We review the top stories by clicks published on Finadium News & Opinion for each month from 2024 across repo, securities lending, collateral management, securities financing regulation developments and the events calendar.
In January, the top spot went to a feature article from Eurex Repo setting the scene for European repo markets and their changing dynamics. 2024 had a starting position characterized by increasing interest rates, repayments of Targeted Longer-term Refinancing Operations and further reduction of excess liquidity. What a difference a year makes, as 2025 suggests a very different kind of financial market environment. The feature was published ahead of Deutsche Börse Group’s annual Global Funding and Financing (GFF) Summit, an event that is just around the corner under the banner “Navigating uncertainty: Geopolitics and market dynamics“.
In February, we highlighted the trend of agent lenders setting up swaps desks. Finadium’s managing principal Josh Galper took a closer look at some of the questions raised, such as how the set up works operationally and who needs to approve it? It was also the major theme of a Finadium webinar that has a replay available online: Synthetic Prime Brokerage in 2024.
SLR-related exemptions
saw peak interest in March, as the International Swaps and Derivatives Association (ISDA) made the argument to regulators to make them permanent, hinging on Basel III finalization. It’s no secret that expansive US Treasury issuance creates a need for more capacity, but at the same time there are moral hazard downsides as well. We examine both sides and their implications.
In April, our most read feature article took a deep dive into buy-side’s growing use of triparty and a new look at generating alpha. The big driver of change in buy-side thinking around collateral has been Uncleared Margin Rules (UMR), and the financial benefit of connecting repo to related triparty processes is cited in the 10-25 basis point range. Nick Kurzel, Buy-Side Strategy & Product Management at BNY Mellon, explained why triparty addresses the growing market demand of buy-side firms looking for a single ecosystem to manage both their collateral and liquidity requirements.
A contributed article from Osttra’s Magnus Jonsson, head of Optimisation Product Design, was May’s top story. With derivatives compression being a global success story, could repo compression work for the industry? Conceptually, repo compression is an attractive idea. By reducing the notional exposure of positions on banks’ balance sheets, banks will naturally save on RWA, G-SIB and Leverage Ratio costs tied to credit exposure and gross assets and liabilities, but there are wrinkles to iron out for compression to be applied to repo.
In June, our special report on the convergence of securities lending and repo tech on the trading desk got the most views. In the age of electronification and optimization, is trading technology keeping pace and what is supporting their convergence or keeping them separate? We gathered a variety of perspectives from major market participants Banco Santander, GLMX, International Capital Market Association (ICMA), ION Markets, Murex, Pirum, S&P Global Market Intelligence, and State Street.
In both July and August, featured articles on collateral mobility and how distributed ledger technologies (DLT) fit in got the most attention from our readers.
In the first article, New regulatory proposals on counterparty credit exposure point to DLT solutions, we map several regulatory proposals to what DLT platforms can provide, showing that solutions exist to deliver on potentially incoming objectives with a minimum of new industry technology development. Guido Stroemer, CEO of HQLAX, said “we expect the banking industry to complement its attention on managing intraday liquidity as a scarce financial resource with a similar, laser-like focus on mitigating intraday Risk Weighted Assets (RWA) related to intraday counterparty credit exposures”.
During the summer break, we spotlighted how the exploding collateral market, which topped €25 trillion, expands the argument for DLT solutions. As total collateral values continue to increase in the market, there is a growing argument that solutions like HQLAX‘s digital collateral records (DCR), which make collateral more efficient market-wide, will become more of a market standard by virtue of their speed and convenience. There is no required development work for users to interface directly, said Erica De Rosa, Solutions Architect at HQLAX; the question is whether they would like their service providers, acting on behalf of hundreds or thousands of clients, to be part of the DLT ecosystem.
As Q3 started, Finadium News & Opinion’s most read article examined how repo and securities lending data consolidation opens new doors for funding and financing optimization as the merging of siloed operations continued at a steady pace. For anyone managing a collateral book, having a holistic view across the financing market is now essential for both margining and optimizing collateral positions efficiently and there are big opportunities for data analytics. Similar themes were discussed at a Finadium webinar: Cross Product Arbitrage in Collateral Trading, with insights from DNB Markets, Murex, and S&P Global Market Intelligence.
In October, we tallied major interest in FIS’ shift in getting from “Loanet to Loanext”, and weighed what it’s worth to the market. The Loanext upgrade will provide a single platform for global business operations across securities lending, repo and cross-product collateral management. Nancy Steiker, senior director of product management for FIS securities finance and collateral, said that “we see our clients increasingly looking across diverse financing activities as one pool of business. Loanext supports this thinking and provides the accounting services to deliver on execution.”
As the year wound down, one of the key insights from our asset manager survey was that firms were moving down the curve to be able to accept a wider variety of securities as collateral, both domestically and internationally, with some at the low end of liquidity in major indices. In an article titled “The next dealer axe in securities lending collateral“, Finadium’s Josh Galper provides analysis for why one equity would be more attractive than another, and the answer is tied to what’s on the dealer’s balance sheet already.
The close of the year saw our top spot go to repo clearing, with LCH RepoClear showing how the LCH model optimizes access. Repo liquidity is often discussed but can be hard to measure: all firms require it but not every firm can access it at the right time and at the right price. Access to the right liquidity pools and partners is a primary part of the analysis and adding repo clearing to the “liquidity toolbox” allows members to optimize their financial resources. In this article, LCH RepoClear discusses how market interest in reliable liquidity is combining with balance sheet optimization.