News and Notes

alternative benchmarks, LCH, Singapore, SORA

Clearinghouse LCH announced it’s cleared the first Singapore Dollar interest rate swaps referencing the Singapore Overnight Rate Average (SORA) as the industry continues to adopt alternative interest rate benchmarks. Standard…

EBA publishes dividend arbitrage inquiry, makes regulatory suggestions

May 19, 2020

AML, CFT, Dividend Arbitrage, EBA

The European Banking Authority’s (EBA’s) inquiry showed that national authorities do not share the same understanding of dividend arbitrage trading schemes, due to differences in Member States’ domestic tax law;…

Bank of England updates on Covid Corporate Financing Facility

May 19, 2020

Bank of England, coronavirus, HM Treasury

The Bank of England (BoE) and UK finance ministry have published details of an update to the terms of the Covid Corporate Financing Facility (CCFF), which has over 230 businesses…

Delta Capita collaborates with DTCC to support buy-side firms’ SFTR testing

May 19, 2020

Delta Capita, DTCC, SFTR

Delta Capita announced that it has extended its collaboration with The Depository Trust and Clearing Corporation (DTCC) to help market participants meet their Securities Financing Transactions Regulation (SFTR) trade reporting…

ESMA announces open hearing on benchmarks consultation paper

May 18, 2020

The European Securities and Markets Authority (ESMA) will hold an open hearing for its Consultation Paper on draft Regulatory Technical Standards (RTS) under the Benchmarks Regulation (BMR) on Friday 29…

ESMA announces termination of short selling bans, net short position reporting remains

May 18, 2020

ESMA, Short selling bans

The European Securities and Markets Authority (ESMA) announced the non-renewal of the emergency restrictions on short selling and similar transactions by the following national competent authorities (NCAs): Finanzmarktaufsicht (FMA) of…

ICSDs appoint China Construction Bank as common depository

May 18, 2020

Central Securities Depositories, China Construction Bank, Clearstream, Eurobonds, Euroclear

The international central securities depositories (ICSDs) Clearstream Banking and Euroclear have appointed China Construction Bank (CCB) as common depository, safekeeper and service provider for their international debt securities, also known…

DTCC releases case studies and proposals on distributed ledger technology for settlements and private markets

May 18, 2020

blockchain, distributed ledger technology, DLT, DTCC

The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry, today unveiled plans to explore the benefits of digitalization in the public and…

US regulators agree on more detailed changes to Supplementary Leverage Ratio exclusion of US Treasuries

May 16, 2020

Supplementary Leverage Ratio, US, US Treasuries

The federal bank regulatory agencies today announced temporary changes to their supplementary leverage ratio rule. The temporary modifications will provide flexibility to certain depository institutions to expand their balance sheets…

CME to wind down regulatory reporting businesses and EU and Australian trade repositories

May 15, 2020

Abide, CME Group, NEX, Trade repositories

Following an evaluation of its business portfolio after the acquisition of NEX Group in November 2018, CME Group has made the decision to wind down its Abide Financial and NEX…

Bank of England paper: The interbank market puzzle

May 15, 2020

Bank of England, Interbank market

Staff Working Paper No. 862 By Franklin Allen, Giovanni Covi, Xian Gu, Oskar Kowalewski and Mattia Montagna This study documents significant differences in the interbank market lending and borrowing levels across…

Fed discontinuing three month repo operations

May 15, 2020

Federal Reserve, Repo

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of large-scale overnight and term repurchase agreement (repo) operations for the…

Get the weekly SFM update – our May 15 newsletter is online

May 15, 2020

Top Stories: Transforming the Global Trade Reporting Process – A Conversation with DTCC’s Val Wotton Worried about negative US interest rates? Get smart on yield curve control (Premium); Are primary…

Pirum announces SFTR compliance for CCP Gateway via Eurex Clearing

May 13, 2020

CCP, Eurex, Pirum, SFTR

Ahead of the SFTR go-live Pirum enhance their CCP Gateway to allow the novation of reportable transactions, enabling clients to manage both real-time novation and the SFTR data required to…

BIS: US dollar funding markets during the Covid-19 crisis – the money market fund turmoil

May 12, 2020

BIS, COVID-19, money market funds

Key takeaways Short-term dollar funding markets experienced severe dislocations in mid-March 2020, with funding diverted from unsecured funding markets as investors withdrew and switched to secured funding markets and government…

BIS: US dollar funding markets during the Covid-19 crisis – the international dimension

May 12, 2020

BIS, COVID-19, money market funds

Dislocations in domestic US dollar money markets reverberated globally. Non-US banks lost a substantial part of funding from money market funds and had to borrow at shorter maturities. Nevertheless, the…

European Commission endorses CSDR delay until February 2021

May 12, 2020

CSDR, European Commission

The proposed Commission Delegated Regulation postpones the entry into force of Commission Delegated Regulation (EU) 2018/1229 from 13 September 2020 to 1 February 2021. Taking into account that for 2020…

