News and Notes

ARRC, securitizations, SOFR

The Alternative Reference Rates Committee (ARRC) released consultations on U.S. dollar (USD) LIBOR fallback contract language for bilateral business loans and securitizations for public feedback. These consultations outline draft language…

ICMA: European bond markets still waiting to experience the benefits of MiFID II implementation

December 7, 2018

Fixed Income, ICMA, MiFID II

6 December 2018 ICMA has today published a report on the impacts and challenges of MiFID II/R for the international bond market in the year since the implementation date. The…

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December 7, 2018

Headlines: Finadium: What we learned at yesterday’s securities finance event in Zurich (Premium); Progress on Frankfurt as the next big banking hub; Fed survey sharpens understanding of banks and IOER;…

Eurex repo clearing reaches 24 participants in Brexit shift

December 6, 2018

Eurex Clearing, Repo Clearing

The extension of Eurex’s Partnership Program to the repo segment has so far signed up 24 participants from the US, the UK and Continental Europe. The program’s aim is to…

World Federation of Exchanges report finds securities lending helpful to draw investors to emerging markets

December 5, 2018

Securities Lending, World Federation of Exchanges

What attracts international investors to emerging markets? World Federation of Exchanges December 2018 The only market structure feature found to be positively associated with international invest- ment is the introduction…

Sberbank and Interros transact OTC repo on blockchain

December 4, 2018

blockchain, Interros, Repo, Sberbank

Sberbank and the Interros group company concluded the first OTC repo transaction in electronic format using a smart contract and electronic digital signatures through an IT platform developed by the…

Fed to expand UST data collection beyond TRACE

December 3, 2018

Brainard, Federal Reserve, US Treasuries

The Structure of the Treasury Market: What Are We Learning? Governor Lael Brainard At “The Evolving Structure of the U.S. Treasury Market” Fourth Annual Conference Hosted by the Federal Reserve…

Reuters: EU takes new step on derivative clearing, despite UK, U.S. concerns

December 3, 2018

CCPs, equivalency, Europe, Reuters

BRUSSELS (Reuters) – European Union governments backed on Monday a proposal that could force systemic foreign clearing houses with operations in the EU to relocate to the bloc if they…

OCC seclending CCP up 4.2% in Nov 2018 year over year

December 3, 2018

OCC, Options Clearing Corporation, Securities Lending

Securities Lending: OCC’s securities lending CCP activity was up 4.2 percent in new loans from November 2017 with 111,814 transactions last month. Year-to-date stock loan activity increased 18.5 percent from…

Fed working paper: “Emergency Collateral Upgrades”

December 2, 2018

Collateral upgrades, Federal Reserve

During the 2008-09 financial crisis, the Federal Reserve established two emergency facilities for broker-dealers. One provided collateralized loans. The other lent securities against a pledge of other securities, effectively providing…

Spain to launch Financial Transactions Tax

November 30, 2018

FTT, Spain

Ernst & Young notes: The Government announced the creation of a Financial Transactions Tax (FTT); as anticipated, the parliamentary proceeding for its approval (Bill proposal, or Royal-Decree Law) has not…

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November 30, 2018

Headlines: Finadium: Benchmark reform and transition: key takeaways from AMIC conference; Finadium: Stablecoins, Capital Markets and the Fiat/Digital Currency Divide; Why it’s time to stop quoting 30 year LIBOR (Premium);…

Tradeweb Connects to Eurex for Direct Clearing

November 29, 2018

As part of their efforts to enhance clients’ trading and clearing workflows, Eurex Clearing, a leading global central counterparty, and Tradeweb Markets, a leading global provider of fixed income, derivatives…

European Parliament MEPs call for inquiry on cum-ex trades

November 29, 2018

Cum-ex, European Parliament

Cum-ex tax fraud: MEPs call for inquiry, justice and stronger tax authorities The tax fraud, which was uncovered by a team of investigative journalists and has affected at least 11…

Fed blog: “Breaking Down TRACE Volumes Further” finds off-the-run is 27% of overall volumes

