Monday, December 13, 2021

“Wisely and Slow; They Stumble that Run Fast.”

Finding a Better Value Proposition for the SEC's Sec Lending Disclosure Rule

Author: David Schwartz J.D. CPA

The SEC has proposed a radical and potentially very costly reporting regime for securities finance transactions to increase transparency "to brokers, dealers, and investors."  While there is no requirement for the Commission to discuss or examine the economic effects of regulatory alternatives, in this case, they have included some alternatives it could consider to the reporting structure they propose, presumably to focus potential commenters on specific ideas they want explored. The Commission has seemingly outsourced the economic analysis of its suggested alternatives to industry commenters. Also, by doing so, the Commission has hinted it is interested in hearing about well-supported alternatives, and may even be inviting counter-proposals. 

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Friday, September 3, 2021

Central Clearing for Securities Lending

DTCC Gambles that If They Build it, they Will Come.

Author: David Schwartz J.D. CPA

DTCC has applied to the US Securities and Exchange Commission for permission to launch a securities finance clearing service. DTCC's fixed income arm, the National Securities Clearing Corporation (NSCC), spearheads the central clearing initiative, touting the numerous efficiency benefits to clearing customers, including increased capital efficiency for both borrowers and agent lenders and a reduction in counterparty risk by novating to NSCC the completion of settlement obligations.

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Thursday, March 16, 2017

OFR Publishes Trio of Central Clearing Studies

Author: David Schwartz J.D. CPA

Over the past few weeks, the U.S. Office of Financial Research (OFR) has published a trio of papers looking at various aspects of central counterparties (CCPs). These papers range from the best way to stress test CCPs, to the adequacy of CCP margin requirements and the relative risks and utility of central clearing to repo markets.

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Tuesday, March 1, 2016

US and EC Agree on a Common Approach to Trans-Atlantic CCPs

Author: David Schwartz J.D. CPA

In a joint statement issued on February 10, the European Commission (EC) and the U.S. Commodity Futures Trading Commission (CFTC) announced agreement on a common approach regarding requirements for central clearing counterparties (CCPs).  The agreement is the result of a multi-year analysis of differences between the CFTC and EU regulatory requirements. The accord commits the EC and CFTC to base regulations on international rather than parochial principles, and for both the CFTC and the European Commission Services to work together, along with counterparts across the global regulatory community, to develop further these principles and further harmonize the standards to which internationally active CCPs are held.

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Thursday, January 28, 2016

OFR Report Highlights Unintended Consequences of Swaps CCPs

Author: David Schwartz J.D. CPA

On January 27, 2016, the Office of Financial Research (OFR), an arm of the Treasury Department created under the Dodd-Frank Act, issued its fourth annual report to Congress. The report highlights the results of OFR research, risks to financial markets, and OFR priorities for the coming year. Notable among its findings, the report suggests that reforms mandating central counterparties in the formerly OTC swaps market could unintentionally increase systemic risk in the long run rather than reducing it.   

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