Oh, what a tangled web we weave, or make that what regulators weave! If the Financial Stability Board (FSB) has its way, back-office operations executives at fund managers, custodians and broker-dealers will be working overtime to track down hoards of data on securities lending and repurchase agreements with no certainty it will be of any […]
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, […]
Shareholder Ballots: The Quest to Confirm a Vote
An investor receives information about a corporate agenda and casts its votes. It happens every day of the week and most frequently from February through June when most US firms hold their annual meetings. But just because a shareholder votes, doesn’t necessarily mean there’s any way to verify the vote made its way to the issuer, […]
Russia: Behind-the-Scenes Progress on Operational Risk
US and European sanctions aside, the Russian securities depository and regulators are staying on track toward their goal of turning Moscow into a major financial center through two badly needed operational reforms — the automated processing of corporate actions and electronic proxy votes for annual meetings in Russian corporations. In line with the global trend toward using ISO-compliant messages for […]
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 […]
New Criteria for US Accredited Investors: Looming Pain for Alt Funds?
The Securities and Exchange Commission might think it is protecting Americans from risky investments as it considers changing the criteria for defining accredited investors, but middle and back-office executives at hedge fund management shops are worried their livelihoods and client service levels are at risk. The Dodd-Frank Wall Street Reform Act requires the SEC to […]
Growing Global Collateral Pool: Will Fund Managers Profit?
With collateral potentially becoming a scarce resource over the next few years, securities depositories are quickly stepping up to the plate to ease access, but it remains uncertain just how much their new services will help the most needy: fund managers. The announcement of the alliance between two mega market infrastructures — international securities depository Euroclear in […]
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 […]
UCITS V: Devil in the Compensation Details
UCITS V — the latest incarnation of the decades-old European legislation easing cross-border marketing of investment funds — has fund managers angry about what they see as far more rigid rules governing their bonuses. Just adopted by the European Parliament, the legislation not only massively reduces the short-term variable compensation of so-called “risk-taking” staff, but defers […]