Contributor: Ted Allen
This blog post originally appeared on TabbFORUM. This is the year that regulatory changes are starting to bite. Dodd-Frank, EMIR and Basel III are all combining to fuel huge growth in the demand for high-quality assets for use as collateral and to maintain liquidity levels. To add to the complexity, we are experiencing a simultaneous drop in the availability of these in-demand assets. These things together have created the infamous collateral squeeze.... read more
Contributor: Peter Banham
It is clear that regulatory changes are transforming the OTC derivatives space, from execution to settlement. There are many challenges at play here. As we head into 2012, market participants will need to manage large volumes of data in order to clear and process trades, and we will see new pressures on the cost and the more effective use of capital. In response to this industry transformation, my team and I have identified 10 key trends shaping OTC derivatives today.... read more
Contributor: David Renz
In banking, the negative externality, i.e. the external cost of a bank failure to society, is enormous because of the interconnectedness of the banking industry and the reliance of both companies and individuals on banks. This externality comes from two distinctive features (i.e. term transformation and high leverage) and makes banking potentially very dangerous. It is thus imperative that regulators maintain control over the practices of banks.... read more
Contributor: David Hamilton
As I referenced in my last post, SunGard identified four main stakeholder groups as part of our recent Well Managed Money research. Today, I want to talk about the regulators. We identified two major trends in this group with the first being the significant and increasing influence of so-called ‘popular politics’ on the future regulatory landscape and the second being a trend towards a climate of more integrated global regulation.... read more
Contributor: David Renz
When thinking of the root causes of the recent financial crisis, clearly the unsustainable path of credit creation stands out as the central problem plaguing the financial sector. Due to the taming of inflation post-1982 and a secular decline of interest rates accelerated by changed aggregate savings processes in emerging economies, the price of credit has been very low for nearly two-and-a-half decades. This phenomenon, dubbed the Great Moderation stood, alongside the introduction of the Euro behind a very rapid growth of credit in many countries. Following the calamities of 2008, this bubble has burst with spectacular side-effects, among which are new efforts to regulate the banking industry. Basel III is set to yield higher capital and liquidity levels across the globe and thus make banking both safer and less profitable, as high-yielding credit is set to be partially replaced, at the same time, by low-yielding liquidity while capital requirements are set to rise drastically.... read more
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