Deutsche Bank asks: why can’t Europe create a post-trade Amazon?
In a recent report about the future of post-trade in a T2S era, Deutsche Bank’s Global Transaction Banking division strikes a note we hear more and more often these days…
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Battle of the European repo RFQ platforms (Premium)
How many dealer-to-client platforms does the European market need for repo? We’re about to find out, as BrokerTec has launched BrokerTec Quote to compete with Tradeweb as the dominant player…
Read More ECB working paper on banks’ reaction to negative rates in the euro area
ECB Working Paper Series Negative interest rates, excess liquidity and retail deposits: banks’ reaction to unconventional monetary policy in the euro area Selva Demiralp, Jens Eisenschmidt, Thomas Vlassopoulos Negative monetary…
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We review the Better Finance report criticizing EU asset manager seclending fee splits (Premium)
Independent European consumer organization BETTER FINANCE released a report on UCITS fee splits in the European securities lending market. They found the known wide disparities in fee splits and criticized…
Read More AI and fintech fragmentation on FSB European group’s agenda
At a recent meeting in Bucharest, the Financial Stability Board (FSB) Regional Consultative Group (RCG) considered implications of the growing use of artificial intelligence, machine learning and big data for…
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Does the European pledge model solve all ills? (Premium)
The benefits of the pledge model in securities lending for borrowers are clear: by retaining legal ownership of the security with the borrower, regulated entities no longer have the obligation…
Read More Fed discussion paper: Liquidity Funding Shocks: The Role of Banks’ Funding Mix
This study attempts to evaluate the impact of an increase in banks’ funding stress and its transmission to the real economy, taking into account different funding sources banks can rely…
Read More ECB paper: ban on trading naked sovereign CDS in 2012 had greatest impact on systemic risk reduction for sovereigns
Effectiveness of policy and regulation in European sovereign credit risk markets: a network analysis Rebekka Buse Melanie Schienle Jörg Urban European Systemic Risk Board Working Paper Series No 90 March…
Read More Survey: Europeans are conflicted about trust in government and AI
Europeans are anxious about technological change and want governments to take action, according to a new report by the Centre for the Governance of Change, which surveyed citizens of eight…
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Uncertainty in reporting for CSDR settlement fails rules
It looks like ESMA’s application of settlement discipline under CSDR may have extraterritorial impacts, which could result in investor preferences to use one CSD over another to ensure being subject…
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ECB papers highlight the state approach to solving market problems
Recent European Central Bank (ECB) working papers on collateral have been really good, well researched and thoughtful about the problems they are tackling. They also show a continued bias towards…
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Finadium: European Delta One Trader Survey
The Delta One business is a type of market making for liquidity and risk management clients that seek economic exposure of a security without the complexity of carrying the underlyings.…
Read More ICMA: End of 2018 European repo market relatively uneventful
Today ICMA has published a briefing note on the European repo market at 2018 year-end. The note documents and analyses repo market behaviour through 2018 year-end. Compared with the previous…
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Not that dramatic: repo spikes in Europe and the US were quick and understandable
End of year repo trading in both the US and Europe saw the same types of leaps in General Collateral (GC) rates backed by government collateral that we’ve seen before,…
Read More ICMA ERCC publishes revisions to the Guide to Best Practice in the European Repo Market
ICMA’s European Repo and Collateral Council (ERCC) is publishing revisions to its Guide to Best Practice in the European Repo Market (Guide). Written on the basis of detailed input from…
Read More Reuters: EU takes new step on derivative clearing, despite UK, U.S. concerns
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…
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Europe readies for CRD-V (Premium)
The European Parliament and the European Council are in discussions to amend the Capital Requirements Directive and Regulation rules (CRD-IV) to create CRD-V. This latest iteration recognizes recent Basel Committee…
Read More ECB says securities finance markets lost liquidity from June to August 2018, deterioration in general collateral market
Results of the September 2018 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD) Credit terms tightened, in line with the expectations reported in…
Read More Bloomberg editorial: Europe’s Banks Aren’t Ready for the Next Crisis
A renewed bout of distress among Greek and Italian banks illustrates a deeper problem in Europe: The financial system’s overseers haven’t done nearly enough to prepare for the next crisis.…
Read More FT: European banks weigh leaving UK derivatives market
European banks are considering whether to begin closing out their trillions of pounds’ worth of derivatives positions in London in the coming months as the UK struggles to finalise an…
Read More EquiLend opens Dublin office
DUBLIN (Sept. 18, 2018)—EquiLend, a leading provider of trading, post-trade, market data and clearing services for the securities finance industry, today announces the opening of its office in Dublin to…
Read More FT: EBA Chief Enria says back-to-back trading must stay after Brexit
Andrea Enria, the head of the European Banking Authority, told the FT in an interview that a contentious way of transferring risk across borders was an indispensable “backbone” of global…
Read More EMMI cancels European repo index project
The EMMI Board of Directors has decided to stop the efforts toward the production of a pan-European reference index for the secured segment of the euro money market under the…
Read More European Systemic Risk Board says data coverage of Shadow Banking “hampers activity-based monitoring”
The European Systemic Risk Board (ESRB) has today published the EU Shadow Banking Monitor 2018 which covers data up to end-2017. This is the third issue in an annual series…
Read More ECB’s Mersch warns on pan-European payment failure and big foreign fintech dependence
Excerpt from speech by Yves Mersch, Member of the Executive Board of the ECB, at the European Institute of Financial Regulation (EIFR), Paris, 3 September 2018 Progress towards an integrated…
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Defining “strong regulation” for safe banks
In an interview with Welt am Sonntag last week, ECB Executive Board Member Sabine Lautenschläger argued that strong bank regulation leads to strong banks. US regulators would agree but have…
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European roundup: some weighty news for the end of July (Premium)
