Prime brokerage 2014 revenues from physical financing and margin (Premium Content)

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We assess prime broker estimated revenues for 2014 from physical financing and margin. We build on the methodology for finding prime brokerage revenue first published in “Which prime brokers are making the most money in securities lending?”, September 2013. This analysis includes further thinking about the value of internalization and the role of synthetic financing. There are some new winners in this year’s numbers. But in a declining physical market, is anyone really a winner?

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WSJ barks up old tree and takes simplistic view on dividend arbitrage

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Even at the once level headed Wall Street Journal, it seems now that any perceived wrong doing by banks is an opportunity for a headline article. This time around the topic is dividend arbitrage in securities lending, which has been flogged, abused and otherwise derided for years. Is it regulatory arbitrage? Of course it is. Is it legal and will be it commonplace until tax authorities harmonize their rules? Yes again. Unfortunately the WSJ has thrown mud into otherwise clearer waters.

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What we heard at our London repo and secured funding event (Premium Content)

CityofLondon

Finadium held an event in London on Monday, September 22, entitled “Building New Business Models for Repo and Secured Funding”, hosting some 50 attendees. While some of the topics we heard were overlapping from other recent events, some new ideas came up too. Here’s a summary of what we discussed.

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Finadium: Netting Rules for Repo, Securities Lending and Prime Brokerage

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The topic of netting for repo, securities lending and prime brokerage has been alternately praised and attacked in financial markets. Proponents argue that it strengthens risk management by encouraging safe, balancing transactions by banks and broker-dealers. Critics say that netting hides risk and can be manipulated to suit the needs of the institution. Which arguments have merit and which are based on heresay and rumor?

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Is 2015 the year that securities lending CCPs finally gain momentum? (Premium Content)

Businessman And Questions

The conversation on the new securities lending CCP model is changing – its not so much in the future tense anymore but is moving to the present. Our panel at IMN’s Beneficial Owner’s Conference in London yesterday cemented that fact. But how soon is too soon to actually expect securities lending CCPs, that allow beneficial owners to participate directly, to be regular fixtures in the market?

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A big September for European securities finance events

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We note seven events on securities finance coming up in Europe, starting with IMN’s Beneficial Owner event and ending with Collateral World, including two events of our own. This article offers a summary of where we will be, where we won’t be, and what attendees can expect. Then we wrap up the month by heading to SIBOS in Boston.

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Beneficial owner direct access: a critical input for securities lending CCPs

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As securities lending CCPs gain momentum, a critical feature, perhaps the most important feature at this point, is their ability to accept beneficial owners as direct participants without having to post margin or contribute to the default fund. To paraphrase Bill Clinton’s 1992 campaign slogan, “its the beneficial owners, stupid.”

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