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
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).
U.S. Stock Loan “Ticker”: A Gift to Beneficial Owners?
SEC’s New Disclosure Regime to Fix “Information Assymetry” Make no mistake. The new 10c-1 disclosure proposal by the SEC is an Investor Protection Rule on steroids. It is also a profound escalation of regulatory support for Investor Self-Protection. Nothing less than a near real-time, stock loan ticker will result if enacted, revealing U.S. loan rates […]
New Trends in Data Ownership
Certain challenges in securities finance can only be met with better data and newer data models. Market regulators now coping with investor demands for ESG-compliance will have to monitor the disclosures of regulated entities by combing through vast pools of stock loan and proxy voting data. Bank custodians and brokers, if tasked with validating the social propriety of their stock loans, will have to dive deep into customer profile data, deeper than either regulators or vendors can today access efficiently.
Assembling the Market Posse
We’ve all been there, having drinks after work with an important client visiting from overseas. My most memorable time was at the very beginning of my career on Wall Street. The client was a trader from the South African branch of Jos. Sebag & Co., a London firm more than 100 years old when he and I met in 1975 at the upscale bar, Michael II. The firm and the restaurant have long since vanished, but at the time Sebag was the most active account for First National City Bank’s (FNCB) American Depositary Receipt (ADR) business. The firm was far more active than Merrill Lynch, Goldman Sachs, or any other cross-border trading outfit. Most of the trades were for the issuance of ADRs in South African mining stocks, such as Anglo-American Gold.
Exposing the Rogue Traders
Master Criminals don’t usually confess in public. If prosecutors’ charges are true, Sanjay Shah is the leading figure in the largest reported tax swindle in history. Yet, Mr. Shah, unbowed, pleading his case to reporters, has openly admitted to borrowing the assets of widows and orphans in one country to kick-start a pyramid scheme of dividend capture trades, so as to swindle widows and orphans in other countries.
Unweaving a Tangled Web
The German Federal Court of Justice’s decision two weeks ago to prosecute as criminals anyone who abused dividend arbitrage trades anytime over the previous 25 years is bad news for everyone in the securities lending community. The German tax authorities’ new determination to conduct sweeps of securities loans that span dividend record dates should in particular sound the alarm for institutional securities lenders, especially if it presages a new trend among regulators.