As July wound down, European market participants released some important news items. We look at Euro clearing moving to Frankfurt, UCITS funds and collateral and the FT’s article on SFTR.…
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The SFTR win for firms that don’t trade with European counterparties
The Securities Financing Transaction Regulation (SFTR) will be global regulation by default as the majority of market participants trade with a European entity or subsidiary and hence are captured by…
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More on handicapping the odds of a repo carve out for the US Leverage Ratio
At our Rates & Repo 2017 conference, we proposed taking bets on whether regulators would adopt the US Treasury’s recommendation of excluding Treasuries from the calculation of the Supplementary Leverage…
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One golden source data repository is necessary for smart regulation
When discussing data for regulatory reporting, the European Union currently suffers from a burdensome approach to reporting across multiple and often inconsistent regulations. A golden source of data for regulatory…
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Electronic RFQ repo markets: The solution for reporting challenges and laying the building blocks for automation
Challenges faced by the repo market including regulatory reporting requirements, reduced balance sheet and fewer resources, have all been well documented. Therefore it comes as no surprise that the use…
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SFM Magazine, Summer 2018, is now online
Big Data, Collateral Management, Regulatory, Repo, Securities Lending, Technology, Trade Repositories, Tri-Party Repo
Securities Finance Monitor Magazine, Summer 2018, is now online. This edition features articles on what to do with all the data that regulators are collecting, if securities lending is a…
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European and US repo markets are different, and that means one-size-fits-all-regulation is unwise
The US and European markets are not identical, although they are often made out to be just that. Besides macro differences, within Europe, transactions are subject to individual country laws,…
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We review the new European repo market survey: overall growth but uneven progress
The International Capital Market Association (ICMA) European Repo Market Survey for December 2017 was released last week. There was an encouraging amount of growth in the markets although it was…
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The EU General Data Protection Regulation (GDPR) sets a new, extraterritorial standard for client data protection
In a now recurring story, the European Union has created regulation that effectively captures the majority of transactions around the world. It will require a broad range of new compliance…
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Finadium Survey: Better Regulation for Europe’s Securities Financing Transactions
European regulation of Securities Financing Transactions (SFTs) is having its desired effect, which is a near gold standard of risk management. Unfortunately, it’s at the cost of market vibrancy. A…
Read More Germany, France call for cryptocurrency scrutiny while small European banks seize opportunities
A letter sent to Argentina’s finance minister urging that cryptocurrencies get put on the G20 agenda has been making the rounds. Sent by heads of the German and French central…
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The Changing Market Structure of Equity Repo Financing
Equity repo is different from its more well-known cousin, government bond repo: the operations of the trade are the same but the collateral and the rationale for engagement can vary…
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MiFID II and Best Execution in SFTs: A Happy Ending After All?
MiFID II went live on January 3, 2018, but that doesn’t seem to be the end of the story. Keeping with the European Commission’s theme of “regulate first, refine later,”…
Read More CCP recovery and resolution moves forward in EU parliament
The European Parliament’s Economic and Monetary Affairs committee confirmed that a report drafted by Kay Winburne and Jacob von Weizsacker received support and was voted through. The position of the…
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A Proposal for Smart Regulation in European SFT Markets
In a post-crisis era, Europeans must focus on efficient and smart regulation in Securities Financing Transactions (SFT) to support competitive financial markets. This can be achieved but requires regulatory attention…
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What does “recalibrating” the Leverage Ratio mean?
There has been a lot of talk lately about recalibrating the Leverage Ratio, especially in the US where the enhanced Supplementary Leverage Ratio (eSLR) of 5% for holding companies and…
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From Brussels to New York, our observations on Peer to Peer and European government regulation (Premium)
Between the Euroclear collateral conference held in Brussels this Monday and Tuesday, plus our own conversations in New York, we’ve digested a lot of feedback on collateralized trading markets. Here…
Read More Finadium: European Prime Brokerage Survey: Customers, Capital and Business Models
This Finadium research report is a survey of European prime brokers’ thinking towards capital and clients. We investigate how much prime brokers are aware of their balance sheet requirements and…
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The EU Systemic Risk Board on collateral premia: some logical conclusions and a few open questions
The EU Systemic Risk Board has published a paper, “Collateral scarcity premia in euro area repo markets” (October 26, 2017) that bears some examination. At the close of 2016, the…
Read More DTCC’s GTR bolsters capabilities for SFTR
DTCC has begun efforts to enhance its European Global Trade Repository in support of the upcoming Securities Financing Transactions Regulation (SFTR) expected to be implemented in 2019. SFTR will require firms…
Read More FN: European repo market fears a year-end freeze
Following a shocking spike in volatility in a key source of short-term funding for asset managers, banks and pension funds, market participants say there is no silver bullet to prevent…
Read More Is the European repo market in recovery? The latest ICMA survey suggests some direction
The headlines look good: based on the ICMA ERCC’s June 2017 data collection, the European repo market grew 6.4% since December 2016 and 12.4% since June 2016 based on a…
Read More Our slides from the Oct 3 London event, “Market Competition, Europe and US regulations” (Premium)
Thanks to our clients who attended our event in London this week on market regulations and their impact on competition between the US and Europe. Our slides are available for…
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An ECB Reverse Repo Facility is a painful idea, even if it may be necessary
ICMA’s Andy Hill was quoted by Global Investor as being in support of a Reverse Repo Facility (RRP) in Europe: “To the extent that regulation prevents banks from doing what…
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