derivatives Clearing, Regulatory, Repo, Securities Lending, Technology

LCR

An article in www.hereisthecity.com made us laugh. It was called “The 15 banking jobs that will be the most secure over the next 7 years”. Continue reading

Lessons from Lehman: Collateral Shortages

September 12, 2013

Basel III, Collateral Management, Dodd-Frank, Featured, Federal Reserve, Liquidity Management, OTC Derivatives Clearing, Regulatory, Repo

The policies that came into being as a result of the financial crisis had numerous unintended consequences. Few have caused more sturm und drang than the collateral shortage. Continue reading

The pendulum eases up on Shadow Banking regulation

August 28, 2013

Collateral Management, G20, Liquidity Management, Regulatory, Shadow Banking

G20, Shadow Banking

After years of careful investigation into the dangers of shadow banking, some regulators appear to be concluding now that the benefits of liquidity provided by credit and maturity transformation may…

Bloomberg article on the impact of regulatory reform for the repo market: is it cause and effect?

August 21, 2013

Collateral Management, Derivatives, Dodd-Frank, ECB, Europe, Featured, Federal Reserve, Hedge Funds, Investments, Liquidity Management, LTRO, OTC Derivatives Clearing, Regulatory, Repo

Finadium, LTRO, Quantitative Easing

An article in Bloomberg “Repo Market Decline Raises Alarm as Regulation Strains Debt” by Liz Capo McCormick & Anchalee Worrachate featured some interesting observations about how the regulatory environment is reducing liquidity.…

The NY Fed Liberty Street Economics Blog on SOMA revenues: as interest rates rise, it is going to be a problem

August 19, 2013

Federal Reserve, Liquidity Management

Federal deficit, Inflation, large scale asset purchases, Liberty Street Economics, LSAP, SOMA, Treasury borrowing costs

1

The Liberty Street Economics Blog over at the NY Fed continues their series on the System Open Market Account (SOMA). We really liked “More Than Meets the Eye: Some Fiscal Implications…

Thursday News Roundup: securities lending, Basel rules (Finadium subscribers only)

August 8, 2013

Basel III, CCP, Europe, Liquidity Management, Securities Lending

Basel III, FTT, Leverage Ratio, Liquidity, Securities Lending

We’ve noted a bunch of interesting news stories this past week that we haven’t been able to comment on until now. Here’s the summary in an update for Finadium research…

The SEC has chimed in on tri-party liquidation; joins the Fed on this important topic

July 24, 2013

2a-7 funds, money market funds, tri-party liquidation

Collateral Management, Custodians, Featured, Liquidity Management, Money Market Funds, SEC, Tri-Party Repo

The SEC has chimed in on tri-party liquidation, releasing a Guidance Update (July 2013, Number 2013-13) “Counterparty Risk Management Practices with Respect to Tri-Party Repurchase Agreements”. They raise some serious…

Basel Committee consults on LCR disclosure, but does it mean anything without more RWA disclosure?

July 22, 2013

Basel III, Liquidity Management, Regulatory

Basel III, LCR, Liquidity Coverage Ratio

The Basel Committee on Banking Supervision has issued a discussion document on the Liquidity Coverage Ratio and disclosure standards. We’ve got some comments but also wonder, how important is this…

ISLA chimes in on the FTT: Lots More Doom and Gloom for Sec Lending and Repo

June 10, 2013

CCP, Collateral Management, Europe, Investments, Liquidity Management, OTC Derivatives Clearing, Repo, Securities Lending

collateral management, collateral transformation, Financial Transfer Tax, FTT, ISLA, Liquidity Coverage Ratio, OTC derivatives, Repo, Securities Lending

Everyone and their dog are getting in their say on the Financial Transactions Tax (FTT). ISLA, the International Securities Lending Association, just released their analysis of the FTT and it…

Tricky business: EU thinks about requiring formal consent to lend out client’s collateral

May 30, 2013

Cash management, Collateral Management, Europe, Liquidity Management, Re-Hypothecation, Repo, Shadow Banking

Lehman, Liquidity, Liquidity Management, Repo, Shadow Banking

An article in Bloomberg BusinessWeek, “EU Weighs Curbs on Banks’ Use of Client Assets as Collateral” by Jim Brunsden last week, discussed a move that could have some serious ramifications for…

Five important points from the new BIS paper on collateral

May 29, 2013

Basel III, Collateral Management, Liquidity Management, Pro-cyclicality, Regulatory, Repo, Securities Lending, Systemic Risk, Trade Repositories

BIS, collateral, Committee on the Global Financial System, optimization, Repo, Securities Lending, transformation

The Bank for International Settlements affiliate, the Committee on the Global Financial System (CGFS), has released a new report on collateral, “Asset encumbrance, financial reform and the demand for collateral…

The NY Fed looks at collateral fire sales and tri-party repo: some good ideas, some well….

