For those familiar with the DTCC Trade Information Warehouse, you'll know this was the first central end-to-end processing platform for OTC business. LCH has now moved into the Rates and FX space to perform a similar function. If you thought the pace of change was slowing, think again.
Crisis always underscores the critical importance of collateral management – that was true in the LTCM (Long Term Capital Management) meltdown in 1998 and then again in the Lehman crisis in 2008 when collateral desks were crucial information vectors.
The week started with temperatures in the 80s and a sunny outlook, but given the way Chicago can change, it wasn’t a huge surprise to see a 30 degree drop over the course of the event. In fact, the weather seemed to mirror the ups and downs of the industry over the last twelve months.
A new exchange is in the process of launching hybrid products which will eliminate the key disadvantages of hedging rate risk on-exchange.
Although the prudential supervision of the Bank of England is focused on ensuring the safety and soundness of CCPs, priority has been given almost exclusively to the development of loss allocation and recovery rules.
By Alan McIntyre and Andy Green
New functionality supports regulatory margin requirements for non-cleared derivatives.
On behalf of the Global Risk Institute I am pleased to invite you to attend our inaugural collaborative event with the Warwick Business school. The Global Risk Institute is a member based organization focused on the management of emerging risk in financial services companies.
The Post Trade Forum is in independent working group for people to ask questions, exchange ideas, and move the agenda forward on how to improve the processing of OTC products. Open to all, with an agenda driven by the industry.
Is this the time for the rise of a centralised Industry Legal Documentation Utility, to streamline the process of putting in place the legal documentation, and standardise terms to minimise the increasing concern around non-standard and commercially impactful terms, from both financial institutions themselves and the regulators?
ESMA has published their MiFID II Final Report as a result of their Consultation Paper. It consists of updates and changes to the 289 page ‘Guidelines’ which provides the industry with, amongst other things, examples and details on how to populate transaction reporting fields in certain circumstances, and a 32 page ‘Final Report’ which summarizes the resultant changes, updates and additions and includes explanations as to why industry feedback was or was not included.
No sooner had the first deadline for the posting of margin on non-cleared derivatives passed than attention had begun to switch to the next set of hurdles.
It goes without saying, I suppose, that financial markets regulation has always been something of a conundrum – the markets have always been global, to a greater or lesser degree, and regulations have always been national or regional. But it does seem that today more than ever the problem is exacerbated. After the financial panic of 2008-09, every regulator and every government seemed to embark on a market reregulation binge, and managed to do it without much regard for what everyone else was doing.
The first meeting has now been scheduled and members of the email list informed, find out how to participate here.
Changes in the leadership team and an investment
Capital is a serious issue, or at least its preservation is. The crisis of ‘07/’08 exposed the financial services industry to tremendous losses to the extent that companies went bust, were taken over or bailed out by government. Ensuing inquiries concluded that excessive levels of risk had been taken in search of reward and that the risk takers were inadequately protected in terms of capital and provided for in terms of liquidity.
Securities financing transactions (SFTs) can contribute to leverage in the financial system. One of the main issues related to leverage is procyclicality, which can manifest itself in many different ways and can incorporate risks for financial stability.
With increasing regularity, I’m hearing more and more banks saying that they are faced with having to do more with less - almost a mantra for our times.