News and Notes

CCPs, OCC

In the midst of record cleared contract volume, OCC, the world’s largest equity derivatives clearing organization, today released a paper titled, Optimizing Incentives, Resilience and Stability in Central Counterparty Clearing,…

CloudMargin Raises $15 Million in Series B Funding Round with Citi, Deutsche Bank and Deutsche Börse as Primary Investors

September 22, 2020

Citi, CloudMargin, Deutsche Bank, Deutsche Borse

CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, today announced that it has closed on its largest funding round to date,…

European Commission grants 18 month equivalence to UK CCPs

September 22, 2020

Brexit, CCPs, European Commission

The European Commission yesterday adopted a time-limited decision to give financial market participants 18 months to reduce their exposure to UK central counterparties (CCPs). A CCP is an entity that…

Bank of England post on jumpstarting RMB internalization using FX Swaps

September 21, 2020

Bank of England, Bank Underground, China, FX Swaps, RMB

Jump-starting an international currency Saleem Bahaj and Ricardo Reis Only a handful of currencies are regularly used for cross-border payments: the euro, the yen, the pound, the yuan and, of…

ECB publishes report on reducing reporting burden, increasing data quality

September 21, 2020

data management, EBA, ECB, ECSB, regulatory reporting

Smarter and standardized reporting procedures proposed to reduce banks’ reporting costs Banking industry involvement in improving procedures needed The European Central Bank (ECB) published the European System of Central Banks’…

ECB finalizes guide to assessing how banks calculate counterparty credit risk

September 18, 2020

counterparty credit, CVA, ECB

Guide shows how ECB assesses compliance of banks’ counterparty credit risk models with regulatory requirements Final publication follows public consultation in February and March 2020 The European Central Bank (ECB)…

Get the weekly SFM update – our September 18 newsletter is online

September 18, 2020

Top Stories A consultant user’s view of ISLA’s new Securities Lending Performance Management guidance (Premium); Finadium goes live with SFTR database, adds OFR repo to Repo Analytics tool; EIB’s Eila…

Barclays: ECB Leverage Ratio relief not a game changer for euro short rates

September 17, 2020

€STR, Barclays, ECB, Leverage Ratio

The ECB Banking Supervision’s decision limits the impact of banks’ balance sheet expansion due to the big reserves increase on their lending activity and market intermediation. Barclay analysts do not…

Bank of England to work on negative rate operational issues in Q4 2020

September 17, 2020

Bank of England, negative rates

Minutes of the Monetary Policy Committee meeting ending on 16 September 2020 The Committee had discussed its policy toolkit, and the effectiveness of negative policy rates in particular, in the…

ESMA renews lower short selling reporting threshold

September 17, 2020

ESMA DECISION of 16 September 2020 renewing the temporary requirement to natural or legal persons who have net short positions to lower the notification thresholds of net short positions in…

SGX lists world’s largest Chinese pure government bond ETF, HSBC takes custody

September 17, 2020

China, CSOP Asset Management, HSBC, ICBC, SGX

ICBC CSOP FTSE Chinese Government Bond Index ETF will start trading on 21 September CSOP Asset Management’s inaugural ETF on SGX will kick off with US$676 million (RMB 4.6 billion)…

SWIFT announces 2-year strategy for instant, frictionless payments and securities processing

September 17, 2020

APIs, Citi, cloud, Deutsche Bank, Payments, securities processing, Swift

SWIFT announced that over the next two years and beyond it will fundamentally transform payments and securities processing, retooling cross-border infrastructure as part of a new strategy approved by its…

ECB allows temporary relief in banks’ leverage ratio until late June 2021

September 17, 2020

COVID-19, ECB, Leverage Ratio

ECB Banking Supervision exercises regulatory discretion declaring exceptional circumstances Measure allows banks to exclude central bank exposures from leverage ratio Banks to benefit from relief measure until 27 June 2021…

SOFR volumes jump as packs and bundles liquidity arrives

September 16, 2020

CME, SOFR, SOFR futures

In recent weeks, CME SOFR futures trading volumes have accelerated to the highest levels since March. Following August’s average daily volume of 42K contracts, SOFR futures are averaging 60K contracts…

FT article speculates on impact of US prime money fund closures to funding markets

September 16, 2020

FT, Money Markets, prime funds, US

Asset managers overhaul money market funds after March rout — Joseph Abate, a managing director at Barclays, expects increased scrutiny over the size of the funds’ liquidity buffers, holdings and…

FT: EU set to extend access to London clearing houses to mid-2022

September 16, 2020

Brexit, Clearing houses, EU, US

The EU is preparing to offer its banks an 18-month extension on access to London’s crucial markets infrastructure as it seeks to prevent a jolt to financial stability when the…

