News and Notes

IFSWF, Securities Lending, State Street

State Street and the International Forum of Sovereign Wealth Funds (IFSWF) released a research paper, Enhanced Asset Utilization to Improve Portfolio Returns. According to the research, one-half of surveyed respondents…

LCH SwapAgent completes its first swaption trade

November 16, 2018

Deutsche Bank and Nomura are counterparties to the first swaptions trades processed through LCH SwapAgent Trades were brokered by ICAP as interdealer broker LCH SwapAgent offers standardised infrastructure and efficiencies…

FSB adds Groupe BPCE to G-SIB list, removes Nordea and RBS

November 16, 2018

FIS, G-SIB

The Financial Stability Board (FSB) today published the 2018 list of global systemically important banks (G-SIBs) using end-2017 data and an assessment methodology designed by the Basel Committee on Banking…

Get the weekly SFM update – our November 16 newsletter is online

November 16, 2018

Headlines: Finadium: 2018 Survey of Institutional Investors in Securities Finance; Webinar replay and slides: Implementation Strategies for SFTR; Europe readies for CRD-V (Premium); Securities lending “controversies” from the Financial Times…

FSB consults on whether existing financial resources are enough for CCP resolution

November 15, 2018

CCPs, Financial Stability Board, FSB

Financial resources to support CCP resolution and the treatment of CCP equity in resolution Available as: PDF 15 November 2018 This discussion paper seeks comment on financial resources to support…

FSB finds that jurisdictions have undertaken substantial reforms to mitigate “too-big-to-fail”

November 15, 2018

Financial Stability Board, too big to fail

FSB 2018 Resolution Report: “Keeping the pressure up“ Available as: PDF 15 November 2018 This report updates on progress in implementing the framework and policy measures to enhance the resolvability…

ESMA updates Q&A on short selling

November 14, 2018

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers (Q&As) on the Short-Selling Regulation (SSR). This Q&A clarifies that the identification of the relevant competent…

IOSCO seeks feedback on proposed framework for assessing leverage in investment funds

November 14, 2018

The Board of the International Organization of Securities Commissions (IOSCO) is requesting feedback on a proposed framework to help measure leverage used by investment funds which in some circumstances could…

FSB publishes progress report on reforming major interest rate benchmarks

November 14, 2018

alternative reference rates, FSB, LIBOR

The Financial Stability Board (FSB) today published its latest progress report on implementation of its recommendations to reform major interest rate benchmarks. The report sets out the progress made on…

IMF: Casting Light on Central Bank Digital Currencies

November 14, 2018

Central Bank Digital Currencies, IMF

The paper is organized in five sections. The first offers an overview of CBDCs—what they are, why central banks might issue CBDCs, and how they might design these. Using a…

ESMA update CSDR Q&A on provision of services and settlement discipline

November 12, 2018

CSDR, ESMA

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers (Q&As) regarding the implementation of the Central Securities Depository Regulation (CSDR). The updated Q&As provide answers…

IHS Markit says seclending revenues hit $2.5bn in Q3 2018

November 9, 2018

IHS Markit, Securities Lending

Banner year for EM equity lending continued in Q3 Lack of specials demand challenged US equity revenues Corporate bond demand robust, though revenue uptrend slowing Ten years ago, the third…

BoE working paper: The leverage ratio, risk-taking and bank stability

November 9, 2018

Bank of England, Leverage Ratio

This paper addresses the trade-off between additional loss-absorbing capacity and potentially higher bank risk-taking associated with the introduction of the Basel III leverage ratio. This is addressed in both a…

Fed’s Quarles on the Stress Capital Buffer

November 9, 2018

Federal Reserve, Quarles, SCB, Stress Capital Buffer

A New Chapter in Stress Testing Vice Chairman for Supervision Randal K. Quarles As devoted readers of our capital rules may know, our regulatory capital rule includes both minimum capital…

Get the weekly SFM update – our November 9 newsletter is online

November 9, 2018

Headlines: China goes after the IMF, with impacts for global finance; Finadium Big Ideas Quarterly Q4 2018 now online; Closer dealer cooperation is now a global trend in securities finance;…

Swissinfo: FINMA wants 800% risk weight for cryptoassets

November 8, 2018

cryptoassets, FINMA, RWA

Cryptoassets like bitcoin should be risk weighted at eight times their market value when banks calculate loss-absorbing capital buffers, according to a confidential letter from the Swiss financial regulator seen…

