Finadium

The more that securities financing goes electronic, the more that its role as “alternative data” for alpha and risk comes to the fore. We’re hearing about different ways that’s happening across numerous conferences representing a wide variety of market actors, and report on how artificial intelligence (AI) techniques specific to repo are being applied to post-trade data by London Reporting House . Anna Reitman More on #finadium: https://lnkd.in/eJ-kD5-F

US quarter-end came with repo market stress, which saw a double-digit rates spike and an uptick in standing repo facility use. That’s focused attention on funding pressures as the Fed’s quantitative tightening program progresses against the backdrop of a policy shift from abundant to ample reserves. How concerned should market participants be, and how will the repo market know when we reach an ample reserves environment? We review recent comments from Robert Perli, manager of the System Open Market Account (SOMA) at the New York Fed, and hear from Stephen Malekian, securities finance expert, about why some market participants believe the repo market is headed for year-end volatility. Anna Reitman More on #finadium: https://lnkd.in/eB-EqB-N

We’re seeing evidence of pension plans and sovereign wealth funds (SWF) around the world interacting with the market more like hedge funds than ever before. This has shown up as well in Finadium’s own client growth in 2024, which saw a sharp increase in new subscribers and conference attendees from this segment. When looking at a large pension or SWF today, it should be assumed that these entities already have a funding and financing desk set up or are considering how to get there. More on #finadium: https://lnkd.in/eg3fRWEf

The European Securities and Markets Authority (ESMA) published its Final Report providing the assessment of the shortening of the settlement cycle in the European Union (EU). The report highlights that the increased efficiency and resilience of post-trade processes that should be prompted by a move to T+1 would facilitate achieving the objective of further promoting settlement efficiency in the EU, contributing to market integration and to the Savings and Investment Union objectives. More on #finadium: https://lnkd.in/e6fyaFBT

The US elections promise an end to the regulatory agenda of Gary Gensler at the U.S. Securities and Exchange Commission. For securities finance, taking key regulations off the board will reduce costs and deliver more liquidity to the market; the Gensler agenda won’t be missed. Look out for a version of US Treasury repo clearing to stick around though, either from a regulatory mandate or because it makes the best sense for the industry. More on #finadium: https://lnkd.in/eewS2tty

Finadium’s 2024 survey of asset managers in securities lending presents best practices for program management across major trends in corporate governance, indemnification and proxy voting. Although revenues may be down in 2024, managers report broad satisfaction with their programs so long as other important metrics are met. Meanwhile, programs must also respond to multiple new regulatory priorities and increasing borrower sophistication to mitigate the balance sheet impact of the transaction. More on #finadium: https://lnkd.in/eY7z-Ykj

In 2023, Nasdaq completed its $10.5 billion cash and stock acquisition of Adenza, with the risk management software provider becoming part of the fintech division of the exchange. We hear from Gil Guillaumey, senior vice president and head of Capital Markets Technology at Nasdaq, about how the year has shaped out and the most recent artificial intelligence (AI) upgrade to the Calypso platform. Anna Reitman More on #finadium: https://lnkd.in/e-ASENZa

It’s been a frustration that UCITS funds say they can’t accept pledge in securities lending, and this is another factor in keeping UCITS on the sidelines of the market in the name of Europe’s Efficient Portfolio Management. However, we find conflicting evidence on the rules from the Level 1 text, an ESMA consultation and recent comment letters. There’s also a clear path forward to resetting the playing field in favor of UCITS accepting pledge if regulators are willing to take action. This could lead to a further breakthrough in UCITS fund participation on securities lending CCPs. More on #finadium: https://lnkd.in/e8fvWRpV

Absa recently released its 8th annual Africa Financial Markets Index (AFMI), which analyzes the progress of 29 countries using key measures of market accessibility, openness and transparency, drawing data from central banks, stock exchanges, regulators, market participants and international development bodies. We report on some of the key highlights and take a closer look at how legal and netting enforcement are boosting financing capacity and stability. Absa Group, OMFIF, Anna Reitman More on #finadium: https://lnkd.in/eYRjuDW5

For institutional players, the next phase of digital markets requires a wholesale central bank digital currency (wCBDC) for cash leg transactions. And while it’s a highly anticipated development, market infrastructures are not waiting around and proving out the case for repo and collateral on DLT. Anna Reitman More on #finadium: https://lnkd.in/eUbyD9VS