Contributor: Daniel Parker
A version of this blog post originally appeared in FOW.
As additional final rules are promulgated throughout the globe, an emerging trend for financial market regulators is to transfer, allocate and defer significant implementation discretion to financial market utilities and other relevant transaction infrastructures.
For instance, on May 16, 2013, in a landmark ruling decided in a public forum, the U.S. Commodities Futures Trading Commission (CFTC) voted, by a margin of 3-2, to implement, among other rules, the final "made available to trade” (MAT) rule.
The MAT rule fundamentally changes the swaps market by instituting the method and manner by which specific products required to be executed and cleared are identified.
This changes the swaps market because the CFTC, in its final rule, has effectively transferred, allocated and deferred significant power to swap execution facilities (SEFs) and designated contract markets (DCMs), (collectively, “facilities”) to unilaterally bind the entire swaps market to mandatory participation. ... read more
Commentary from SunGard experts on news and events affecting the financial services industry.
Contributor: SunGard Viewpoint
Vince Tolve, vice president of SunGard's brokerage business, focused on the SGN Short Term Cash Management solution, shares his thoughts on how cash management tools and strategies can enhance credit risk analysis and reporting for treasurers.... read more
senior vice president, Astec Analytics, SunGard’s capital markets business
Contributor: David Lewis
This blog post was taken from the Astec Analytics Securities Lending Focus for May 2013.
Trading venues require a number of different characteristics to function properly no matter what product or service is traded. “Liquidity” is an oft-quoted characteristic when describing an efficient market.
Market “liquidity” is where a given asset can be sold without causing a significant movement in the price and with minimum loss of value – otherwise defined as exhibiting equilibrium between buyers and sellers where a scarcity of either can lead to deflated or inflated prices, respectively. Just ask anyone looking to buy a house in London.
But what has this got to do with securities lending? A great deal in fact. ... read more
Contributor: Brendan Farrell
A version of this blog post was originally published by Wall Street & Technology.
Virtually every industry in every corner of the world has undergone technological or process evolution in recent times. There are countless examples of innovations that have addressed a challenge – the process takes too long, the process costs too much, the process is too risky – and changed the game by helping organizations or individuals operate smarter through efficiency, automation, or simplification.
Let’s consider communication, or the transmission of messages, as just one area where evolution has occurred. There are ways to communicate that involve quite a bit of manual work, such as the use of a carrier pigeon. Not the quickest way to transmit a message, and not too efficient, as apparently a carrier pigeon typically only flew in one direction – home – and would need to be manually taken to a message’s original location to begin the process. Given the level of difficulty and manual intervention required, it’s no surprise we don’t see the skies full of email or text message pigeons today.
On the flip side, if we look at a more modern messaging bird, it is evident that technology has changed the game for how individuals, organizations, and governmental entities can communicate and discover information. Twitter offers its users a simplified and efficient way to communicate specific messages to an audience across the room or across the world – pointing to why the social network has amassed millions of users in just a few years.
A similar, albeit less feathery, evolution is taking place within the corporate actions space today.... read more
Contributor: Daniel Parker
This blog post was originally published on TabbFORUM.
New rules have recently come into effect that have substantively changed the customer collateral asset protections relevant to central clearing.
Specifically, the Dodd-Frank Act prescribed that the CFTC adopt rules that provide for enhanced protections of cleared swaps customer margin collateral. The mandate is known as “legal segregation with operational commingling,” or LSOC. LSOC provides a fundamental change in how futures commission merchants (FCMs), as members of central clearing counterparties (CCPs), must manage customer margin collateral.
As a result of these rules, there was an initial flurry of activity to automate compliant processes. For instance, the first phase simply provided a bridge whereby FCMs reported excess collateral without reaching individual-customer-level granularity.... read more