Margin and the hedge fund Treasury manager
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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…
Read More ISDA: CCP Initial Margin up 51.9% for Q1 2020
During the first quarter of 2020, there was a significant increase in initial margin (IM) collected by global central counterparties (CCPs) for over-the-counter (OTC) derivatives and exchange-traded derivatives (ETD). The…
Read More US regulators finalize amendments to margin rules for inter-affiliate swaps and LIBOR legacy swaps
Five federal agencies have finalized changes to their swap margin rule to facilitate the implementation of prudent risk management strategies at banks and other entities with significant swap activities. Under…
Read More BoE blog: what role did margin play during the Covid-19 shock?
As markets reacted to Covid-19 in March 2020, some markets saw their largest price moves in 30 years. Price volatility also rose sharply. This resulted in a large increase in…
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Repo Liquidity as a Solution to (Un)cleared Derivatives Cash Margin Requirements
Entities in the scope of phases five and six of the Uncleared Margin Rules (UMR) will need reliable and efficient access to cash in order to manage their daily OTC…
Read More ISDA Margin Survey: Top 20 Firms Collected Over $170 Billion of Initial Margin at Year-End 2019
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…
Read More The Trade: Mass margin calls spark operational headache for buy-side and brokers
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…
Read More BIS: Leverage and margin spirals in fixed income markets during the Covid-19 crisis
Key takeaways For a two-week period in mid-March 2020, government bond markets experienced uncharacteristic turbulence, sometimes selling off sharply in risk-off episodes when they would normally attract safe haven flows. Evidence in…
Read More Bank of England blog: Margin call! Cash shortfall?
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…
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The door opens for an SA-CCR in securities finance
The European Systemic Risk Board published last week an innocuously titled document called “Mitigating the procyclicality of margins and haircuts in derivatives markets and securities financing transactions“. The early pages,…
Read More Bank of England: Simulating liquidity stress in the derivatives market
By Marco Bardoscia, Gerardo Ferrara, Nicholas Vause and Michael Yoganayagam We investigate whether margin calls on derivative counterparties could exceed their available liquid assets and, by preventing immediate payment of the…
Read More J.P. Morgan and Baton automate derivatives margin payments using DLT
Baton Systems, a provider of distributed ledger-based post-trade solutions for capital markets, and J.P. Morgan have developed a solution that enables the near real-time orchestration of cash and collateral transfers…
Read More Basel Committee and IOSCO announce one year delay on phase 5 margin implementation for OTC derivatives
The Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) acknowledge the progress that has been made to implement the framework for margin requirements for non-centrally…
Read More SEC and CFTC propose lower margin rules for security futures
The Commodity Futures Trading Commission (“CFTC”) and the Securities and Exchange Commission (“SEC”) (collectively, the “Commissions”) are proposing amendments to regulations that establish minimum customer margin requirements for security futures.…
Read More Bloomberg: Democrats Back Wall Street Push to Free Up $40 Billion in Margin
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…
Read More Basel Committee finalizes Leverage Ratio revisions for client margin and window-dressing for SFTs
The Basel Committee on Banking Supervision today released a revised treatment of client cleared derivatives for purposes of the leverage ratio. The Basel Committee also issued a revision to the…
Read More SEC Adopts Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Amends the Capital and Segregation Requirements for Broker-Dealers
The Securities and Exchange Commission took another significant step toward establishing the regulatory regime for security-based swap dealers today by adopting a package of rules and rule amendments under Title…
Read More Reuters: Hong Kong to cap securities margin financing
HONG KONG, April 4 (Reuters) – Hong Kong’s financial markets watchdog plans to limit the amount brokers can lend against shares to five times their capital. Margin financing is an…
Read More Deutsche Bank will use CloudMargin’s public cloud for collateral infrastructure
According to a joint statement, CloudMargin’s platform will be integrated into Deutsche Bank’s collateral infrastructure. The move is expected to save on costs and improve the client experience by creating…
Read More Charles River and AcadiaSoft team up for margin call automation
Charles River Development, a State Street Company, and AcadiaSoft have announced a business alliance to automate communication of margin calls and collateral estimates between counterparties in the Charles River Investment…
Read More ISDA white paper: Clearing Incentives, Systemic Risk and Margin Requirements for Non-cleared Derivatives
Central clearing of standardized derivatives and margin requirements for non-cleared derivatives are two of the basic tenets of global financial regulatory reform. They are also inter-related: the purpose of margin…
