News on Basel III, money markets, Asian banks and more

We’ve found so much important in the world of securities finance that today’s article needed to summarize the latest news. Topics include progress on Basel III, the Fed on money markets, Asian banks and capital rules, and an important hire in collateral management.

Basel III: The Basel Committee has released a progress report on Basel III adoption globally. This progress report is really a report card: how fast and well are regulators moving to adopt the Basel III framework? All reviewed economies have either implemented or are in the process of implementing Basel II. 22 out of 28 have taken some action on Basel 2.5, and 20 out of 28 have begun to publish rules on Basel III (21 if you count the US as of last week).

The Federal Reserve released a research report, Money Market Funds and Systematic Risk, that lends support to the SEC’s currently proposed rule changes for money market funds (VNAV, reserve fund and investor withdrawal limits). As the report notes, “the SEC’s current efforts to modify the structure of MMFs to reduce incentives to run may be essential not only for protecting MMF investors—especially retail investors—but also for protecting the stability of the U.S. financial system and maintaining the access of businesses, consumers, and governments to credit.”

Reuters reported last week on a KPMG report that said Asian banks would struggle with Basel III rules because of a lack of high quality liquid assets and poor or delayed direction from regulators. According to the article, “‘In the rest of Asia, many of the regulators haven’t yet decided how or when to bring in the new rules, so consequently the banks are not kicking off their projects yet,’ Simon Topping, KPMG’s Asia-Pacific head of their Financial Services Regulatory Centre of Excellence, said in the report.” We looked for the original KPMG report but couldn’t find it online.

IOSCO released a consultation paper on securitization, part of the global initiative on Shadow Banking regulation. Highlights from the report include questions on international regulatory jurisdictions that might impede cross-border issuance and the need for stress testing.

The Fed released final Basel III rules. Much of this was as expected, except that Basel III rules will now apply to all US banks, not just those with the largest balance sheets. Can anyone say further US banking industry consolidation? Here’s the Fed press release. No word yet from the Federal Reserve on accounting for indemnification however.

And lastly, LCH.Clearnet has hired Stephen Patriarco, lately of Merrill Lynch, to be Global Head of Collateral Services and US Head of Collateral and Liquidity Management. According to the LCH.Clearnet release, “Stephen will be responsible for developing LCH.Clearnet’s collateral management capabilities on a global basis and will provide localised support in collateral and liquidity management to U.S. clients. The appointment is further testament to LCH.Clearnet’s commitment to the U.S. marketplace and to the importance placed on creating collateral efficiencies for participants.” Congratulations to Stephen on this new role.

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