Will removing repo safe harbors fix systemic risk? This paper thinks so….

At the Fed’s Workshop on the Risks of Wholesale Funding on August 13th, there were presentations on repealing the repo safe harbor. This is an idea that has gotten some momentum lately, but we think it isn’t such a great idea. We look at a paper presented at the conference “Rolling Back the Repo Safe […]

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The Fed’s Liberty Street Economics gets it right on gating and fees to prevent runs: they don’t work

An August 18th post in the Federal Reserve Bank of New York’s Liberty Street Economics “Gates, Fees, and Preemptive Runs” by Marco Cipriani, Antoine Martin, Patrick McCabe, and Bruno M. Parigi is worth a read. Here is our take.

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Finadium: Insurance Companies, Fund Managers and the Process of Collateral Management

Finadium has released the second part of our annual survey covering asset managers on securities finance and collateral management. This second report focuses on the process of collateral management including collateral management organization, technology, cash vs. non-cash policies and pricing out risk in financing transactions.

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New reports and articles on collateral for non-cleared derivatives; what are they saying? (Premium content)

We’ve seen several reports and articles lately on collateral and risk management for non-cleared derivatives, including submissions from OMGEO, DerivSource and Finadium/Murex. The indication is that the topic is heating up. What are these papers saying and which ones should you read?

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WSJ on repo: the news is still depressing

The WSJ is having a field day reporting on repo. Two related back-to-back articles, “Banks Retreat From Market That Keeps Cash Flowing” (August 12th and updated on the 13th) and “Fed Officials Suggest Limiting Banks’ Repo Exposure” (August 13th). Both are by Ryan Tracy. Little of the news is good.

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Survey preview: insurance companies, fund managers and collateral policies (Finadium subscribers only)

This article previews an upcoming Finadium research survey on insurance companies, fund managers and the process of collateral management. In particular, we look at manager thinking on collateral efficiency and portfolio strategy, non-cash vs. cash and the value of trading collateral.

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The Harvard Law School Forum article “Nationalize the Clearinghouses” — the author may have jumped the gun

An article in the August 8, 2014  Harvard Law School Forum on Corporate Governance and Financial Regulation entitled “Nationalize the Clearinghouses!” brought up some interesting issues. We take a look.

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“Financial Stability Monitoring” by the Fed keeps looking for that line between the gold standard of risk management and the desire to let the economy grow

A recently revised staff research report from the Federal Reserve, “Financial Stability Monitoring,” by Tobias Adrian, Daniel Covitz, and Nellie Liang, looks at how risk should be tracked across financial markets. We review both the revised report and a new blog article by the authors.

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Reuters article on Puerto Rican bonds as repo collateral — interesting although missing some detail

An August 5, 2014 article in Reuters, “Unlikely booster for money market funds: beat-up Puerto Rico bonds” by Tim McLaughlin caught our attention. But it seems to be missing some details.

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Cross margining of derivatives: can it work?

There have been a couple articles on cross margining of derivatives recently, mostly focused on netting exposures within CCPs. This has been a hard nut to crack.

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