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Direct Clearing: A New Competitive Differentiator for the Buy-side
The introduction of buy-side direct clearing for central counterparties (CCPs) has created buy-side opportunities while raising new considerations about business models, risk and reward. Whether and how to engage, for…
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Big (alternative) data is better in real-time for alpha and risk
While there’s a lot of discussion about how to stop things like flash crashes, the fact is they are going to keep happening. Regulators are watching closely: ESMA just released…
Read More Nasdaq leads team for margin and collateral on the blockchain
ABN AMRO Clearing, EuroCCP, Euroclear and Nasdaq have completed a joint proof of concept to make the use of securities more efficient when used to cover margin calls, including after…
Read More ISDA identifies gap in margin call issuance, proposes best practices for collateral STP
The ISDA Collateral Infrastructure Committee in its remit to monitor issues and challenges related to the OTC collateral process has identified a gap as it pertains to the current margin call…
Read More ESMA consults on CCP anti-procyclicality margin measures
The European Securities and Markets Authority (ESMA) has opened a public consultation on draft guidelines which aim to clarify the implementation of anti-procyclicality provisions for central counterparties (CCPs) under the…
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What’s the real risk of CCPs, counterparty risk or liquidity risk?
A recently issued academic paper from Dr. Rama Cont at Imperial College London makes the argument that CCPs don’t mitigate counterparty credit risk, they just transform it into liquidity risk.…
Read More Reuters: CLO market experiments with built-in margin reset to manage regulatory exposure
Managers are considering embedding a new repricing feature in US Collateralized Loan Obligation (CLO) funds that would protect firms from regulation that requires them to hold 5% of their funds…
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Tough challenges for prime brokers and MiFID II compliance
This article looks at the questions of conflicts of interest and co-mingling of interests from the view point of the prime broker/borrower. This is a follow up to a previous…
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Margin Optimization and the Cost of the Trade
Banks have largely absorbed the Leverage Ratio and the Liquidity Coverage Ratio and are taking on the next challenge: maximizing their balance sheet efficiency in a return to profitability. One…
Read More Australian regulators propose new securities lending, repo and margin data collection
Economic and financial statistics, January 2017 Discussion Paper Proposed changes Repurchase agreements and securities lending Consistent with feedback received in informal consultation, the agencies are proposing two alternative versions of…
Read More EBA and ESMA call for clarification of margin requirements between CRR and EMIR
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) published today their joint report on the functioning of the Capital Requirements Regulation (EU) No 575/2013 (CRR) with the…
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An interview with Bimal Kadikar, CEO of Transcend Street Solutions
Transcend Street Solutions is establishing itself as an innovative player in the collateral and liquidity technology space. We spoke with CEO and founder Bimal Kadikar to learn more about what…
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Finadium: Prime Brokerage: Towards a New Target Operating Model for Financing
This Finadium report looks at a newly emerging conversation in prime brokerage on the Target Operating Model for financing. We evaluate the historical prime brokerage financing model in relation to…
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Prime brokerage 2014 revenues from physical financing and margin (Premium Content)
We assess prime broker estimated revenues for 2014 from physical financing and margin. We build on the methodology for finding prime brokerage revenue first published in “Which prime brokers are…
Read More What's the right margin for collateral in securities lending? 102%? 105%? 120%? (Finadium subscribers only)
Our market research is showing some movement in the last year, but also the last few months, in ideas about collateralization levels in securities lending. This article looks at some…
Read More Finadium: Guide to Margining for Cleared Swaps vs. Futures
Finadium has released a guide to understanding margin rules for cleared OTC swaps, non-cleared swaps, swap futures and standard futures. This guide is intended for market professionals needing a briefing…
Read More Another shoe drops: Basel Committee and IOSCO issue consultation paper on margin for non-cleared derivatives
In a long expected move, the Basel Committee on Banking Supervision and IOSCO have issued a joint consultation paper, “Margin requirements for non-centrally-cleared derivatives – consultative document.” The main idea…
Read More "Margin Call", the movie is coming in October! Popcorn anyone?
Just when you thought it passe, another movie about Wall Street is coming your way in October — “Margin Call” staring Keven Stacey, Jeremy Irons, Stanley Tucci, Demi Moore and…
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