All - Center for the Study of Financial Market Evolution (CSFME)

EU Tax Officials to Audit Securities Finance

by Ed Blount | Saturday, September 19, 2020 | All, Commentary, Cross-Post, Procedural Changes

The European Securities and Markets Authority (ESMA) has recommended that the market regulators in EU Member States combine trade data generated from the Securities Finance Transaction Regulation (SFTR) with local surveillance data so as to empower tax authorities to catch and indict tax abusers. To the abusers, that is like saying that the Sheriff and Posse are closing in on their SFTR trails.

(No kidding. What did they think? And if the abusers haven’t created defenses by this time, it’s already too late.)

Governance in the Age of Financial Crises

by Ed Blount | Wednesday, June 24, 2020 | All, Cross-Post, Traditions

In the coming corporate bankruptcy crisis, banks and companies perceived as bad actors in society will find their resolution terms to be very harsh. To avoid being diluted or even wiped out, large shareholders and corporate boards of directors must be constantly vigilant in exercising their oversight duties. Stakeholders must enforce policies which require company management to act in a socially responsible fashion.

Taking Stock of Blockchain for Improving Securities Services

by Ed Blount | Saturday, October 19, 2019 | All, Commentary, Cross-Post

The early torrent of media hyperbole about distributed ledger technologies (DLT), such as blockchain and shared ledgers, has now been supplanted by reflection on lessons learned. Scaling concerns were allayed to some degree by DTCC’s November 2018 report that its study of throughput capacity for DLT was sufficient to handle massive U.S. equity trading volumes.

ESMA Takes a Look at Tax Withholding Schemes

by David Schwartz J.D. CPA | Tuesday, March 19, 2019 | All, Formal Regulatory Remedies, Procedural Changes

The European Securities and Markets Authority (ESMA) has published the findings of its preliminary study of multiple withholding tax (WHT) reclaim schemes. ESMA conducted this preliminary study at the request European Parliament (EP) and has launched another more formal inquiry to gather further evidence from national competent authorities (NCAs) on the supervisory practices and experience regarding those schemes.

The study published on July 2, 2019 assesses how widespread WHT reclaim schemes are across the EU and any potential methods for preventing and detecting them. While WHT schemes are not strictly illegal and “do not necessarily imply breaches of the market abuse or short selling regimes, they may affect the integrity of securities markets and individual firms.” ESMA found that WHT reclaim transactions are being investigated in Germany, Denmark, and Austria.

Systems Experts Set the Bar for Blockchain in Securities Finance

by Ed Blount | Monday, February 18, 2019 | All, Cross-Post

“Hype and Reality for Blockchain and Distributed Ledger Technologies” at Institutional Securities Lenders’ Meeting February 6, 2019 —Systems entrepreneurs – Armeet Sandhu, Sal Giglio, and Ed Blount – engaged in a lively brainstorming session with Chris Ferris, IBM’s Distinguished Engineer for Open Source Technologies, at IMN’s 25th Annual International Securities Finance and Collateral Management Conference. …

Global Banks in Test of US$11 Trillion Shared Ledger at DTCC

by Ed Blount | Wednesday, December 19, 2018 | All, Cross-Post

Regulators and Credit Derivatives industry prep for 2019 Go-live Announced on November 6, 2018, the addition of Barclays brings to 15 the number of dealers in the main blockchain project of The Depository Trust & Clearing Corporation (DTCC). By recoding the DTCC’s Trade Information Warehouse (TIW) for bilateral credit derivatives in only 18 months, the …

Distributed Ledger Tech Can Process U.S. Stock Volumes, says DTCC

by Ed Blount | Wednesday, October 17, 2018 | All, Cross-Post

Accenture cloud model scales to 100 million trades daily in study prototype On October 16, 2018, the Depository Trust & Clearing Corporation (DTCC) reported that “distributed ledger technology (DLT) is capable of supporting average daily trading volumes in the US equity market of more than 100 million trades per day.” Based on a cooperative study …

Disrupters Fail to Move Needle with Securities Lending Solutions

by Ed Blount | Thursday, September 27, 2018 | All, Cross-Post

The Bank of England’s Securities Lending Committee took up the question of distributed ledger technologies (DLT) in its September 24 meeting. Three vendors were invited to present their concepts to the group of nearly two dozen UK bankers and their regulators. The presentations and the Committee members’ reactions were summarized in the minutes of the meeting. Each vendor approached the market from a different perspective, using a different aspect of DLT. Members found some value in the proposed solutions, yet were generally disappointed in the market impact of the innovative approaches.

Fintech Plans Announced to Digitize Portfolios in the Capital Markets

by Ed Blount | Saturday, May 19, 2018 | All, Cross-Post

More than 1,200 dealmakers brought their ardor and business plans to sold-out Polycon18, a giant-sized version of television’s Shark Tank which convened at the Bahamas’ Bal Mar Grand Hyatt Hotel from February 28th to March 3rd, 2018. Attending investors were shown project offerings, as well as conference materials that cited U.S. Senate testimony by SEC chair, Jay Clayton, to the effect that initial coin offerings (ICOs) of securities tokens would indeed be considered securities:

“When investors are offered and sold securities – which to date ICOs have largely been – they are entitled to the benefits of state and federal securities laws and sellers and other market participants must follow these laws.”

JPMorgan Chase Tests Blockchain Use for Securities Services

by Ed Blount | Friday, May 18, 2018 | All, Cross-Post

On May 16, 2018, JPMorgan Chase unveiled Dromaius, its prototype of a shared ledger for capital market services, at Coindesk’s Consensus 2018 conference. The prototype is designed to test the use of the Ethereum blockchain technology in supporting a coordinated posting by multiple entities to a single encrypted securities bookkeeping system. JPMC executive director Christine Moy said that, “We think the technology has the potential to be transformative.”

Ms. Moy, who leads J.P. Morgan’s Blockchain Center of Excellence, told the Wall Street Journal that the technology “should streamline operations, help with cost savings and overall make the experience of transacting or issuing a financial instrument like this more seamless and simplified.”

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