BoE and CFTC reinforce cross-border supervision of derivatives clearing in new agreement

Regulators for the UK and US derivatives markets have signed a new cross-border supervisory agreement for clearing houses operating in both countries. The Bank of England (BoE) and the US Commodity Futures Trading Commission (CFTC) announced the signing of a new memorandum of understanding (MOU) where they have established a cooperation framework for overseeing international clearing houses.  

Operational Resiliency Must Remain a Top Priority

New layers of risk and complexity call for holistic, collaborative and cross-border responses.As a vast majority of the financial industry's workforce continues working remotely, organizations are operating in entirely new ways. No one could have predicted at the end of last year that a global pandemic would impact the world's workers in 2020 and force millions of financial services staff, and staff across other industries, into a remote work environment.

ISLA forms three new “broader” steering groups

The International Securities Lending Association (ISLA) has formed three new steering groups to address the regulatory, digital and associated market practice changes the industry is experiencing through the recent pandemic.ISLA runs a variety of working groups for its members, covering all aspects of advocacy, tax, legal, regulation and best practice in order to allow members to discuss challenges, debate issues, conceive ideas and seek solutions. 

Big banks give backing to Singapore Green Finance Centre

The Monetary Authority of Singapore and nine international banks have leant their weight to the establishment of a research institute dedicated to green finance research and talent development.The Singapore Green Finance Centre, run by Imperial College Business School and the Lee Kong Chian School of Business at Singapore Management University (SMU), will pursue research to help develop strategies for policy makers and financial institutions to support Asia’s transition to a low carbon future.

Bank of Japan preps CBDC experiments

The Bank of Japan will begin central bank digital currency (CBDC) experiments early next year but says it still does not yet have any plans to issue its own digital yen.Central banks around the world have been grappling for years with the pros and cons of creating their own digital currencies.

HSBC appointed securities services provider for HK ESG ETF

HSBC has been appointed as the as the full securities service provider by Haitong International Asset Management (HK) Limited for Haitong MSCI China A ESG ETF, the first broad-based environmental, social and governance exchange-traded fund listed on Hong Kong Stock Exchange. 

SFTR: Buy side start reporting

Buy-side members must begin reporting under the EU's Securities Financing Transactions Regulation (SFTR) from today as part of the third phase of implementation.SFTR reporting obligations now apply to investment funds, pension funds and (re-)insurance undertakings, which join sell-side firms, central counterparties and central securities depositories that began reporting in July. 

Finadium: Total Return Swaps and Bank Resource Optimization

This Finadium report investigates current dynamics in the Total Return Swaps market with a focus on bank resource optimization. We deliver market sizing through H2 2020 and analyze the dynamics that lead to a continued preference for TRS over physical financing transactions.

LCH SA to support the clearing of €87.4 billion of EU emergency SURE bonds

Central clearing counterparty (CCP) LCH SA will support the clearing of bonds issued as part of the European Union’s temporary support to mitigate unemployment risks in an emergency (SURE) programme.The bonds issued as part of the scheme will be eligible for clearing at LCH SA’s RepoClear service. LCH SA offers clearing of euro-denominated bonds and repos across 13 government bond markets. It will also support and clear the upcoming Next Generation EU Bonds. 

Reporting data integrity undermined by widespread LEI lapses

As much as 30 percent (500,000) of legal entity identifiers globally are out of date and in need of renewal, according to LEI Worldwide, a GLEIF-registration agent and LEI provider.LEIs are a 20-character alphanumeric code that, as the name suggests, allows regulators to identify individual counterparties in a transaction.They are currently required under several rules frameworks including the Securities Financing Transactions Regulation and the European Market Infrastructure Regulation, among others. 

TORA Expands OEMS Offering to Include Fixed Income

 TORA, the provider of industry leading trading technology, has today announced that it has expanded its multi-asset Order & Execution Management System (OEMS) trading platform to support fixed income.TORA’s OEMS now offers a range of proprietary tools to help traders access bond liquidity and to efficiently execute and manage bond orders across a broad range of sectors. With coverage across government, sovereign, supranationals, agency, investment grade corporate bonds, high yield, emerging markets, covered bonds and municipal bonds the new offering will appeal to global fixed income managers. This adds to existing coverage of fixed income futures, options and ETFs. 