DTCC boosts ETF clearing with multiple basket types and order customization

September 15, 2020

Clearing, DTCC, ETFs

The Depository Trust & Clearing Corporation (DTCC) announced that its subsidiary National Securities Clearing Corporation (NSCC) has received regulatory approval and has begun implementing rule changes designed to enhance the…

State Street Survey Finds Firms Unprepared to Comply with Uncleared Margin Rules Despite Deadline Extension

September 15, 2020

State Street Corporation (NYSE:STT) today released survey results that measured the perceptions, plans and readiness of 300 asset managers and asset allocators in 16 countries around the Uncleared Margin Rules…

Bank of England: hedge funds and mutual funds have an information advantage in UK gilt trading

September 15, 2020

Bank of England, hedge funds, mutual funds, UK

Informed trading in government bond markets Robert Czech, Shiyang Huang, Dong Lou and Tianyu Wang Government bond yields serve as a benchmark for virtually all other rates in financial markets.…

Get the weekly SFM update – our September 11 newsletter is online

September 11, 2020

Top Stories The bombshell CFTC report on asset repricing based on climate change risk (Premium); Legal experts flag regulatory divergence in capital requirements, data, sustainable finance (Premium); Finadium, Eurex and…

Numerix: LIBOR transition challenged by ARR liquidity, data and tech systems

September 10, 2020

alternatives to LIBOR, Numerix

To better understand the industry’s level of preparedness for switching from LIBOR to ARRs, Numerix conducted a global survey of financial services market participants. Numerix is a provider of capital…

ICMA ERCC publishes fourth edition of its SFTR recommendations

September 9, 2020

ICMA, SFTR

The ICMA European Repo and Collateral Council (ERCC) has published today an updated version of the ICMA Recommendations for Reporting under SFTR. This is the fourth public edition of the…

Office of Financial Research releases US repo funding data

September 9, 2020

OFR, Repo, US

The U.S. Office of Financial Research (OFR) released its new U.S. Repo Markets Data Release, a prototype publication of daily data on repo markets, and unveiled the Short-term Funding Monitor,…

EACH: European CCPs prove resilience after BCP fire drill tests

September 9, 2020

CCPs, EACH, stress tests

During the second quarter of 2020, 16 European CCPs Members of the European Association of CCP Clearing Houses (EACH) successfully performed Fire Drill Tests in Business Continuity Planning (BCP) mode.…

Risk: BofA becomes first US bank to adopt SA-CCR

September 8, 2020

BAML, SA-CCR

Bank of America has switched to a new leverage regime 18 months before US banks are required to move, dramatically cutting its total exposure – but finding itself alone among…

Monetary Authority of Singapore Enhances Access to Liquidity Facilities to Strengthen Banking Sector Resilience

September 8, 2020

Liquidity, MAS, SGD, USD

The Monetary Authority of Singapore (MAS) today announced measures to enhance the banking system’s access to Singapore dollar (SGD) and US dollar (USD) funding. The new measures will strengthen banking…

ICMA publishes a briefing note on CSDR mandatory buy-ins and the requirement to appoint a buy-in agent

September 8, 2020

CSDR, ICMA

The CSDR-SD regulatory technical standards require that in the case of failing non-cleared transactions, at the start of the mandatory buy-in process the purchasing party must appoint a buy-in agent.…

IHS Markit and Tokyo Stock Exchange to combine securities finance data sets

September 8, 2020

Data, IHS Markit, Short selling, stock loan, Tokyo Stock Exchange

IHS Markit Securities Finance and Tokyo Stock Exchange, Inc. (TSE), are combining mutually exclusive market data into a comprehensive and invaluable short selling and stock loan dataset. The combined IHS…

ISLA publishes industry guidance for securities lending performance measurement

September 7, 2020

ISLA, performance measurement, Securities Lending

ISLA announced the publication of a new set of standards and best practice guidelines in respect of data aggregation and calibration of performance-related metrics for securities lending. The standards set out…

FSB extends implementation timelines for securities financing transactions

September 7, 2020

FSB, Haircuts, SFTs

The Financial Stability Board (FSB) announced extensions to the implementation timelines for minimum haircut standards for non-centrally cleared securities financing transactions (SFTs), to ease operational burdens on market participants and…

Federal Reserve slightly adjusts stress tests results for Morgan Stanley and Goldman Sachs

September 7, 2020

Federal Reserve, stress tests

The Federal Reserve Board on Friday released corrected stress test results stemming from an error in projected trading losses and as a result, revised the capital requirements for two banks.…

Global Peer Financing Association adds Australian Super, CalSTRS and Thrivent Financial

September 4, 2020

GPFA announcement: Welcome new GPFA members, Australian Super, CalSTRS and Thrivent Financial. We are excited to broaden our membership base to other regions and asset owner types. Welcome!

