collateral

Big Data, Big Tech, BIS, collateral

Collateral is used in debt contracts to mitigate the difficulties (agency problems) that arise when the lender’s knowledge of the borrower is incomplete (asymmetric information). Banks usually require borrowers to…

ECB’s SESFOD reports collateral liquidity deterioration, valuation disputes in record acceleration in June

August 21, 2020

collateral, ECB, Initial Margin, OTC derivatives, SESFOD

Results of the June 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD) Most widespread tightening of credit terms over three-month review period…

ECB: Liquidation Value and Loan Pricing: Evidence From Repo Markets

August 19, 2020

collateral, ECB, Repo

Francesca Barbiero European Central Bank (ECB) Glenn Schepens ECB -Financial Research Division Jean-David Sigaux European Central Bank (ECB) We show that the liquidation value of collateral depends on who is…

Report: Investor Monitoring, Money-Likeness and Stability of Money Market Funds

August 19, 2020

collateral, money funds

Maija Jarvenpaa Aalto University – Department of Finance Aleksi Paavola Aalto University – Department of Economics An asset is money-like if investors have no incentives to acquire costly private information…

IMF: privacy provision, payment latency and the role of collateral

August 17, 2020

CBDC, collateral, IMF, stablecoin, tokenization

The new boundary between publicly and privately provided payments systems and the role of collateral may be changing. Recent technological developments have made it feasible for markets and policymakers to…

UK FCA warns firms on inappropriate use of title transfer collateral arrangements

July 30, 2020

collateral, FCA, Securities Lending, title transfer

We are sending this letter to you and other FCA-authorised firms acting as brokers in wholesale financial markets, who currently, or may in the future, offer services (including clearing broker…

The social element of securities finance and collateral as COVID-19 continues (Premium)

July 30, 2020

Collateral Management

collateral, conferences, COVID-19, topstory

Collateral Management, Hedge Funds

A global bank said on a client call this week that they had extended working from home (WFH) for all employees until the end of the year, erasing a plan…

Margin and the hedge fund Treasury manager

July 20, 2020

James Finlayson

collateral, hedge funds, Margin, topstory, treasurers, Treasury, UMR

With a semblance of relative calm back in the markets, now is a great opportunity for hedge funds to reconsider how they manage margin which ultimately ties into how a…

Research paper: China central bank collateral policy reduced spreads in acceptable bonds by 42-62 bps

July 13, 2020

Central Banks, China, collateral, monetary policy

The Collateral Channel of Monetary Policy: Evidence from China Hanming Fang, University of Pennsylvania – Department of Economics; National Bureau of Economic Research (NBER) Yongqin Wang, Fudan University Xian Wu,…

SIX Launches a New Triparty Agent to Enhance Collateral and Liquidity Management

June 24, 2020

collateral, collateral management, SIX, tri-party

The new comprehensive solution Triparty Agent from the Swiss Stock Exchange incorporating the Collateral Cockpit™, streamlines front and back office processes to provide seamless and effective collateral management for its…

The Block: MakerDAO greenlights first “real-world” assets as collateral

June 12, 2020

News and Notes – Fintech

collateral, DeFi, MakerDAO

The MakerDAO community has taken a key step toward letting people use tokenized trade invoices and music streaming royalties as collateral for stablecoin loans. A community vote has signaled strong support…

Research paper: Collateralized Networks

May 28, 2020

collateral, collateral management

Samim Ghamami University of California, Berkeley – Center for Risk Management Research; New York University (NYU); Goldman Sachs Group, Inc. Paul Glasserman Columbia Business School Peyton Young Government of the…

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…

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…

Introducing the Digital Collateral Protocol: the right blockchain for global settlements

April 30, 2020

Michael Cyrus

Blockchain, Collateral Management, Technology

blockchain, collateral, DekaBank, Digital Collateral Protocol, topstory

Blockchain has a valuable role to play in securities settlements when applied to the right problem at the right point of market infrastructure. The solution is not tokenization however, rather…

Webinar replay and slides for The Macro Environment, COVID-19 and Office Hours (Premium)

April 29, 2020

Central banks, Collateral Management, Investments

collateral, equity markets, Federal Reserve, interest rates, topstory

Finadium clients can access the webinar replay and slides here. Continue reading

ECB collateral adjustments help, but the EU must still take big moves on bank balance sheets (Premium)

April 27, 2020

Basel III, ECB, Regulatory

collateral, European Central Bank, Leverage Ratio, Non-performing loans, topstory

While the European Central Bank’s (ECB) adjustments to acceptable collateral and other tweaks have been useful, what really needs to happen is a significant and competitive move by the EU…

The Next Level in Building Data-Driven Operational Efficiency

April 16, 2020

Bimal Kadikar

Collateral Management, Operations, Technology

Big Data, Bimal Kadikar, collateral, funding, Liquidity, operations, STP, topstory, Transcend

The next level of operational efficiency will incorporate a deep view of connected data within organizations that will yield better efficiencies and optimization of capital through firm-wide decision making. Taking…