Sibos: SmartStream develops data observational learning alongside Tier 1 banks

In collaboration with Tier 1 banks, SmartStream has launched Affinity, a new artificial intelligence (AI) ‘observational learning’ solution.SmartStream’s new solution is set to meet the technical demands and business agility for operational data management and data quality processes. 

Fed prohibits large bank share repurchases and caps dividends for Q4 2020, ensuring ample...

Due to the continued economic uncertainty from the coronavirus response, the Federal Reserve Board on Wednesday announced it will extend for an additional quarter several measures to ensure that large banks maintain a high level of capital resilience. 

ESMA confirms recognition of three UK CCPs post Brexit

The European Securities and Markets Authority (ESMA) has confirmed LCH, ICE Clear Europe, and LME Clear will be recognised as third country central counterparties (CCPs) from January 2021.The three UK CCPs will be eligible to provide services in the EU after the end of the transition period following the withdrawal of the UK from the EU on 31 December 2020.

DTCC lays out roadmap for full adoption of US electronic securities

US financial market participants must pull together to achieve complete securities dematerialisation and improve market stability, according to the Depository Trust & Clearing Corporation (DTCC) in a new whitepaper.The transition from physical certificates to electronic records, DTCC argues, would reduce the risks and costs associated with manual processing and human touchpoints, while also increasing efficiency and resiliency at a time when automation is more important than ever.  

Market Volatility and the U.S. Presidential Election

Market volatility has been the order of the day in 2020, as firms across the globe react instantly to the latest developments, whether that be Covid-19, the global economic downturn or geopolitical tensions. This volatility shows no signs of letting up, with the uncertainty around this year’s presidential election stoking yet another wave of uncertainty.

Video: It is not realistic to have just one CSD in the Nordics

Euronext’s Anthony Attia gave the keynote starting PostTrade 360° Copenhagen on Wednesday morning, 23 September. As member of the management board, with a heavy role in the post-trade area, he sees new opportunity for his groups three CSDs to take a strong position as Europe’s CSD market is being consolidated. Portugal’s Interbolsa was the group’s first CSD, Norway’s VPS was acquired in 2019 and Denmark’s VP Securities this summer. 

Dated Technology and Manual Processes Cost Hedge Funds Millions

Hedge Funds are absorbing a punishing $8 million annual hit to their Assets Under Management (AUM) due to high levels of manual processes and outdated trading systems that are causing delays in sending orders out to market. According to a new analysis from TradingScreen, a typical mid-sized long/short equity hedge fund ($5 billion AUM) wastes, on average, 2.5 hours per day dealing with 200 orders.

ECB changing acceptable collateral framework

ECB amends monetary policy implementation guidelinesECB phasing out secured marketable assets other than asset-backed securities, legislative covered bonds and multi-cédulas as collateralApplication process and acceptance criteria for external credit assessment institutions clarifiedAmendments to treatment of breaches with respect to own fund requirements and reporting on capital ratiosThe European Central Bank (ECB) has today published amendments to its guidelines on the implementation of monetary policy in the Eurosystem, applicable from 1 January 2021.

LCH registers first SONIA/SOFR swap from Bank of America and Lloyds

LCH has registered its first SONIA/SOFR cross-currency basis swap between Bank of America and Lloyds Bank Corporate Markets via SwapAgent.The UK clearing house said the trade was completed ahead of the upcoming discounting and price alignment interest transition to USD SOFR at LCH SwapAgent, which is scheduled for 16 October.

Preventing Withholding Tax Reclaim Schemes

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published the Final Report on its inquiry into Cum/Ex, Cum/Cum and withholding tax (WHT) reclaim schemes. ESMA’s key proposal is that national competent authorities (NCAs) for securities markets should be empowered to share information with the tax authorities, to assist in detecting WHT reclaim schemes.ESMA’s inquiry has highlighted that WHT schemes are primarily a tax related issue and so a response should be mainly sought within the boundaries of the tax legislative and supervisory framework. As part of its inquiry, ESMA has identified a number of measures adopted by various Member States to limit the risk of WHT reclaims schemes being pursued.In its Report, ESMA recommends legislative change to remove the legal limitations on NCAs exchanging information acquired from other NCAs with tax authorities. Additionally, a common legal basis should be developed to ensure a consistent and convergent approach on the exchange of information directly acquired by NCAs in their supervisory activity with tax authorities.Moreover, ESMA said it had identified best practices extracted from the experience of those NCAs that, thanks to an extended remit under national legislation, carry out supervisory activity for WHT schemes.“Today’s Final Report is...

