News and Notes

weekly update

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

The use of bank notes in Canada for payments has declined consistently for some time, and similar trends are evident in other countries. This has led some observers to predict…

Bloomberg editorial: Europe’s Banks Aren’t Ready for the Next Crisis

October 24, 2018

banks, Bloomberg, Europe

A renewed bout of distress among Greek and Italian banks illustrates a deeper problem in Europe: The financial system’s overseers haven’t done nearly enough to prepare for the next crisis.…

Korea’s National Pension Service stops securities lending following criticism

October 24, 2018

Korea, Securities Lending

Business Korea: The National Pension Service (NPS) has decided to stop lending stocks to short sellers as criticism mounts against it. Kim Sung-joo, chairman of the National Pension Corporation, said…

London Stock Exchange Group to increase majority shareholding in LCH Group

October 22, 2018

CCPs, LCH, LSEG

London Stock Exchange Group plc (“LSEG”) announces that it is in the process of acquiring further shares in LCH Group Holdings Limited (“LCH”), which will increase its majority ownership of…

CFTC Commissioner Rostin Behnam on CCP risk management

October 21, 2018

Behnam, CCPs, CFTC

Keynote Remarks of CFTC Commissioner Rostin Behnam at the Federal Reserve Bank of Chicago’s Fifth Annual Conference on CCP Risk Management, Chicago, Illinois CCP Governance and Risk Management CCP governance…

GlobalCapital: China approves tri-party repo

October 21, 2018

China, Repo, tri-party

PBoC has opened the way to triparty repo in the interbank bond market, the central bank announced on October 17. “In recent years, there has been a growing and diverse…

SEB: “no products nor participates in structures whose sole purpose is to avoid taxes” in response to media reports

October 21, 2018

SEB, Securities Lending

Comment on tax arrangements in Sweden SEB offers no products nor participates in structures whose sole purpose is to avoid taxes, says SEB in a commentary on Friday’s media reports…

Fed blog: Liquidity Effects of Post-Crisis Regulatory Reform

October 21, 2018

Federal Reserve, Liberty Street Economics, Liquidity

The post-crisis regulatory reform efforts to improve capital and liquidity positions of regulated institutions provide incentives for banks to change not only the structure of their own balance sheets but…

Basel Committee seeks views on the leverage ratio treatment of client cleared derivatives

October 21, 2018

Basel Committee, Cleared Derivatives, Leverage Ratio

The Basel Committee on Banking Supervision today published a consultative document entitled Leverage ratio treatment of client cleared derivatives. A key element of the Basel Committee’s post-crisis Basel III reforms…

ESMA values EU derivatives market at EU 660 trillion with central clearing increasing significantly

October 20, 2018

CCPs, derivatives, ESMA

The European Securities and Markets Authority (ESMA) today publishes its first Annual Statistical Report (Report) on the European Union’s (EU) derivatives markets. The Report, based on data submitted under the…

Get the weekly SFM update – our October 19 newsletter is online

October 19, 2018

Headlines: The ECB’s Cœuré walks through ESTER: time is short to solve some tricky problems; A new analysis on the impact of central bank digital currencies to private banks; An update…

ISDA white paper: Clearing Incentives, Systemic Risk and Margin Requirements for Non-cleared Derivatives

October 17, 2018

ISDA, Margin, non-cleared derivatives

Central clearing of standardized derivatives and margin requirements for non-cleared derivatives are two of the basic tenets of global financial regulatory reform. They are also inter-related: the purpose of margin…

Basel Committee issues final “Stress testing principles”

October 17, 2018

Basel Committee, stress testing

The Basel Committee on Banking Supervision today issued the final version of its Stress testing principles. This document replaces the Committee’s 2009 Principles for sound stress testing practices and supervision,…

ICMA: European repo market hits record EUR 7,351 billion

October 17, 2018

European repo survey, ICMA

The European Repo and Collateral Council (ERCC) of the International Capital Market Association (ICMA) has today released the results of its 35th semi-annual survey of the European repo market. The…

ISLA News now available through Bloomberg Launchpad

October 17, 2018

The International Securities Lending Association (ISLA), a leading financial services trade association today announced a new capability whereby securities finance traders can personalise their Bloomberg Launchpad settings to receive ISLA…

DTCC study shows DLT can support US equity market volumes

October 16, 2018

Digital Asset, DLT, DTCC, R3

A study from the Depository Trust and Clearing Corporation (DTCC) said that distributed ledger technology (DLT) is capable of supporting average daily trading volumes in the US equity market of…

ISDA Publishes Updated Model Netting Act

October 16, 2018

ISDA, netting

The International Swaps and Derivatives Association, Inc. (ISDA) has published an update of its Model Netting Act, designed to provide a template that can be used by jurisdictions considering legislation…

Get the weekly SFM update – our October 12 newsletter is online

October 12, 2018

Headlines: Several blows this week to London as a financial center post-Brexit (Premium); We analyze new US mutual fund securities lending disclosures, plus fee splits (Premium); If brokers move their business to…

DTCC Partners with Broadridge, FIS Global, Murex, RegTek.Solutions and SimCorp to Further Streamline SFTR Trade Reporting Processes

October 9, 2018

Broadridge, DTCC, FIS, Murex, RegTek.Solutions, SFTR, SimCorp

The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced new partnerships with Broadridge, FIS Global, Murex, RegTek.Solutions and SimCorp…

Hanweck Enhances Borrow Intensity Indicators

October 9, 2018

Hanweck, a leading provider of real-time risk analytics on global derivatives markets, has enhanced its Borrow Intensity Indicators™ with the addition of five years of historical data and new real-time liquidity…

Industry Groups Set Out Impact of Hard Brexit on Derivatives

October 9, 2018

Brexit, ISDA

The International Swaps and Derivatives Association, Inc. (ISDA), the Association of German Banks (Bundesverband deutscher Banken), the Italian Financial Markets Intermediaries Association (Associazione Intermediari Mercati Finanziari), the Banking and Payments…

FT: ECB warns banks to curtail booking trades and loans in UK after Brexit

October 9, 2018

back-to-back, Brexit, ECB, FT

The European Central Bank has warned banks they have a maximum of three years after Brexit to curtail their use of a “back-to-back” booking model that makes it easier to…

UK Financial Policy Committee says UK banks okay with Brexit but CCPs in jeopardy

October 9, 2018

Bank of England, Brexit

The FPC continues to judge that the 2017 stress test encompassed an appropriately wide range of UK macroeconomic outcomes that could be associated with Brexit. As it has set out…

SIX licenses SARON to Eurex for futures contracts

October 9, 2018

Eurex, SARON, SIX

SIX, the leading index provider for the Swiss Market today announces that it has licensed the SARON (Swiss Average Rate Overnight) to the derivative exchange EUREX as underlying for Futures…

Fed blog: Unlocking the Treasury Market through TRACE

October 7, 2018

Federal Reserve US Treasuries, Liberty Street Economics, TRACE

The U.S. Treasury market is widely regarded as the deepest and most liquid securities market in the world, playing a critical role in the global economy and in the Federal…

Reuters: Under fire from Musk, top fund firms defend securities lending

October 7, 2018

Blackrock, Tesla, Vanguard