News
Regulators Drop the Hammer on Archegos
Rogue Trader’s Behavior Yields Lessons for Risk Management The Securities and Exchange Commission (SEC) filed a civil lawsuit against Archegos Capital Management, its founder, and several other individuals in April 2022. The SEC alleges that Archegos engaged in a fraudulent scheme to manipulate the market for the securities of the issuers that represented Archegos’s top […]
SEC Gets an “Earful” on Securities Lending and Short-selling Disclosure Proposals
And Another Thing – Longer Comment Periods, Please The Securities and Exchange Commission’s controversial securities lending disclosure proposal (Proposal) sought public input on 97 questions and received a substantial body of feedback during the initial 30-day comment period. Drawing sharp rebukes, most responses from trade associations for lenders and borrowers focused on the ambiguous scope […]
Disclosure and Beyond: Restructuring the U.S. Equity Markets
BRIEFING GUIDE to the SEC’s Aggressive Agenda to Head off the Next “Big Squeeze” On Friday, February 25, 2022, the Securities and Exchange Commission (SEC) proposed its latest round of GameStop rule proposals. In addition to enhanced public disclosures of short sales by institutional investors, the Commission announced a 30-day extension of the comment period […]
T+1: The Future is Now (or at least as early as 2024)
The SEC Boldly Sets Course for T+1 and T+0 While real-time settlement is still something that may happen far in the future, perhaps on the Starship Enterprise, T+1 is now imminent. On February 9, 2022, the Securities and Exchange Commission proposed to make T+1 a reality. The proposal aimed at reducing risks in clearance and […]
How Would Cross-Border Payments Change in a Digital Currency World?
World Bank, BIS and SWIFT weigh in on CBDCs Widespread adoption of central bank digital currencies (CBDC) could revolutionize cross-border payments by reducing friction and making it possible for T+1 or even T+0 settlement of cross-border trades. The Fed’s Digital Currency discussion paper is the central bank’s first step in a public discussion with stakeholders […]
The Fed Weighs in on a ‘Digital Dollar’
Vast Cross-border Implications for Central Bank Digital Currencies A discussion paper published on January 20th invites the public to explore with the U.S. Federal Reserve Board the creation of a digital version of the U.S. dollar. A Central Bank Digital Currency (CBDC) backed by the Federal Reserve would be designed, according to the Fed’s paper, […]
Lenders and Borrowers Sound off on the SEC’s Disclosure Proposal
Giving the SEC an Earful and Sounding the Alarm The Securities and Exchange Commission’s (SEC) securities lending disclosure proposal has drawn sharp rebuke from both securities lenders and borrowers. Lending principals criticized the proposal on everything from cost, lack of clarity, and overbroad scope to the rule’s general inequity. They also warned of a host […]
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 […]
Digitized Finance Testing Approved by European Union
The European Commission has reached agreement with legislators and financial trade groups on a digitized infrastructure to reshape the EU and, by extension, the global securities markets. The resolution affects all transactions involving EU securities, including securities loans, by (1) green-lighting the Distributed Ledger Pilot Regime, an effort to foster fintech innovation in the EU, and (2) delaying mandatory buy-ins, a highly contentious aspect of the ongoing sweeping reforms to the EU’s securities settlement system.