Fed starts to buy corporate bond ETFs

May 12, 2020

Corporate Bonds, ETFs, Federal Reserve

New York Fed Announces Start of Certain Secondary Market Corporate Credit Facility Purchases on May 12 The Federal Reserve Bank of New York today announced that the Secondary Market Corporate…

BIS research says central banks need to assess CCPs jointly in wake COVID-19 turbulence

May 11, 2020

banks, BIS, CCPs, COVID-19

The Covid-19 pandemic led to market turmoil in mid-March. Large price movements prompted large margin calls from central counterparties (CCPs). This strained the liquidity positions of large dealer banks. Banks…

DTCC’s NSCC completes $2 billion debt offering to bolster liquidity resources

May 11, 2020

DTCC, NSCC, risk waterfall

From DTCC Connection: In April, the National Securities Clearing Corporation (NSCC), a clearing agency subsidiary of DTCC, successfully completed its inaugural term debt issuance in the amount of $2 billion…

Get the weekly SFM update – our May 8 newsletter is online

May 8, 2020

Top Stories: The Joys of Tea, Crumpets and Software as a Service FISL 2020: rising pros on where securities finance fits and future tech (Premium); The Fed’s regulatory wish list:…

ARRC publishes results of vendor readiness for SOFR transition

May 7, 2020

ARRC, LIBOR, SOFR, vendors

ARRC Releases Best Practices for Vendors’ Transition to SOFR and Vendor Readiness Survey Results The Alternative Reference Rates Committee (ARRC) today released recommended best practices for technology and operations vendors…

ARRC introduces an ISDA-like option for LIBOR to SOFR fallback language

May 6, 2020

ARRC, ISDA, LIBOR, SOFR

The Alternative Reference Rates Committee (ARRC) today issued a supplemental consultation seeking further views on certain technical issues related to spread adjustment methodologies for cash products referencing U.S. dollar (USD)…

Fitch maintains stable ratings for Euroclear and Clearstream

May 6, 2020

Clearstream, Euroclear, Fitch

European Securities Depositories’ Credits Stable Despite Volatility Fitch Ratings-London-05 May 2020: European international central securities depositories (ICSDs) have coped well with pandemic-related market volatility thanks to ample latency in transaction…

Bloomberg: PIMCO suggests Fed to open up primary dealer system to asset managers

May 6, 2020

Bloomberg, PIMCO, primary dealers

Bond giant Pacific Investment Management Co. argues that asset managers should be included [as a primary dealer]. That could benefit the Newport Beach, California-based firm and would add trillions of…

DTCC, Unavista, REGIS-TR and KDPW approved as SFTR trade repositories

May 6, 2020

ESMA, SFTR, Trade repositories

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has approved the extension of registrations of four trade repositories (TRs) to include securities financing transactions (SFT) reporting…

Regulators modify liquidity coverage ratio for banks participating in money market facility and PPP liquidity programs

May 5, 2020

Federal Reserve, Liquidity Coverage Ratio

To support the flow of credit to households and businesses, the federal bank regulatory agencies today announced an interim final rule that modifies the agencies’ Liquidity Coverage Ratio (LCR) rule…

MTS launches MTS Depo for unsecured money market trading

May 5, 2020

MTS, MTS Depo, Repo

MTS, part of London Stock Exchange Group, has launched MTS Depo, a new electronic multilateral exchange system for European unsecured money market trading denominated in Euros. Trading has already begun…

Reserve Bank of Australia expands eligibility of corporate debt as collateral

May 5, 2020

collateral, corporate debt, Reserve Bank of Australia

To assist with the smooth functioning of Australian capital markets, the Reserve Bank has broadened the range of corporate debt securities that are eligible as collateral for domestic market operations…

BIS: Releasing bank buffers to cushion the crisis – a quantitative assessment

May 5, 2020

Balance sheets, bank capital, BIS, capital buffers

Banks globally entered the Covid-19 crisis with roughly US$ 5 trillion of capital above their Pillar 1 regulatory requirements. The amount of additional lending will depend on how hard banks’…

Axoni to replace OCC’s seclending infrastructure with DLT

May 5, 2020

Axoni, blockchain, DLT, OCC, Securities Lending CCPs

Equity derivatives clearing organization OCC announced it’s selected Axoni, a technology firm that specializes in multi-party workflows and infrastructure, to develop and implement a distributed ledger technology solution to replace…

Tradeweb’s repo ADV up 18.7% yoy to $223.1bn in April

May 5, 2020

electronic repo, Tradeweb

Tradeweb reported average daily volume (ADV) of $763.4 billion in April across its electronic marketplaces for rates, credit, equities and money markets. This is an increase of 14.6% year over…

BNY Mellon, J.P. Morgan, State Street among investors for Citi-developed proxy voting platform raising $20.5mn

May 5, 2020

BNY Mellon, Citi, Clearstream, Computershare, Deutsche Bank, fundraising, HSBC, J.P. Morgan, proxymity, State Street

