E.U. Banks Punished Over Lowball Credit Risk Estimates

By Louie Woodall January 10, 2019, Risk Quantum European authorities judge that almost one in six banks included in a recent supervisory benchmarking exercise have flawed credit risk models that underestimate their capital requirements. Under the Capital Requirements Directive,...

Prop Firms Face Disproportionate Capital Rules – FIA EPTA

By Louisa Chender January 10, 2019, Global Investor Group The prop trading community will still face disproportionate capital rules under the European Council’s latest proposed text, the FIA European Principal Traders Association (ETPA) warns. The FIA EPTA remains concerned...

Two Percent of Firms Have Renegotiated Libor-Based Contracts Ahead of 2021 Deadline

By Hayley McDowell January 10, 2019, The Trade The vast majority of firms with exposure to Libor are yet to begin preparations and renegotiate contracts ahead of the withdrawal of the benchmark in 2021, according to a survey. Of...

European Benchmark Transition Faces Hurdle

By Shanny Basar January 9, 2019, Markets Media The low volume of cleared swaps based on Eonia, the euro overnight index average rate, may make it difficult to transition to a new risk-free interest rate based on actual transactions...

Fed Economists Float New Way to Project Op Risk Losses

By Steve Marlin January 10, 2019, Risk Companies should look at their size and past loss experience in tandem to get the most accurate projection of operational risk losses under stress conditions, three US Federal Reserve economists have proposed....

DTCC, ICE Clear Europe Lead Top CCPs in Boosting Liquidity Buffers

By Alessandro Aimone January 10, 2019, Risk Quantum Ten of the largest central counterparties added $20.8 billion to their liquidity buffers during the third quarter of 2018 – a 4% increase on the second quarter – having extended credit...

Non-Netting Status Denies Capital Boost for Chinese Banks

By Aileen Chuang and Blake Evans-Pritchard January 10, 2019, Risk China’s largest banks could reduce the capital held against derivatives counterparty credit risk by as much as a fifth, following the implementation of new global rules on January 1,...

China’s ‘Flash Boys’ Hedge Funds Eye End to Hiatus

By Noah Sin and Samuel Shen January 9, 2019, Reuters China’s data-driven “flash boys” – hedge fund managers who for years have been handicapped by government curbs on tools to short-sell stocks – are dusting off high-speed trading products...

Equity Derivs Healthy, Prime Brokerage Slower in Q4 – Analysts

By Andrew Neil January 10, 2019, Global Investor Group Investment banks saw healthy equity derivatives trading activity in the last quarter of 2018, according to HSBC, although prime brokerage growth may have weakened. Analysts at HSBC suggest equity derivatives...

ECB Urged to Keep Options Open as It Winds Up Stimulus

By Claire Jones January 10, 2019, Financial Times France’s top central banker has warned the European Central Bank to take a “gradual and pragmatic” approach to ditching its crisis-era stimulus, as the world’s monetary policymakers react to fears of...

Fintech Sector Hurt by Shutdown

By Chris Brummer January 10, 2019, Roll Call The consequences of the partial government shutdown for the poor, the environment, federal employees and those relying on government services or benefits have become painfully evident, and are getting worse. The...

Brexit Barriers to U.K. CCPs Persist – ISDA

By Louisa Chender January 9, 2019, Global Investor Group The International Swaps and Derivatives Association (ISDA) has identified outstanding issues that could have an immediate impact on European clearing firms’ access to U.K. central counterparties (CCPs) after Brexit. In...

For U.S. Banks, Billions in Regulatory Manna

By Joanna Wright January 9, 2019, Risk 2018 was a heady year for regulatory change in the U.S. Proposals came thick and fast, with some hawked as a helping hand to U.S. banking’s mid-sized and small contenders. As the...

Volatility: How ‘Algos’ Changed the Rhythm of the Market

By Robin Wigglesworth January 9, 2019, Financial Times Philippe Jabre was the quintessential swashbuckling trader, slicing his way through markets first at GLG Partners and then an eponymous hedge fund he founded in 2007 — at the time one...

Computer Models to Investors: Short Everything

By Stephanie Yang January 9, 2019, The Wall Street Journal Investors have started to shake off last year’s steep losses, helping markets regain some ground in 2019. But the robots are still almost uniformly bearish. Trend-following investment strategies —...