ESMA Consults on MiFIR Reference Data and Transaction Reporting

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has launched a Consultation Paper (CP) reviewing the reference data and transaction reporting obligations under the Market in Financial Instruments Regulation (MiFIR). The CP contains ESMA’s proposals for possible amendments to the transaction reporting and reference data regime based on its experience in implementing the MiFIR reporting regimes since January 2018.ESMA said its objectives for this review are to simplify the current reporting regimes and enhance the quality of the data reported by ensuring consistency among various reporting and transparency requirements.The CP addresses a wide range of issues, including:A possible revision of the ToTV (Traded on a trading venue) concept A revision of the scope of indices subject to the reporting obligation considering the more recent Benchmark RegulationProposals to remove, replace or further clarify specific data elements that should be reported under the transaction reporting obligationProposals to ensure further alignment between EMIR and MiFIR reporting regimes considering the EMIR Refit review.Industry observers say the consultation paper proposals are particularly relevant for trading venues, systematic internalizers, investment firms, data reporting services providers, and asset management companies.ESMA is inviting all stakeholders involved in EU financial markets to respond to this consultation by November...

Ultimus completes second phase of uSUITE technology launch

Ultimus Fund Solutions has completed the second phase of its uSUITE technology launch, as part of its innovative technology strategy.uSUITE, which was originally launched in 2018, uses robotic process automation (RPA) to streamline back-end data processing, eliminating the need for manual intervention.  

OCC Issues Paper on Central Clearinghouse Resiliency and Stability

In the midst of record cleared contract volume, OCC, the world’s largest equity derivatives clearing organization, has released a paper titled, Optimizing Incentives, Resilience and Stability in Central Counterparty Clearing, on central counterparty (CCP) clearing resiliency, recovery and resolution. The paper details OCC’s approach as a market utility, to risk and capital management, ensuring industry feedback is received and considered, enhancing operational resiliency, and providing greater transparency to market participants.KEY TAKEAWAYS:CCPs like OCC – which stand between buying and selling parties in trades and manage the risk to the market should one side of a transaction default – have worked extremely well over the course of their existence by underpinning stable markets to the benefit of the investing public during times of market stress.With record-setting cleared contract volume so far in 2020, OCC is taking new steps to further enhance its financial and operational resiliency and respond to industry feedback, including previously established skin-in-the-game, and recently announced plans to seek regulatory approval to increase it.CCPs must have an eye toward supporting the entire market ecosystem, balancing, and optimizing incentives toward maximum stability, security and continued functioning in regular times and particularly in times of stress.“CCPs have served markets and investors with...

DTCC Appoints Lisa Hershey as Chief Compliance Officer

The Depository Trust & Clearing Corporation (DTCC) today announced the appointment of Lisa Hershey as Managing Director and Chief Compliance Officer with responsibility for leading the firm’s compliance function effective January 1, 2021. She will report to Ann Shuman, DTCC’s Managing Director and General Counsel. Hershey joined DTCC in 2009, and over the last decade, according to a depository spokesperson, has developed a broad understanding of nearly every aspect of DTCC’s business and its approach to effective risk management and compliance. In her current role, Hershey serves as Managing Director and Head of Operational Risk Management (ORM) where she has been a driving force in expanding and strengthening the firm’s capabilities to identify, assess, manage, report and remediate operational risks, working in partnership with the firm’s business and functional leaders. Hershey has also overseen initiatives that have delivered significant enhancements to DTCC’s Third Party Risk Management and New Initiatives functions, has played a key role on the Investment & Operating Committee and has been co-leading the firm’s Governance, Risk and Compliance Council. “As a critical market infrastructure for the global financial markets, DTCC must comply with multiple laws, regulations and governmental guidelines while promoting the highest ethical standards for our company and...
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