Commentary
Journal Commentaries
Keep Regulation Functional (October 2008)
CSFME’s Executive Director Ed Blount interviews SEC Chairman Chris Cox.
American Banking Association Banking Journal
https://www.questia.com/library/journal/1G1-187494664/keep-functional-regulation-how-financial-regulation
The Bear Market Posse, or Counterparty Risk Management during the Recent Turmoil (Sept. 2008)
by Ed Blount
The RMA Journal, v91n1, 28-32, 5 pages Sep 2008.
Searching for New Paradigms at BIS (July 2008)
by Ed Blount
Unexpected deficiencies in bank capital after recent market turmoil has regulators rethinking aspects of Basel II and “value at risk.”
American Banking Association Banking Journal
https://www.questia.com/library/journal/1G1-181991450/searching-for-new-paradigms-at-bis-market-turmoil
Will Basel II Affect The Competitive Landscape? (September 2003)
By Ed Blount
Newly elected Basel Committee Chairman Caruana, Governor of the Bank of Spain, gives his views on the revised Basel capital accord, relative to its potential effects on competition and risk management in banking markets.
American Banking Association Banking Journal
https://www.questia.com/read/1G1-108008773/will-basel-ii-affect-the-competitive-landscape-the
CSFME Commentaries
Loan Recalls & the T+1 Countdown: Can Securities Lenders Adapt?
Time is Running out for Lenders to Prepare for T+1 and N-PX Loan Recall Wrinkles The securities industry is transitioning to a T+1 settlement cycle, where trades settle one business day after the transaction date. While this shift promises benefits like reduced market risk and lower costs, it poses significant challenges for securities lenders.
Predictive AI in Securities Finance: Step One
On April 2nd, 2026, an effusion of data from a daily trove of U.S. regulatory filings will create resources to drive many new use cases for artificial intelligence in capital markets. A clear opportunity exists in securities finance, where practitioners have repeatedly stated that major IT investments will be needed to comply with the many new regulatory mandates. “Black box” AI platforms may seem a ready solution but can also create nightmares for client reviews and lawsuits.
In our opinion, public data can clarify the rational limits of influence for predictive artificial intelligence. The best courtroom-ready models will display an audit trail based on the replication of critical decision parameters and vectors from past markets. Vendor data in securities finance may be more timely and deeper than the public releases but, for judicial purposes, the public data will provide foundational evidence for the “bounded rationality” of decision-makers, as defined by the late Herbert Simon, Nobel Laureate and the father of Artificial Intelligence.
Beyond Benchmarking: The Race to Predictive Analytics in Securities Finance
When, on October 13, 2023, the Securities and Exchange Commission released its long-awaited final 10c-1 rule on reporting and public disclosure of securities loans (explained here), the most important passage, at least to the commercial data vendors who support the securities finance community, stated that, “the final rule could render existing securities lending data services less valuable, potentially leading to less revenue for the firms currently compiling and distributing these data for a fee.”[1] But is that true? Are bonuses and careers really at risk?? As shown in the table below, there is hope for vendors because the public data release will either omit or delay several data elements that are crucial to many important vendor applications today.
Untold Stories of Market Manipulation: Archegos Capital
How Securities Lenders Unraveled the $100 billion Pump and Dump Scheme By Ed Blount and Dan Hammond “In a matter of days, the companies at the center of Archegos’s trading scheme lost more than $100 billion in market capitalization, Archegos owed billions of dollars more than it had on hand, and Archegos collapsed.”U.S. Federal Bureau […]
Balancing the Risks of Loan Disclosures for Traders
Is 10c-1 Regulatory Overreach? Or a Good Starting Point? [1] “The best trader I ever knew was broken when he took over a dying friend’s book. Everyone knew the book and turned on him.” Born in 1899, Henry Goldberg was the oldest trader on the floor of the New York Stock Exchange when I interviewed […]
FIRST DO NO HARM
A Hippocratic Oath for Securities Lenders [1] If the Securities and Exchange Commission approves the many industry requests for delay of its proposed 10c-1 reporting rule for securities loans, leaders in the Global Association of Securities Lending Associations (GASLA) should move quickly to create a more efficient and lower cost disclosure regime. Congress will not […]
Beneficial Owners: “Most at risk, yet least served” by Disclosures
Comments to SEC on Proposed 10c-1 Reporting by Securities Lenders Excerpts from CSFME comment letter on proposed SEC Rule 10c-1, submitted 15 December 2021 “The Honorable Gary Gensler, Chairman, U.S. Securities and Exchange Commission: “With regard to the above-cited 10c-1 disclosure system, my colleagues and I consider inclusion in the rule proposal of an optional […]
“Wisely and Slow; They Stumble that Run Fast.”
Finding a Better Value Proposition for the SEC’s Sec Lending Disclosure Rule The SEC has proposed a radical and potentially very costly reporting regime for securities finance transactions to increase transparency “to brokers, dealers, and investors.” Notably, the rule release’s[1] extensive economic analysis section includes some potential alternatives to the proposed new reporting structure. While […]
Selling Transparency: A Bean Counter’s Blog
A new disclosure data model has just been proposed by the SEC for U.S. securities lenders. Adoption of the model, called 10c-1 after the revised regulation, would be “one of the most drastic adjustments in the history of the securities lending industry,” writes Sidley Austin, a leading Wall Street law firm and advisor to broker-dealers. Previously, we have explained the proposal and intended benefits. Now we begin to analyze the proposed 10c-1 disclosure system’s value proposition. Will disclosure help more than it will cost to create and manage the network that supports the new disclosure system?
Who Bears the Cost of the SEC’s Securities Lending Disclosure Proposal?
The Securities and Exchange Commission (SEC) recently proposed a new reporting regime to increase transparency and efficiency in the securities-lending market. The SEC seeks to accomplish this by requiring anyone who loans a security on behalf of himself or another person to report material terms of those loans (and related information regarding the securities on loan) to a registered national securities association (RNSA), namely the Financial Industry Regulatory Authority (FINRA).