More Volatility Could Follow Year-End Repo Fireworks – JPM

By Andrew Neil January 8, 2019, Global Investor Group Year-end turbulence in the U.S. repo market serve as a reminder of what a lack of liquidity can do to funding rates, according to experts at JP Morgan. Although repo...

ELFA Triggers Chain Reaction Across Levfin Trade Bodies

By Victor Jimenez January 9, 2019, GlobalCapital Leveraged finance industry bodies are a chaingin.’ The two main organizations led by the sell-side are set to open talks with a new, more independent investor lobby taking its first steps Wednesday....

U.K. Proportion of U.S. PP Market Swells to Over a Fifth

By Silas Brown January 9, 2019, GlobalCapital The proportion of overall issuance in U.S. private placements sold by U.K. borrowers may have risen to over 20% for the first time in years. According to Barclays data, the total volume...

Weakest Treasuries Demand Since 2008 Sends Bond Market Warning

By Katherine Greifeld January 9, 2019, Bloomberg As the U.S. government kicks off its debt sales this year, here’s one potentially worrisome sign for traders to keep in mind: the steep decline in demand at its bond auctions. Of...

Study: High Volatility Significantly Limits Cryptocurrencies Usefulness for Portfolio Diversification

By Francine McKenna January 9, 2019, MarketWatch Cryptocurrencies aren’t really a traditional asset class since there’s no significant relationship between the returns on cryptocurrencies and returns on traditional asset classes, according to new research. There is a marginally significant...

ESMA: Crypto Platforms Should Trade Under MiFID II Rules

By Hayley McDowell January 9, 2019, The Trade The E.U. financial regulator has said that certain crypto platforms should trade under MiFID II rules in cases where the crypto-assets being traded qualify as financial instruments under the regulation. Advice...

MiFID II Research Rules Could Spur Further Mergers on the Buy-Side

By Hayley McDowell January 9, 2019, The Trade The impact of rules related to research payments for investment management firms under Europe’s MiFID II regulation will likely see further consolidation on the buy-side, consultancy Deloitte has said. A regulatory...

MiFID II ISINs “an Underestimated Headache” – Tradition

By Louisa Chender January 9, 2019, Global Investor Group MiFID II product identifiers continue to be a headache one year after rules were introduced but the regulation has brought some benefits to the intermediary business, according to interdealer broker...

MiFID Causes Fee Headache for Advisers

By Rachel Addison January 9, 2019, FTAdviser Concerns have been raised over providers’ ability to disclose costs in line with MiFID II requirements, due to poorly performing investment markets and botched platform migrations. The requirements under MiFID II came...

Advisers Warned Over MiFID II Compliance

By Damian Fantato January 8, 2019, FTAdviser Advisers have been warned the client segmentation they carried out after the Retail Distribution Review will not be sufficient for MiFID II rules. Jamie Farquhar, business development director at Square Mile, said...

Third Country Benchmark Administrators Struggle Ahead of BMR

By Amelia Axelsen January 8, 2019, Waters Technology The European Benchmarks Regulation (BMR) comes into force January 2020, but the costly and complicated compliance process means big problems for ‘third country’ benchmarks, which could be exacerbated by the UK’s...

Libor Reform: Corporates Start Asking Questions

By Lizzie Meager January 9, 2019, Practice Insight from IFLR The corporate sector is slowly awakening to regulators’ proposed phasing out of Libor. Over the past year developments in new risk-free rates (RFRs) have begun to gain traction in...

U.K. Financial Watchdog Steps Up Plans for No-Deal Brexit

By Philip Stafford January 8, 2019, Financial Times U.K. markets regulators have announced further measures to ensure millions of financial contracts will be unaffected by Brexit, as authorities step up preparations to avoid financial turmoil should Britain leave the...

China Structured Deposits Falter After Shadow Banking Climbdown

By Blake Evans-Pritchard January 7, 2019, Risk A surge in Chinese structured deposits, a savings account with enhanced returns, has fizzled out in less than a year, as Beijing relaxes restrictions on competing wealth management products. Structured deposit volumes...

Regulatory Uncertainty ‘Top Concern’ for Foreign Fund Managers

By Karry Lai January 8, 2019, International Financial Law Review China is gradually opening up its financial industry to foreign financial institutions but regulatory uncertainty remains for foreign fund managers entering China. Issues include lengthy approval processes for funds,...