ISDA Margin Survey: Top 20 Firms Collected Over $170 Billion of Initial Margin at Year-End 2019

April 14, 2020

collateral, ISDA, Margin, margin survey

The International Swaps and Derivatives Association, Inc. (ISDA) has published its latest annual margin survey, which shows the amount of initial margin (IM) collected by the 20 largest market participants…

The Trade: Mass margin calls spark operational headache for buy-side and brokers

April 10, 2020

collateral, Margin, The Trade

Sharp rises and falls in global financial markets caused by the COVID-19 outbreak has resulted in firms facing huge margin calls, adding increased operational pressure at a time where many…

ECB announces package of temporary collateral easing measures

April 8, 2020

collateral, coronavirus, ECB

ECB adopts an unprecedented set of collateral measures to mitigate the tightening of financial conditions across the euro area Temporary increase in the Eurosystem’s risk tolerance in order to support…

Six charts you should see this week (Premium)

March 26, 2020

Collateral Management, Federal Reserve, Money Market Funds

collateral, Federal Reserve, Repo, topstory

Lots of unprecedented market movements this week. Here are a number of charts that collateral trading professionals should review. The big question is how far have the Fed’s liquidity programs…

ING invests in seclending blockchain platform HQLAx

March 9, 2020

blockchain, collateral, HQLA, HQLAx, ING, Securities Lending

ING has invested in securities lending platform HQLAx, which went live in December 2019. ING’s blockchain team developed the initial version of the HQLAx application, which uses blockchain to facilitate…

Bank of England blog: Margin call! Cash shortfall?

January 23, 2020

Bank of England, collateral, Margin

Participants in derivative markets collect collateral from their counterparties to help secure claims against them should they default. This practice has become more widespread since the 2007-08 financial crisis, making…

Europe’s securitization markets adapt to risk transfer and balance sheet requirements (Premium)

January 22, 2020

Securitization

Basel capital rules, collateral, ESMA, LCR, PCS, SRT, STS, topstory

European Union securitization legislation was supposed to pave the way for a resurgence of the market. We speak with Ian Bell, head of PCS, about the state of the market…

We size the global collateral markets at $19.8 trillion (Premium)

January 7, 2020

CCP, Collateral Management, Derivatives, Repo, Securities Lending

collateral, OTC derivatives, Repo, Securities Lending, topstory

Finadium conducted a market sizing exercise of the global collateral markets, including a diversity of collateral product types held by private sector market participants. Here’s what we found. Continue reading

Is there offshore demand for Chinese bonds as collateral? (Premium)

November 14, 2019

China, Collateral Management, Fixed Income

Bonds, China, collateral, offshore, onshore, topstory

At ¥95.5 trillion (US$13.7 trillion), the Chinese bond market is big and growing. Chinese institutions would like to see Chinese bonds accepted as collateral offshore. The effort faces obstacles however.…

A pan-Asian collateral stablecoin? Why it may be worth taking seriously (Premium)

October 24, 2019

Asia, Blockchain, Collateral Management, Repo

Asia, blockchain, collateral, collateral baskets, Repo, stablecoins, tokens, topstory

We’re generally positive on blockchain-inspired solutions for collateral, securities lending and repo, but they’ve been slow to gain traction in part because existing platforms are also pretty efficient. In Asia…

BNY Mellon: signs point to wider adoption of ETF collateral

October 3, 2019

BNY Mellon, collateral, ETFs

The market for exchange-traded funds (ETFs) has skyrocketed over the past quarter-century, thanks to the trillions of dollars investors are put¬ting to work in passive, index-tracking strategies. What hasn’t yet…

SFM Magazine, Fall 2019, is now online

October 1, 2019

Big Data, Collateral Management, Common Domain Model, Repo, Securities Lending, SFTR, Technology

buy-side, collateral, Repo, securities finance, Securities Lending, SFTR, topstory, treasuries

Securities Finance Monitor Magazine, Fall 2019, is now online. This edition features articles on best execution in securities lending, electronic dealer and RFQ repo markets, the Common Domain Model in…

BofE working paper: Liquidity transformation, collateral assets and counterparties

September 27, 2019

Bank of England, collateral, Repo

Staff Working Paper No. 830 Liquidity transformation, collateral assets and counterparties Calebe de Roure and Nick McLaren We investigate how counterparties’ characteristics, and the collateral they use, interact with their…

Connected Data: The Opportunity for Collateral and Liquidity Optimization

September 12, 2019

Bimal Kadikar

Collateral Management, Operations, Technology

Big Data, Bimal Kadikar, collateral, collateral optimization, topstory, Transcend

The function and definition of collateral and liquidity optimization has continued to expand from its roots in the early 2000s. Practitioners must now consider the application of connected data on…