Get the weekly SFM update – our September 4 newsletter is online

September 4, 2020

Top Stories Doors open for international access to China’s huge securities finance markets; CanDeal’s Andre Craig on modeling data for capital reserves (Premium); Finadium launches SFTR database, invites clients for…

Tradeweb’s repo ADV up 18.1% YoY to $246bn in August

September 3, 2020

electronic repo, Tradeweb

Tradeweb reported that global repo activity, buoyed by the addition of new dealers and participants in bilateral repo remained strong. Repurchase agreement ADV was up 18.1% YoY to $246 billion.…

Stradley Ronon: New DOL Rule Proposal Risks Chilling Proxy Voting and Shareholder Engagement

September 2, 2020

Department of Labor, proxy voting, Stradley Ronan, US

The U.S. Department of Labor (DOL) released its long-awaited proxy voting rule proposal on Aug. 31. If adopted without modification, fiduciaries of plans (e.g., investment managers) subject to the U.S. Employee Retirement…

European associations warn industry not ready for SRD II launch

September 2, 2020

On behalf the European Banking Federation (EBF), the Association for Financial Markets in Europe (AFME), the International Securities Lending Association (ISLA), the Association of Global Custodians (AGC), the European Central…

ESMA sees high risk of decoupling of financial market performance and underlying economic activity

September 2, 2020

The European Securities and Markets Authority (ESMA), the EU securities markets regulator, published its second Trends, Risks and Vulnerabilities (TRV) Report of 2020. The Report analyses the impact of COVID-19…

TriOptima Extends Collaboration with AcadiaSoft to Improve Industry Standard for Collateral Interest Payments Processing

September 2, 2020

AcadiaSoft, TriOptima

TriOptima has extended its collaboration with AcadiaSoft to automate monthly collateral interest payments, making trade processing more efficient for over-the-counter (OTC) market participants. According to International Swap Dealers Association (ISDA)…

OCC securities lending CCP volume down 4.3% in August 2020 year over year

September 1, 2020

CCP, OCC, Securities Lending

The average daily loan value at OCC in August 2020 was $68,733,295,322, a 10.5 percent decrease compared to August 2019. Securities lending CCP activity decreased by 4.3 percent in new…

Bobsguide: vendors facing an uncertain future with CSDR delay

September 1, 2020

With a further delay to the EU’s Central Securities Depositories Regulation (CSDR) just announced, market participants and tech vendors face an uncertain future. “There’s a level of uncertainty and to…

Dutch regulator: transparency in fixed income and derivatives pricing needs improvement

September 1, 2020

AFM, MiFID II, Netherlands, regulators

A study by the Dutch Authority for the Financial Markets (AFM) on the effectiveness of the MiFID II regulatory framework for the fixed income and derivatives markets shows price formation…

BIS research finds big data could decrease significance of collateral

September 1, 2020

Big Data, Big Tech, BIS, collateral

Collateral is used in debt contracts to mitigate the difficulties (agency problems) that arise when the lender’s knowledge of the borrower is incomplete (asymmetric information). Banks usually require borrowers to…

IIROC estimates $500mn industry savings from self-regulatory organization consolidation

September 1, 2020

IIROC has released “An assessment of benefits and costs of self-regulatory organization consolidation conducted by Deloitte. The assessment confirms that a consolidation of IIROC and the Mutual Fund Dealers Association (MFDA)…

People’s Bank of China promotes repo as benchmark interest rate

August 31, 2020

benchmark rates, China, People's Bank of China, Repo

The People’s Bank of China Publishes the White Paper Participating in International Benchmark Interest Rate Reform and Improving China’s Benchmark Interest Rate System Although China started late, compared internationally, in…

Regulation Asia: Brokers Push Back Against ASIC Proposal to Limit CFD Leverage

August 31, 2020

Foreign exchange brokers expressed concerns that the proposals are overly stringent, infringe on investor freedoms, and may result in regulatory arbitrage. The full article is available at https://www.regulationasia.com/brokers-push-back-against-asic-proposal-to-limit-cfd-leverage/

South Korea extends short selling ban for six months

August 28, 2020

From the South Korea Financial Services Commission TEMPORARY BAN ON SHORT SALE TO BE EXTENDED FOR SIX MONTHS The FSC announced its decision to extend the temporary ban on stock…

Vanguard reorganizes Prime Money Market Fund into a government money fund

August 28, 2020

government money markets, prime funds, Vanguard

Vanguard today announced the following changes to its taxable money market fund lineup: Vanguard Prime Money Market Fund will be reorganized into a government money market fund and renamed Vanguard…

ESMA postpones CSDR settlement discipline until February 2022

August 28, 2020

CSDR, ESMA, settlement discipline

This final report presents a new draft regulatory technical standard (‘RTS’) on postponing the date of entry into force of Commission Delegated Regulation (EU) 2018/1229 of 25 May 2018 supplementing…

Federal Open Market Committee announces approval of updates to its Statement on Longer-Run Goals and Monetary Policy Strategy

August 27, 2020

Federal Reserve, monetary policy