Although it is intuitively clear that interconnectedness has some effect on the transmission of shocks, it is less clear whether and how it significantly increases the likelihood and magnitude of losses compared to a financial system that is not interconnected. The Office of Financial Research, a government study group created by the Dodd-Frank Act, has […]
Time is running out for those who are unhappy with the settlements of some 930,000 Lehman derivatives contracts. With the statute of limitations running out on filing Lehman derivatives disputes, a flood of new cases is expected from parties holding these contracts when Lehman filed for bankruptcy in 2008. An article by law firm Orrick […]
“Some optimisation techniques are still taking shape due to a lack of clarity around new regulations. However, some elements must naturally precede others before it is possible to reach the next level.”
Post crisis regulatory changes have had dramatic effects on the landscape of collateral management, and amplified greatly its importance from a risk management, funding cost, and operational standpoint. As a result, financial institutions across the globe are overhauling their collateral management processes to deal more effectively with the new market for collateral. Traditionally, the concept of “collateral optimization” was limited to examining what is cheapest to deliver, assigning costs to collateral assets, mapping eligibility criteria, and centralizing collateral across business lines. But as a new white paper from 4sight Financial Software points out, in the new regulatory climate and collateral marketplace, effective optimization now requires a much more dynamic and custom-made approach.
In an October 14, 2013 address, William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, expressed some lingering concerns he and the Fed have about the tri-party repo market. Despite the reform efforts of both regulators and the tri-party repo industry, Mr. Dudley worries that tri-party repo still remains an area of significant systematic risk.
The Court of Justice of the EU (CJEU) has announced that it will hear a challenge to EU short selling regulations on June 11, 2013. Britain’s finance ministry filed the legal challenge in June of 2012 against the European Union in an effort to limit the European financial regulators’ power to ban short-selling. Britain’s lawsuit seeks to clarify the powers granted to the European Securities and Markets Authority to halt or limit short selling across the 27-member EU nations in the event of a crisis.
The Risk Management Association’s Committee on Securities Lending has filed a 40-page response to the Financial Stability Board’s recent whitepaper on shadow banking, focusing on its recommendations regarding securities lending and repo. The January 14, 2013 comment letter represents the views of the RMA and major participants in the agency securities lending markets like BNY Mellon, BlackRock, Citigroup, Northern Trust, State Street, and others.
Sifting the rubble left by the financial crisis has turned up some revealing clues about the causes of the catastrophe. At the same time, this forensic examination has given us an opportunity to do some fundamental thinking about to what extent sheer size of the financial industry contributes to the growth and success of economies, or whether size does more harm than good.
For the most part, regulators and policy makers around the globe have “bought in” to the global regulatory reform agenda brought about by the financial crisis. But, there are differences of opinion on whether the reforms that are underway are up to the task of enhancing the resilience and robustness of the global financial system.
Treasury Secretary J. Lew still sees money market funds and tri-party repo as unfinished business in the nation’s quest to control risks to financial stability. In May 21, 2013 testimony before the Senate Committee on Banking, Housing, and Urban Affairs, Lew delivered the Financial Stability Oversight Council’s (FSOC) annual report to Congress.
Today Treasury Secretary Jack Lew delivered a broad policy address to an audience at the Pew Charitable Trust. For the most part, Lew spoke about progress the Treasury and Administration have made thus far ending too-big-to-fail and reigning in many of the perceived excesses of Wall Street firms. The truly interesting part of Lew’s address, however, was when he took Congress for to task for passing Dodd-Frank but then failing to properly fund the agencies and departments charged with enforcing the law. Absent real funding, he said, “the best rules will fall short without effective supervision and enforcement.”