Highlight: Proxymity launches consortium of financial industry heavyweights and raises $20.5 million in strategic round to become its own entity. BNY Mellon, Citi, Clearstream, Computershare, Deutsche Bank, HSBC, J.P. Morgan,…

BIS working paper: CCPs may dampen innovation and efficiency in market making

May 4, 2020

BIS, CCPs, dealers, Liquidity, market making

Dealers’ insurance, market structure, and liquidity Many financial markets operate through dealers, market-makers, or similar intermediaries that promote liquidity in over-the-counter (OTC) markets. Following the Great Financial Crisis of 2007-09,…

FSB consults on assessing adequacy of financial resources for CCP resolution

May 4, 2020

CCPs, FSB, resolution plans

The Financial Stability Board (FSB) published a public consultation report on Guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution. The guidance…

European regulators defer bilateral OTC derivatives margining requirement for one year

May 4, 2020

EMIR, ESMA, OTC derivatives

The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs), in response to the COVID-19 outbreak have published joint draft Regulatory Technical Standards (RTS) to amend the Delegated Regulation on…

Bank of England: Bounce Bank Loans can be excluded from UK Leverage Ratio

May 4, 2020

Bank of England, Bounce Bank Loans, Leverage Ratio

HM Treasury recently launched the Covid-19 Bounce Back Loan scheme (BBLS). This statement sets out the PRA’s observations on the risk weighted treatment of exposures under the scheme, particularly eligibility…

Federal Reserve extends time for foreign banks to comply with single counterparty credit limit rule

May 1, 2020

Federal Reserve, SCCL, single counterparty credit limits

The Federal Reserve Board on Friday finalized a rule to extend by 18 months the initial compliance dates for certain parts of its single-counterparty credit limit rule. The extension, which…

OCC seclending volumes up 4% in April 2020 year over year

May 1, 2020

CCP, OCC, Securities Lending

The average daily loan value at OCC in April 2020 was $72,649,346,808 a 4.02 percent increase compared to April 2019. Securities lending CCP activity increased by 2.51 percent in new…

ISLA Publish Bankruptcy Remoteness Opinions to Support the GMSLA Security Interest over Collateral Agreement

May 1, 2020

bankruptcy, collateral, GMSLA, ISLA

ISLA is delighted to announce the release of four additional bankruptcy remoteness opinions to support the Global Master Securities Lending Agreement (Security Interest over Collateral – 2018 version), published by…

Get the weekly SFM update – our May 1 newsletter is online

May 1, 2020

Top Stories: Introducing the Digital Collateral Protocol: the right blockchain for global settlements Webinar replay and slides for The Macro Environment, COVID-19 and Office Hours (Premium); FISL 2020: trends and…

State Street paper offers perspective on the intersection of ESG and securities lending

April 30, 2020

ESG, Securities Lending, State Street

Beyond Mechanics: The Intersection of Securities Lending and ESG Investing Empirical evidence indicates that short selling, facilitated by securities lending, improves market efficiency and market liquidity. A holistic view of…

REGIS-TR and Sensiple to collaborate on delegated reporting services for SFTR

April 30, 2020

The European trade repository REGIS-TR will join forces with Sensiple, a market leader in regulatory technology solutions for repurchase agreements (“repo”) and secured lending. The partnership aims to provide an…

Basel Committee issues progress report on banks’ implementation of the “Principles for effective risk data aggregation and reporting”

April 29, 2020

Basel Committee, risk data

Banks’ ongoing efforts to implement the Risk Data Aggregation Principles have resulted in tangible progress in several key areas. Banks should continue to closely monitor implementation of the Principles. As…

Credit Agricole and Bank of China transact first onshore SOFR-linked swap

April 29, 2020

Bank of China, Credit Agricole, SOFR

Crédit Agricole Corporate and Investment Bank announced that its China division has completed the first onshore USD/CNY cross-currency Swap (CCS) with BAnk of China linked to the Secured Overnight Financing…

ICMA publishes an in-depth report on consolidated tape for greater post-trade transparency in the EU bond markets

April 29, 2020

bond markets, consolidated tape, Europe, ICMA

ICMA has today published a report into considerations surrounding the establishment of an EU consolidated tape (CT) for bond markets. This report was produced in response to a request from…

WFE paper says academic research shows short-selling bans are disruptive. Again.

April 29, 2020

Short selling bans, WFE

What does academic research say about short-selling bans? Published by: The WFE Research Team 29 Apr 2020 The WFE has published a paper that reviews the academic literature on short-selling…

European Commission proposes changes to IFRS9 and Leverage Ratio but fails to exempt government bonds

April 29, 2020

coronavirus, European Commission, IFRS9, Leverage Ratio

Coronavirus response: Banking Package to facilitate bank lending- Supporting households and businesses in the EU Changes to IFRS9 The application of IFRS 9 during the Coronavirus pandemic may lead to…

Report: APAC overtakes EU for seclending revenue, Japan leads and China “hugely encouraging”

April 28, 2020

APAC, Equilend, PASLA, RMA, Securities Lending