J.P. Morgan to collaborate with Wematch Interest Rates

November 7, 2018

Wematch Interest Rates has been selected to join J.P. Morgan’s In-Residence Fintech programme and will collaborate with the bank to explore ways of applying its technology at scale. The In-Residence…

Sharegain raises $12 million in funding, gets write up in Financial Times

November 6, 2018

Sharegain

Here’s the press release: Sharegain has raised $12 million, over two funding rounds, to bring securities lending to private banks, online brokers, robo-advisors and asset management firms. Venture Capital firms…

Rumor mill: Euroclear looking at Elixium investment

November 6, 2018

From Global Investor: Euroclear is exploring buying a stake in securities financing and collateral venue Elixium, Global Investor understands. The full story is available at https://www.globalinvestorgroup.com/articles/3691231/euroclear-exploring-elixium-stake-sources

Bloomberg: BrokerTec moving to Amsterdam

November 6, 2018

CME Group Inc. is moving its European market for short-term financing, the largest in the region, out of London because the exchange operator wants to guarantee continental firms can continue…

WSJ: Asian investors buying fewer US Treasuries

November 6, 2018

Asia, US Treasuries, WSJ

Where to Find Treasury Buyers? Not Asia The erosion of demand in emerging Asian markets reflects their maturation into more stable economies. Asian investors are proving less and less eager…

DTCC testing DLT for credit derivatives with MarkitSERV and 15 banks

November 6, 2018

blockchain, derivatives, DTCC, Trade repositories

The Depository Trust and Clearing Corporation (DTCC) announced that it has advanced to the testing phase of its project to re-platform its credit derivatives Trade Information Warehouse (TIW) on distributed…

FT: German bond shortages likely to continue in the face of QE

November 6, 2018

Germany, QE, Quantitative Easing

German bond market shrugs off fears over QE end Although investors are bracing for the European Central Bank to stop its huge purchases of government bonds at the end of…

Federal Reserve Board finalizes new supervisory rating system for large financial institutions

November 2, 2018

bank regulation, Federal Reserve

The Federal Reserve Board on Friday finalized a new supervisory rating system for large financial institutions that is aligned with the core areas most important to supporting a large firm’s…

Swiss National Bank’s Thomas Jordan: Protectionism complicates monetary policy

November 2, 2018

protectionsim, Swiss National Bank

Switzerland owes much of the prosperity it enjoys today to open markets and thriving trade with many countries across the globe. In recent decades, free trade in goods and services,…

Get the weekly SFM update – our November 2 newsletter is online

November 2, 2018

Headlines: The US SA-CCR proposal on collateral: generally speaking, good news for the markets (Premium); Protectionist government policies and the impact on financial markets; Hedge fund closures down in 2018,…

NEX Markets connects with Eurex to launch new clearing solution for BrokerTec Europe customers

November 2, 2018

BrokerTec, Eurex

Eurex Clearing has worked with BrokerTec Europe Limited, an anonymous dealer-to-dealer platform for the fixed income markets run by NEX Markets, to launch a new clearing solution for the European…

OCC securities lending CCP volume in Oct 2018 up 25.7% year over year

November 1, 2018

CCP, OCC, Options Clearing Corp, Securities Lending

Securities Lending: OCC’s securities lending CCP activity was up 25.7 percent in new loans from October 2017 with 129,863 transactions last month. Year-to-date stock loan activity increased 20.1 percent from…

Federal Reserve proposes lower regulatory obligations for smaller US banks

October 31, 2018

bank regulation, capital requirements, Federal Reserve

The Federal Reserve Board on Wednesday invited public comment on a framework that would more closely match the regulations for large banking organizations with their risk profiles. The changes would…

BIS says notional of OTC derivatives increases to $595 trillion but gross value declines to $10 trillion

October 31, 2018

OTC derivatives statistics at end-June 2018 The notional value of outstanding OTC derivatives increased from $532 trillion at end-2017 to $595 trillion at end-June 2018. This increase in activity was…

Barclays moving some securities financing business from UK to Ireland

October 31, 2018

As part of its planning to ensure continuity of service provision to clients in the European Economic Area outside the United Kingdom (EEA), and in response to the proposed withdrawal…

ASIFMA: Asia struggling to meet EU Benchmarks Regulation

October 31, 2018

Asia, ASIFMA, Benchmarks, EU

ASIFMA, the financial industry’s leading regional trade association, today released a new report “The EU Benchmarks Regulation and Asia: Hurdles Rise as the 2020 Deadline Nears.” The report was co-authored…

