Uniform standards for how European securities depositories handle trades that fail to settle on time might sound like good thing — particularly since more than 30 of their markets have moved to a two-day settlement cycle and the phased launch of the new centralized settlement platform, Target2-Securities, is around the corner. But that’s not how the world’s largest custodian […]
Pre-Trade Swaps Credit Check: It’s Time to Study the Options
Once there were two pre-trade credit checking hubs for swaps. Now there is only one left standing. Time for fund managers to ask their clearing agents some tough questions. Futures commission merchants (FCMs) are backing Traiana’s pre-trade credit checking hub over Markit’s, which was forced to shut down for lack of traffic. Concerns about the potential for […]
Futures Commission Merchant: Four Steps to the Right Choice
It’s the phone call no operations manager wants to get. The trading desk just tried to execute a swap contract, and discovered that the newly hired futures commission merchant (FCM) doesn’t handle transactions in that currency. Or doesn’t accept that kind of collateral. Or isn’t a member of the necessary clearinghouse. Who’s to blame? Good question, […]
DTCC’s Institutional Tri-party Repo Clearing: Great Idea…Maybe
A recent proposal by the Depository Trust & Clearing Corp. to serve as the middleman for a large chunk of the institutional tri-party repo market through its subsidiary Fixed Income Clearing Corp. might sound like a great way to reduce counterparty risk and the potential for fire sale of collateral, but with so few details unveiled […]
T+2 in Europe: Smooth Sailing or Turbulence Ahead?
A non-event. That is how European securities depositories; their bank and brokerage participants, fund managers and software vendors describe the migration of over two dozen European markets to a two-day settlement cycle on October 8. Yet they are all realizing that they must keep up the good work in ensuring seamless middle office procedures. Relying […]
EU Settlements: More Corporate Actions Claims?
In focusing strictly on settling domestic and cross-border trades, the new central settlement platform, Target2Securities (T2S) may end up causing unintended operational glitches and additional costs when it comes to how corporate actions of European issuers are processed. Or so fear some managers who apparently aren’t buying the assertions made by custodians and securities depositories […]
DTCC Puts Defrosting of Issuer Chills on Hold: Now What?
By all appearances, it’s back to square one for US corporate issuers when it comes to dealing with the Depository Trust & Clearing Corporation and the manner in which it imposes minor or more severe restrictions on a newly public company accessing some or all of its services. Any possible future changes in DTCC’s adjudication of so-called […]
Merrill’s Reconciliation Fine: What Happens When Middle Office Fails
Reconciliation: it’s an everyday process in buy- and sell-side shops, where overworked middle-office analysts pay close attention to details and hope technology works. Like all post-trade operations, it often draws the attention of C-level executives only when something goes wrong. Even worse, as evidenced in a recent case involving Merrill Lynch, mistakes can also elicit […]
Fund Managers: Picking the Best Clearinghouse, Intricate Juggling Act
Fund managers can no longer afford to view clearinghouses as stodgy infrastructures which just exist for the sake of servicing mega broker-dealers and banks. With regulators now requiring far more transactions — particularly in the over-the-counter derivatives market — to be processed through clearinghouses, asset managers must realize they have some choices to make and […]
Russia Sanctions: Narrow Focus Makes Compliance Trouble
Asset managers have to deal with trading restrictions against countries on U.S. or foreign sanctions lists every day. Trading with certain countries or in issues from certain companies is forbidden, period. The black and white requirements are clear to understand so they are easy to follow. Not so, when it comes to the new sanctions imposed by the U.S. government […]