By Martin Arnold March 16, 2021, Financial Times Europe’s top banking supervisor has said lenders could be given more time to benefit from capital relief if they speed up their recognition of loans that are likely to turn sour.

Andrea Enria, chair of the European Central Bank’s supervisory board, made the comment as he called on eurozone lenders to be bolder in booking provisions for an expected rush of bad loans caused by the fallout from the Coronavirus pandemic.full article

By Lucy McNulty March 15, 2021, Financial News There’s a growing consensus forming across the City: The finance sector’s post-Brexit future will be one without equivalence. 

Six senior City lobbyists at London’s largest banks and trade groups, as well as regulatory advisers to finance’s most senior executives told Financial News that they are now preparing for a Brexit deal that does not hinge on equivalence – where the EU allows those with matching standards access to its markets. full article

By Suzanne CosgroveMarch 16, 2021, John Lothian News

If there still are any doubters as to the extent of Brexit’s impact on London’s financial markets, Mairead McGuinness, European commissioner for financial services, set them straight on Tuesday. In a keynote address to the FIA’s Boca conference, she called the UK’s then-popular 2016 decision to leave the EU “a major fragmenting event” with consequences. 

UK-authorized firms now cannot provide services across the EU based solely on their U.K. authorizations, McGuinness noted, adding “the good news is that our [EU] companies were prepared and markets have adjusted well to this new situation.”full article

By Jeff Reeves March 16, 2021, MarketVoice FIA’s International Futures Industry Conference kicked off on 16 March with in-depth discussions about market access and market structure issues. These included the rise of retail investor participation, the impact of Brexit on cross-border trading and clearing, international access to financial markets in China, and market infrastructure issues.

Here are some of the highlights from the first day of Boca-V:Brexit and cross-border accessMairead McGuinness, the European Commissioner for Financial Stability, Financial Services and the Capital Markets Union, discussed market fragmentation and cross-border policies for the European Union in the wake of Brexit. She said that “transparent and liquid marketplaces are the pillar of strong and efficient European capital markets,” and that the EU will remain open with equivalence decisions and deference being an important part of the regulatory framework.full...

By Wendy Lisney March 16, 2021, Global Investor Group Data fragmentation in over-the-counter (OTC) derivatives market risks lack of transparency across jurisdictions, which could hinder regulators’ ability to adequately monitor systemic risk, the Depository Trust & Clearing Corporation (DTCC) has warned.

“Jurisdiction-specific rules and standards that have been promulgated over the last 10 years around what and how data is reported has resulted in the creation of a complex local reporting network, which can be expensive to develop and maintain for reporting market participants and infrastructures,” Chris Childs, the DTCC’s managing director and head of repository and derivatives services told Global Investor.full article

By Cherry Reynard March 8, 2021, Money Marketing Multi-asset investment has become a mainstay for many advisers, but separating the amateurs from the professionals isn’t always easy.

There is a proliferation of offerings, launched by fund groups, discretionary managers and even adviser firms themselves. Recent strong markets have flattered even the most inexperienced multi-asset manager. However, the future is likely to be more difficult, and advisers will need to seek out a true specialist to help see them through.full article

By Natasha Rega-Jones March 8, 2021, Risk Good things are meant to come to those who wait. Those waiting for greater electronification of over-the-counter foreign exchange options have been waiting unusually long, but good things are finally on the horizon.The $297.5 billion market is dominated by voice trading. The reasons include the products’ inherent complexity, lack of standardization and low volatility, as well as the market’s relatively small size.full article

By Huw Jones March 4, 2021, Reuters Britain’s Financial Conduct Authority said on Thursday it was lifting more curbs on “dark” trading, throwing down the gauntlet to the European Union after billions of euros of trading left London for Amsterdam in the wake of Britain’s departure from the bloc.Dark trading refers to the use of platforms that allow institutional investors to trade shares without having to disclose a range of details on the transaction before it is executed.full article

By Annabel Smith March 15, 2021, The Trade The European Commission has published its amendments to MiFID II research rules and best execution reporting to offer relief to participants in the wake of the COVID-19 pandemic.

Under the changes, investors will be permitted to bundle payments for research and execution provided that the research is on issuers with a market cap of less than €1 billion over 36 months.full article

By Robert Mackenzie Smith March 16, 2021, Risk The foundation of the global financial system is showing some cracks. On February 25, US Treasuries suffered a bout of extreme turmoil and illiquidity that took many by surprise and hinted at fragility in a market on which all others depend. Bond dealers say further tremors are inevitable – unless, at a minimum, regulators tackle a known side-effect of post-crisis rules.full article

By Victoria Guida March 14, 2021, Politico Republicans are bashing the new $1.9 trillion pandemic relief package for further ballooning the federal debt, but it’s the Trump administration that greased the path for a smooth federal spending spree.

The Treasury has a cash pile of well over $1 trillion, which will allow the government to quickly disburse money in line with the sweeping new law, including direct checks to millions of Americans that are expected to start hitting bank accounts in the coming week. That robust rainy-day fund was built last year by then-Treasury Secretary Steven Mnuchin, who preemptively cranked up the pace of government borrowing, unsure of how and when Congress might mandate further relief measures.full article

By David Benoit March 15, 2021, The Wall Street Journal US banks are sitting on a pile of cash that could turn into billions of dollars of profits.

