Repo Comes Under the Microscope

Introduction On 29 January 2014, the EU Commission published a legislative proposal for a regulation on reporting and transparency of securities financing transactions[1] (SFTs) and associated FAQ document. The EU Commission is concerned that efforts to reform the structure of EU banks (in the form of the Liikanen proposals – see this blog post for […]

CFTC: New Helmsman Changing Tack?

“Our dealings with the CFTC have been good over the last few weeks, better than before,” said an unnamed European official, commenting on a number of meetings between the EU and the CFTC. While referring to concerns over SEF-driven market fragmentation and extra-territorial fiat by footnote (513), the remarks are the latest indication that the CFTC under temporary Chairman Mark […]

Liikanen Out of the Blocks

Introduction On 29 January 2014, the EU Commission published a legislative proposal and accompanying press release regarding a regulation on structural reform of the EU banking sector.  Recognising that the Bank Recovery and Resolution Directive will be unable to address the issue of “too-big-to-fail” in its entirety, and in furtherance of the political agenda to […]

The King Is Dead; The CFTC Limps On

  Outgoing CFTC Chairman Gary Gensler delivered his farewell speech on 27th December 2013, calling himself “darn proud” of pretty much everyone associated with his time at the agency, including his daughters and their “Captain Grandpa”. While he gave a full summary of the agency’s achievements under his tenure, he only alluded briefly to the many issues that will […]

EBA Asset Encumbrance Rules Add to the Data Headache

Introduction On 30 October 2013, the European Banking Authority (EBA) published final implementing technical standards (ITS) on asset encumbrance reporting under Article 100 of the Capital Requirements Regulation (CRR).  The purpose of the ITS is to: create a standardised measure of asset encumbrance across institutions and in doing so provide authorities with insight into reliance […]

European Council Deals Blow to Single Resolution Mechanism

  The Single Resolution Mechanism (SRM) proposed by the EU Commission in July has suffered a fresh blow (see this blog for SRM background).  On 7 October 2013, an opinion from the European’s legal service sheds serious doubt on the legality of giving a new agency wide discretion to close troubled banks under EU treaties, potentially undermining […]

Margin Requirements for OTC Derivatives: Regulators Listen, but Do They Hear?

Introduction On 2 September 2013, the Basel Committee on Banking Supervision (“BCBS”) and the International Organization of Securities Commissions (“IOSCO”) published their long-awaited final policy document dealing with “Margin requirements for non-centrally cleared derivatives”. Scope Subject to certain exemptions discussed below, the final rules apply to financial firms and systemically important non-financial entities (“Covered Entities”) […]

Battle Lines Drawn Over CCP Resolvability

In the context of the continuing industry and regulator discussion regarding central counterparty (CCP) resolvability, last week ISDA published a position paper entitled “CCP Loss Allocation at the End of the Waterfall”.  The paper addresses two scenarios: “Default Losses” – i.e. losses that remain unallocated once the ‘default waterfall’ is exhausted following a clearing member […]

Basel III Phase-in Begins to Bite

30th July 2013. The PRA updated its statements on bank and capital leverage ratios to include Barclays. A brief summary of 2013 statements to date: Lloyds/RBS– the PRA has mandated the capital requirements- the two banks’ compliance plans will be announced once discussion with all 8 major banks are concluded. Co-operative Bank– needs to generate an extra £1.5bn […]

EU Commission proposes Single Resolution Mechanism

On 10 July 2013, the EU Commission proposed a Single Resolution Mechanism (SRM), a complement to the Single Supervisory Mechanism (SSM) and one of the building blocks of EU Banking Union.  The SRM is designed to ensure that the resolution of a failing bank can be managed efficiently with minimal costs to taxpayers and the real economy. […]

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