Moscow Exchange’s OTC derivatives market migrates to Unified Collateral Pool

July 30, 2019

collateral, MOEX, Moscow Exchange, OTC derivatives

MOEX’s Standartised OTC Derivatives Market migrated to the Unified Collateral Pool, allowing securities to be posted as collateral for trades on the market. The Unified Collateral Pool model delivers cross-market clearing…

An opportunity for market-led reform in equity-for-equity collateral exchanges

July 18, 2019

mstan

Collateral Management, Repo

15c3-3, collateral, DEGC, DTCC-Euroclear GlobalCollateral, Equity for Equity, Repo, topstory

Regulatory changes put in place following the financial crisis of 2008 have broadly reshaped the US repo market but few reforms outside of the Intermediate Holding Company requirement have impacted…

Bloomberg: Democrats Back Wall Street Push to Free Up $40 Billion in Margin

June 28, 2019

affiliates, Bloomberg, collateral, Margin, US Democrats

A group of House Democrats is pressing bank regulators to roll back a rule that forces the biggest Wall Street firms to set aside as much as $40 billion as…

In five years, 90% of funding will be done by machines

April 25, 2019

Bimal Kadikar

Big Data, Collateral Management, Liquidity Management, Technology, Uncategorized

Big Data, Bimal Kadikar, collateral, connected data, Liquidity, technology, topstory, Transcend

You may disagree with the number of years or the percent, but everyone understands that automation in the funding and collateral space is occurring at a fast pace. The question…

ECB paper: Does liquidity regulation impede the liquidity profile of collateral?

March 28, 2019

collateral, ECB, LCR

Kirsten Schmidt Working Paper Series No 2256 / March 2019 We analyze the pledging behavior of Euro area banks during the introduction of the liquidity coverage ratio (LCR). The LCR…

Finadium: Scenarios for a Cyber Collateral Attack

March 26, 2019

Collateral Management, Technology

collateral, cyberattack, Finadium, topstory

Both the financial services industry and corporations everywhere have faced an increase in cyberattacks in recent years, by both state-led and individual actors. This report focuses on how an attack…

Transparency requirements of EU Securitisation Regulation to be incorporated into Eurosystem collateral framework

March 24, 2019

collateral, ECB, securitisations

Eligibility requirements for loan-level data reporting in collateral framework to be adjusted to reflect EU Securitisation Regulation’s disclosure requirements Eligibility criteria for asset-backed securities to change at a future date,…

ECB Working Paper: Money markets, collateral and monetary policy

February 15, 2019

collateral, ECB, Money Markets

Money markets, collateral and monetary policy ECB Working Paper Series Fiorella De Fiore, Marie Hoerova, Harald Uhlig Interbank money markets have been subject to substantial impairments in the recent decade,…

BofE Working Paper: To ask or not to ask: collateral vs screening in lending relationships

February 1, 2019

Bank of England, collateral

We study the impact of higher capital requirements on banks’ decisions to grant collateralized rather than uncollateralized loans. We exploit the 2011 EBA capital exercise, a quasi-natural experiment that required…

ECB’s Yves Mersch: The possible triangle – frictionless movement of payments, securities and collateral across Europe

January 31, 2019

collateral, ECB, ICMA

Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the 2019 Annual General Meeting of the International Capital Markets Association’s European Repo and…

Shanghai Stock Exchange Releases Notice On Collateralized Repo Of Shares

January 30, 2019

collateral, equity repo, Shanghai Stock Exchange

To implement relevant requirements on preventing and defusing the shares collateral risks of listed companies given by the Financial Stability and Development Committee under the State Council and encourage and…

Review: RMA and EquiLend’s LatAm guide

January 30, 2019

Collateral Management, Securities Lending

collateral, Equilend, Latin America, Repo, RMA, Securities Lending, topstory

RMA and EquiLend have produced a new report on the Latin American securities lending market, “Latin American Securities Finance User Guide 2019.” There’s a lot to appreciate in this piece…

Review of the second annual Asian Prime Collateral Forum

January 24, 2019

Asia, Collateral Management

Asian Prime Collateral Forum, collateral, Fixed Income, Repo, topstory

We applaud the efforts of the Asian Prime Collateral Forum to popularize the idea of collateral as an important building block for Asia’s capital markets. The second annual Forum was…

BoE Consultation Paper: Credit risk mitigation: Eligibility of financial collateral

January 10, 2019

Bank of England, collateral, credit risk mitigation

Overview In this Consultation Paper (CP), the Prudential Regulation Authority (PRA) sets out its proposed changes to Supervisory Statement (SS) 17/13 ‘Credit risk mitigation’ to clarify expectations regarding the eligibility of…

Could Chinese banks become an important liquidity source for Western banks? (Premium)

January 9, 2019

China, Collateral Management, Liquidity Management

Bank of China, China, collateral, ICBC, Liquidity, topstory

In recent conversations on Delta One trading for an upcoming report, we heard the idea that Chinese banks could become an important future liquidity source for Western banks. The logic…

ECB working paper: Re-use of collateral: leverage, volatility, and welfare

December 21, 2018

collateral, ECB, re-use