We’re off to the races this Monday with multiple news items of interest. Below we discuss CASLA’s fixed income panel, the attendee list for Finadium’s June 11 repo event in NYC, and comments from the head of the Basel Committee on RWA standardization.
Three presentations from CASLA’s May 8 2013 conference are now online. In “Securities Lending in Canada Legal, Regulatory and Tax Issues,” we recommend the coverage on Canada’s specific tax practices for various trust types as compared to US REITs and ETFs. The section on the EU’s proposed FTT is lengthy, but may undergo multiple changes before any conclusion comes around. We’re going to wait until discussions are further along in Europe before getting back into this one. Tim D’Arcy from SunGard presented current data on securities lending volumes and revenues. Lastly, a presentation on Fixed Income hinted at having details on a CCP initiative but was more a set up for the panel that ensued.
Finadium’s repo event
June 11 is shaping up to be repo day worldwide, with Finadium’s event in New York and the ICMA’s conference in London. We’re waiting for someone in Hong Kong to raise the flag and we’ll have solid time zone coverage.
In New York, we’re very pleased the Federal Reserve and ING have joined our panel. Our event now has 70 attendees with three weeks to go. Here’s the breakdown:
Prime brokers/repo dealers: 30%
Collateral service providers: 21%
Securities lending agents: 12%
Asset managers: 7%
The Wall Street Journal carried a brief comment from Stefan Ingves, head of Sweden’s Riksbank and chairman of the Basel Committee on Banking Supervision. Mr. Ingves spoke last Friday at the University of Chicago. According to the WSJ, “The principle of “risk-weighting” assets to gauge how much capital should be set aside for potential losses is a central part of the Basel framework. One of the chief concerns about the Basel III rules, which were agreed in the wake of the financial crisis, is that they still allow too much leeway…. Mr. Ingves added policy makers are working on the issue of leverage ratios, and he expects them to complete their work later this year.”
This gets back to two issues we’ve been tracking for some time: first is the lack of standardization in the leverage ratio, which prevents an apples to apples comparison of bank balance sheets and distorts stress tests results. This issue is well documented in Securities Finance Monitor as well as documents from the Basel Committee, the Federal Reserve, and others. The second is the growing importance of the leverage ratio, which we suspect might be the final ratio that regulators rely on to test bank health.