US$3.6 million. That is the average cost a fund management firm could incur for correcting failures to settle their collateral requirements for bilateral swap transactions in 2020. The amount comes to US$2.4 million for a broker-dealer. These sobering figures, delivered in a document entitled “Implications of Collateral Settlement Fails: An Industry Perspective on Bilateral OTC […]
US Braces for Testing T+2 Preparedness (Updated)
(Editor’s Note: After the publication of this article, DTCC published a document which outlines the testing requirements from its subsidiaries NSCC, DTC and Omgeo for impacted organizations and instruments. The paper entitled “T+2 Test Approach: DTCC’s High-Level Testing Framework” can be found here). Testing, testing, testing. That is the next critical focus for achieving a successful transition […]
Investment Fund Transfer Agents: Forget About Monitoring Brokers
The US Securities and Exchange Commission has the right intention in wanting to update its outdated rules for transfer agents, say investment funds transfer agents and their legal counsel, but its approach in regulating shareholder recordkeepers of buy-side firms may be flawed. Among the growing list of concerns is whether investment fund transfer agents might […]
Syndicated Loans Market: An Evolution is Coming
Nineteen days and counting. That’s the average time it takes to settle a US syndicated loan. It’s a far cry from the two or three days for other asset classes, but fund managers, broker-dealers, agent banks and even regulators are waking up to the fact the gap must be closed to reduce risks and costs. […]
Johannesburg in Final Sprint to T+3 Settlement (Updated)
(Editor’s Note: This article was updated on February 29 to reflect the JSE’s announcement on February 26 that it had selected July 11 as the go-live day for T+3.) South Africa is in the last lap of a longstanding project to shave two days off its current five day settlement cycle, even though the […]
Securities Finance Data: Useful or Not for European Regulators?
In asking market players to shed more light on their securities finance transactions, European regulators have unintentionally opened an operational and legal can of worms. The newly passed European Securities Financing Transactions (SFT) legislation includes a requirement that managers of new European traditional and alternative investment funds disclose their policies involving securities finance transactions in […]
FINRA’s TBA Margin Rule: No Meeting of Minds with Industry
The pleas of fund managers and broker-dealers for the Financial Industry Regulatory Authority (FINRA) to change proposed rules requiring the collateralization of agency mortgage-backed securities and other transactions are falling on deaf ears and time is running out. The SEC is requiring that final comments on FINRA’s new proposal published last month be submitted by […]
Squeezing Market Data Costs: Why, When, Where and How
Market data may be the life blood of financial firms, but it’s also a massive expense to them. Often quick to blame exchanges and market data vendors for overcharging them, financial firms eventually have to face the fact that the buck stops with them. If they want to reduce their data spend, they have to get their own […]
Mutual Funds to SEC: We Can’t Swing Prices
When proposing new rules, the US Securities and Exchange Commission often plays catch-up to the changing technological or market times. Not so when it comes to the practice of swing pricing, part of its new proposed rules for liquidity management.by US registered investment funds. Nothing short of a revolutionary change in operational capabilities would be needed […]
US Registered Funds: Say Hello to Derivatives Risk Managers
Must have knowledge of derivative products, risk management, compliance procedures, technology implementation and project management. An MBA or graduate degree in financial engineering is required. A certified financial analyst designation is preferred. Those are the likely employment requirements for the derivatives risk manager that many US registered investment funds will have to hire if the Securities and Exchange Commission […]