In the coming months, banks are expected to free up tens of billions of dollars in reserves they set aside to cover soured loans—losses that still haven’t materialized a year into a pandemic that shut down swaths of the US economy.full article

By Sarah Wynn March 11, 2021, The Bond Buyer Banks and mutual funds increased their holdings of municipal bonds in 2020, followed by a strong increase of holdings by exchange-traded funds.

Bank holdings increased to $513 billion from $472 billion from 2019, an increase of 9%. That was among several growth trends that stood out from the Federal Reserve’s flow of funds report covering the final quarter of 2020, released Thursday.full article

By Lucy McNulty March 15, 2021, Financial News

There’s a growing consensus forming across the City: The finance sector’s post-Brexit future will be one without equivalence.

Six senior City lobbyists at London’s largest banks and trade groups, as well as regulatory advisers to finance’s most senior executives told Financial News that they are now preparing for a Brexit deal that does not hinge on equivalence – where the EU allows those with matching standards access to its markets.

full article

By Christoper Whittall March 13, 2021, IFR Europe’s largest investment banks are losing ground in derivatives trading to US and UK banks this year in a surprise Brexit twist resulting from a financial regulatory standoff between Brussels and London.

BNP Paribas, Deutsche Bank, and Societe Generale are among the banks to register notable market share declines in trading of interest rate swaps and credit-default swap indices this quarter, according to sources familiar with the matter, as a result of no longer having access to UK-based derivatives trading venues from the start of 2021. That has cut them off from a large chunk of UK institutional investors – as well as other banks – that still trade billions of dollars worth of derivatives on these platforms every day.full article

By Philip Stafford, Mehreen Khan, and David Keohane March 11, 2021, Financial Times

Authorities in the Netherlands were anxious ahead of Brexit. Unlike counterparts in other European capitals who saw opportunity in Britain’s withdrawal from the EU — the chance to pick up more business and financial services jobs — the Dutch government worried about a blow to its economy as a major trading partner left the bloc.

The Dutch government ran a public awareness campaign to alert companies to the dangers. It portrayed Brexit as an annoying blue furry monster, an obstruction that prevented Dutch businesses from getting to meetings or delayed transport shipments to Britain. Stef Blok, the foreign minister, tweeted: “Make sure Brexit doesn’t sit — or lie — in your way.”

full article

By Stephen Spratt and William Shaw March 11, 2021, Bloomberg A clear leader is emerging in the migration away from Libor for the vast global derivatives industry.

Trading activity pegged to the UK’s Libor replacement stood at 46% in February with the remainder linked to the discredited benchmark, according to the latest data from the International Swaps and Derivatives Association. That compares with just 3.5% pegged to new reference rates for the Japanese yen, and about 5% for those on the U.S. dollar — markets that are worth more than $200 trillion collectively.full article

By Luke Jeffs March 12, 2021, Global Investor Group Many of the world’s top financial trade bodies have written to the European Commission calling for a “thorough reassessment” of the Settlement Discipline regime, a contentious part of the central...

By Rebekah Tunstead June 16, 2021, Risk A growing number of public entities in Europe are considering a possible move into clearing their derivatives trades, but dealers say significant funding waivers for SSAs mean potential increased risk exposure for European clearing houses. And many of their members see the waivers as unnecessary preferential treatment.

“If you have an entity that’s contributing to the risk in the system without ponying up for it, I just don’t think that’s right,” says the global head of clearing at a US bank.full article

By Costas MourselasJune 16, 2021, Risk

Clearing banks are up in arms after a seemingly arcane change to the way US regulations categorise their clients for the purposes of margining led to large funds lobbying for their requirements to be dropped by as much as 9% versus previous levels.

On January 27, an amendment to US Commodity Futures Trading Commission (CFTC) Regulation 39.13(g)(8)(ii) – which governs the way clearing houses and futures commission merchants (FCMs) should treat clients when determining base margin requirements – entered force.full article

By Luke Clancy June 16, 2021, Risk Ten of the world’s largest clearing banks have agreed to fund the growth of an industry utility tasked with helping standardize post-trade workflows – seen as vital in preventing a repeat of the operational bottlenecks that crippled futures trade processing during last year’s COVID-19 market meltdown.

FIA Tech, a for-profit subsidiary of industry trade body the Futures Industry Association, has received $44 million in funding from a group of futures commission merchants (FCMs), including Goldman Sachs, Morgan Stanley and JP Morgan, and a mandate to smooth kinks in the piping that connects brokers and clients to one another and the more than 70 exchanges in the listed derivatives markets.full article

By Alex Harris June 16, 2021, Bloomberg The Federal Reserve on Wednesday tweaked the rates on some of the tools used to help control the benchmark even as it left unchanged the overall target range for the fed funds rate.

The upward shift to the so-called administered rates comes amid the growing dollar glut in short-term funding markets that’s outstripping the supply of investable securities and weighing down front-end rates, despite the steadiness of the Fed’s key benchmark at 0.06%. Fed officials decided to raise the rate on its overnight reverse repurchase agreement facility by 5 basis points to 0.05%, effective June 17. Policy makers also boosted the interest paid on excess reserves by 5 basis points to 0.15%, but left the main monetary policy goal unchanged at 0% to 0.25%.full article