US regulators issue Notice of Proposed Rulemaking for SA-CCR

October 30, 2018

Federal Reserve, SA-CCR

Three federal banking agencies on Tuesday invited public comment on a proposal to update their standards for how firms measure counterparty credit risk posed by derivative contracts under the agencies’…

ARRC Releases Information on Transition Progress and Consultation for Fallback Contract Language

October 30, 2018

ARRC, LIBOR, SOFR

The Alternative Reference Rates Committee (ARRC) released additional information regarding its support of the transition from U.S. dollar (USD) LIBOR. The ARRC provided a timeline of key milestones to serve…

ECB says securities finance markets lost liquidity from June to August 2018, deterioration in general collateral market

October 30, 2018

ECB, Europe, securities finance, SESFOD

Results of the September 2018 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD) Credit terms tightened, in line with the expectations reported in…

FT: EU pledges access to UK clearing houses in no-deal Brexit

October 30, 2018

Brexit, CCPs, EU, FT

Brussels has responded to financial industry calls for continued access to London’s capital markets by providing reassurance that EU groups will temporarily be able to use crucial derivatives clearing services…

Reuters: EU shows no sign of heeding U.S. threat over derivatives clearing

October 29, 2018

CCPs, ECB, European Union

The European Union is proposing to give the European Central Bank sweeping powers over foreign clearing houses in times of market stress, an EU document showed, as the bloc shows…

ECB’s Draghi argues for continued central bank independence

October 29, 2018

Central Banks, Draghi, ECB

Mario Draghi: Central bank independence Text of the First Lamfalussy Lecture by Mr Mario Draghi, President of the European Central Bank, at the National Bank of Belgium, Brussels, 26 October…

Basel Committee publishes Basel III annual progress report

October 29, 2018

Basel Committee, Basel III

This updated progress report provides a high-level view of Basel Committee members’ progress in adopting Basel III standards as of end-September 2018. It focuses on the status of adoption of…

Canada DLT settlement project results promising, but benefits need scale

October 28, 2018

blockchain, DLT, Project Jasper

In an assessment of its latest phase of blockchain experimentation, Payments Canada found that while distributed ledger technology (DLT) shows promise in terms of its ability to deliver efficiency improvements,…

BBH: US/China trade war impact on securities lending

October 28, 2018

BBH, China, Securities Lending

President Donald Trump has slapped tariffs on $250 billion worth of Chinese goods this year, and Beijing has retaliated with levies of $110 billion on American products. The IMF’s projections…

Get the weekly SFM update – our October 26 newsletter is online

October 26, 2018

Headlines: Finadium’s event calendar: a webinar on SOFR implementation, events in Zurich and Frankfurt, Rates & Repo and more; A new analysis on the impact of central bank digital currencies to…

FASB approves SOFR for hedge accounting

October 26, 2018

FASB, SOFR

The Financial Accounting Standards Board (FASB) today issued an Accounting Standards Update (ASU) that expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting. FASB…

Eurex Clearing to expand Partnership Program to Repo and Foreign Exchange

October 26, 2018

Eurex Clearing, OTC derivatives, Repo

Eurex Clearing plans to expand its Partnership Program to cover the repo and OTC foreign exchange (OTC FX) segments. The design of the program extension is complementary to the OTC…

Bank of England publishes plans for financial services regulation post-Brexit

October 25, 2018

Bank of England, Brexit, CCPs

The package of communications published today sets out changes to our rules and binding technical standards arising out of EU Withdrawal. It also sets out further guidance on the process…

Reuters: UK derivatives clearers may get no-Brexit deal reprieve – EU document

October 25, 2018

Brexit, CCPs, Clearing

The European Union might grant temporary permission for clearing houses in Britain to continue serving EU customers if there is a no-deal Brexit next March, an EU document seen by…

Deutsche Börse and Bundesbank expect rapid blockchain development after tests

October 25, 2018

Blockbaster, blockchain, Bundesbank, Deutsche Borse, Digital Asset

Deutsche Bundesbank and Deutsche Börse have successfully completed the performance tests of their jointly specified prototypes for securities settlement based on blockchain technology. The prototypes support the settlement of securities…

Schroders: Are short sellers ethical?

October 24, 2018

Schroders, Short selling

On the face of it, an investment strategy specifically designed to gain in value when companies fall in value might not seem particularly responsible. So-called “short selling” is often associated…

Bank of Canada: Is a Cashless Society Problematic?

October 24, 2018

Bank of Canada, cashless