The Fed NY report “The Risk of Fire Sales in the Tri-Party Repo Market” (May 2013) by Brian Begalle, Antoine Martin, James McAndrews, and Susan McLaughlin certainly caught our eye.…

The FSOC 2013 Annual Report: taking a look at “Fire Sale and Risk Run Vulnerabilities”

April 30, 2013

Liquidity Management, Money Market Funds, Primary Dealers, Regulatory, Repo, Shadow Banking, Tri-Party Repo

FSOC, Lender of Last Resort, LOTR, money market funds, tri-party reform

We have been picking our way through the nearly 200 page Financial Stability Oversight Council (FSOC) 2013 Annual Report. One thing that caught our eye was Chapter 7 “Potential Emerging…

Comments on the Fed's Jeremy Stein on the Liquidity Coverage Ratio and Lender of Last Resort: a fascinating speech (Finadium subscribers only)

April 25, 2013

Basel III, Collateral Management, Featured, Liquidity Management, Regulatory

collateral, Federal Reserve, HQLA, LCR, Lender of Last Resort, Leverage Ratio, Stein

A speech made on April 19, 2013 by Fed Governor Jeremy Stein entitled “Finding the right balance” at the 2013 Credit Markets Symposium, sponsored by the Federal Reserve Bank of…

The growth of regulatory capital trades and the names of firms taking the other side

April 11, 2013

New York Times, Orchard Global Capital, Regulatory capital trades, Spring Hill Capital

Basel III, Liquidity Management, Regulatory, Shadow Banking

1

An interesting article in the New York Times yesterday tracked the growth of regulatory capital trades. Until or unless regulators clamp down, the volume of these trades in the market…

LTRO borrowings shrinking fast as negative carry catches up

April 9, 2013

Cash management, Europe, Featured, Liquidity Management

LTRO

An article picked up by the blog soberlook “Trends behind declining LTRO balances; Italy overtakes Spain as the largest LTRO borrower” was interesting. It gives a good description of the…

A new paper on the EC proposed Financial Transaction Tax: the news is all bad

April 3, 2013

Collateral Management, Europe, Featured, Liquidity Management, Regulatory, Repo, Tri-Party Repo

EC, Financial Transaction Tax, FTT, Repo, tri-party repo

A just published report “The impact of a Financial transaction tax on corporate and Sovereign Debt”, written by London Economics on behalf of the Regulatory Strategy Group (IRSG) and sponsored…

BCBS and IOSCO clarify non-cleared derivatives margin rules and allow broader collateral eligibility – the cake is almost baked

February 19, 2013

Collateral Management, Derivatives, Liquidity Management, OTC Derivatives Clearing, Re-Hypothecation

BCBS, collateral eligibility, confidence interval, IOSCO, non-cleared derivatives margin

1

Last week the BCBS and IOSCO released their second consultative document “Margin requirements for non-centrally cleared derivatives”. It describes their thinking on what the final proposal will be for non-cleared…

Dudley’s speech on how to fix wholesale funding floats some controversial ideas about tri-party

William Dudley, the President of the New York Fed, just gave a speech at the New York Bankers Association 2013 Annual Meeting. His focus was on wholesale funding and these…

Fitch reports on MMFs holdings; we look behind the data

January 29, 2013

Basel III, Europe, Featured, Liquidity Management, LTRO, Money Market Funds, Repo

Basel III, Fitch, Liquidity Coverage Ratio, Repo

1

Fitch released a report on January 28, 2013 entitled “U.S. Money Fund Exposure and European Banks: Eurozone Declines, France Increases”. We dig behind the headlines and noticed some interesting trends.…

Global capital, local liquidity and the Basel Committee

January 8, 2013

Bank of England, Basel III, Liquidity Management, Regulatory

Bank of England, Basel capital rules, Basel Committee, Basel III, Finadium, LCR, liquidity rules, Promontory

This week’s announcements by the Basel Committee on changes to the Liquidity Coverage Ratio have been greeted with cheers and sneers, but one important aspect remains the same: the Committee…

Fed SCOOS survey results on collateral transformation and the end of TAG

In late December the Federal Reserve released their quarterly “Senior Credit Officer Opinion Survey on Dealer Financing Terms” (SCOOS) report. The interesting stuff are always the special questions. This report’s…

What the end of the FDIC’s TAG program means for securities finance

December 17, 2012

Cash management, Dodd-Frank, Featured, Liquidity Management, Money Market Funds, Regulatory

cash management, FDIC, IOER, TAG

1

The US Senate last Thursday rejected a possible two year extension of the Transaction Account Guarantee (TAG) program, which both provided insurance to $1.6 trillion in cash holdings (16% of…

The saga continues: what should Level 1 assets be in Basel III

October 24, 2012

Basel III, Liquidity Management, Regulatory

Basel III, European Covered Bond Association, High-Quality Liquid Assets, LCR, Tier 1