November 29, 2018

Liberty Street Economics, off-the-run, TRACE, US Treasuries

Following an earlier joint FEDS Note and Liberty Street Economics blog post that examined aggregate trading volume in the Treasury cash market across venues, this post looks at volume across…

BoE Systemic Risk Survey 2018 H2: 67% expect a high-impact risk event in the short term

November 28, 2018

Bank of England, systemic risk

Probability of a high‑impact event and confidence in the UK financial system The perceived probability of a high‑impact event in the UK financial system over the short term has increased…

BoE Financial Stability Report: UK banks can withstand a Brexit shock

November 28, 2018

Bank of England, Brexit, financial stability

Since the EU referendum in 2016, the FPC and other authorities have identified risks of disruption to the financial system that could arise from Brexit and worked to ensure they…

Fed’s Powell says that financial stability risks are moderate

November 28, 2018

Federal Reserve, financial stability, Powell

The Federal Reserve’s Framework for Monitoring Financial Stability Chairman Jerome H. Powell November 28, 2018 The New Approach to Financial Stability This new approach can be divided into three parts.…

Bundesbank’s Burkhard Balz: patience is paying off for RMB in international payments

November 28, 2018

Bundesbank, China, RMB

Burkhard Balz: The role of the renminbi in international payments Keynote speech by Mr Burkhard Balz, Member of the Executive Board of the Deutsche Bundesbank, at the 5th European-Chinese Banking…

Fed blog: Is the United States Relying on Foreign Investors to Fund Its Larger Budget Deficit?

November 28, 2018

Federal Reserve, Liberty Street Economics

The federal tax cut and the increase in federal spending at the beginning of 2018 substantially increased the government deficit, requiring a jump in the amount of Treasury securities needed…

ISDA Publishes Preliminary Results of Benchmark Consultation

November 27, 2018

ISDA has today published a statement summarizing the preliminary results of a consultation on technical issues related to new benchmark fallbacks for derivatives contracts that reference certain interbank offered rates…

IFLR: Initial margin prompts shift to unconventional collateral

November 27, 2018

collateral, IFLR, uncleared margin

Phase four and five firms are moving away from standard forms of eligible collateral under the uncleared margin rules (UMR), but sources warn that this will lead to delays due…

Banque de France’s Villeroy de Galhau: Brexit an opportunity for European financial infrastructure

November 25, 2018

Banque de France, Brexit

François Villeroy de Galhau: The consequences of Brexit for the French and European financial sectors Speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman…

An odd WSJ article on the US repo market

November 25, 2018

Repo, US, WSJ

Investment Banks’ Secret Cash Cow Jon Sindreu Nov. 23, 2018 Investment banks have made a nice little money-spinner out of a once broken trading strategy: The repo. But now that…

ESMA issues statement on managing risks of a no-deal Brexit for central clearing

November 23, 2018

Brexit, Clearing, ESMA

The European Securities and Markets Authority (ESMA) is publishing this Public Statement to address the risks of a no-deal Brexit scenario in the area of central clearing. The ESMA Board…

Get the weekly SFM update – our November 23 newsletter is online

November 23, 2018

Headlines: Finadium: China and Japan are holding fewer US Treasuries. What happens next?; Which money fund will be first to force price improvement on repo CCPs? (Premium); Finadium launches new…

Global regulatory committees say CCP adoption working but concentration of clearing firms is high

November 19, 2018

CCPs, CPMI, FSB

The Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published today…

State Street survey shows execution tech, seclending are SWF priorities

November 19, 2018

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…

IIAC: Canada’s Central Counterparty for Repo: A Made-In-Canada, Street-Led Liquidity Success story

November 6, 2018

Canada, CDCC, IIAC, Repo

Toronto, ON, November 6, 2018 – The Investment Industry Association of Canada (IIAC) and the Canadian Derivatives Clearing Corporation (CDCC) commissioned a Deloitte study, “The Development & Evolution of Canada’s…

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