Sovereigns in Search of Solutions: OTC Derivatives Reform: Direct and Indirect Impacts

With the imminent introduction of specific requirements under the Dodd-Frank Act and the European Market Infrastructure Regulation (EMIR), investors continue to grapple with the potential impact of such regulations, especially as some of the rules have yet to take their final form. For sovereign institutions, the evolving regulatory framework holds much uncertainty. Inconsistencies in the application of some key provisions, including the classification of sovereigns and the extent of exemptions to the Basel III capital adequacy rules, must be addressed to avoid market distortions and regulatory arbitrage. One thing, however, is clear: the derivatives business for all investors will change in a very significant way. Specifically, the trading of derivatives and the management of the collateral associated with such trades will be impacted.

Authors:   Jai Arya, Nadine Chakar
Business:  Collateral Services
Publication date:   June 2012

A Clear Case for Change

Reprinted with the permission of Financial-i

The move to central clearing for OTC derivatives is causing consternation, especially amongst fund managers, and many foresee changes in investor behaviour to avoid charges when the new regulations come into force. This article was first published in Financial-i Q2 2011. www.financial-i.com.

Authors:   Jonathan Bowler, Christopher Coleman
Business:  Collateral Services
Publication date:   June 2011

Mitigating Collateral Damage: Current Themes in Managing and Mitigating Counterparty Credit Risk for OTC Derivatives (UK English)

The financial crisis re-emphasised the importance of counterparty credit risk, and the subsequent industry-led program of reform has addressed many of the shortcomings of the OTC market. BNY Mellon and independent consulting firm InteDelta investigated current counterparty credit risk management policies and processes across a representative sample of asset management, insurance and pension fund institutions. Findings from this research reveal an evolving OTC derivatives market that is wary of risk, open to change, and surprisingly robust.

Authors:   Jonathan Bowler, Mark Higgins, Stephen Ingle, David Brown, Michael Schroeder, Chris Coleman, Patrick Tadie, John Templeton
In collaboration with:   InteDelta
Business:  Collateral Services
Publication date:   January 2011

Mitigating Collateral Damage: Current Themes in Managing and Mitigating Counterparty Credit Risk for OTC Derivatives

The financial crisis re-emphasized the importance of counterparty credit risk, and the subsequent industry-led program of reform has addressed many of the shortcomings of the OTC market. BNY Mellon and independent consulting firm InteDelta investigated current counterparty credit risk management policies and processes across a representative sample of asset management, insurance and pension fund institutions. Findings from this research reveal an evolving OTC derivatives market that is wary of risk, open to change, and surprisingly robust.

Authors:   Jonathan Bowler, Mark Higgins, Stephen Ingle, David Brown, Michael Schroeder, Chris Coleman, Patrick Tadie, John Templeton
In collaboration with:   InteDelta
Business:  Collateral Services
Publication date:   January 2011

Collateral Management for German Funds: Innovative Solutions for Stock-Loan Transactions

Reprinted with the permission of Euromoney Institutional Investor PLC

As the German investment industry liberalises to the form of the international model, German institutional and retail funds are adopting innovative techniques to mitigate risks in capital markets around the world.

Authors:   Thomas Brand, Mark Higgins
Business:  Collateral Services
Publication date:   June 2011

Global View

Reprinted with the permission of Euromoney Institutional Investor PLC

In a recent interview with Global Investor, Nadine Chakar, global head of BNY Mellon's Derivatives360 business, explained how the business -- which spans the entire life of a derivatives transaction -- is developing and offered her reaction to regulatory reform.

Author:   Nadine Chakar
Business:  Collateral Services
Publication date:   October 2012

Regulatory Change in Securities Lending: An Update for Clients, Part II

As greater supervisory attention is focused on securities lending across the world, there is a commensurate movement to macro-prudential regulation. That is, increasingly regulators are not focusing on securities lending through firm-specific supervision, but are instead transitioning to global rules impacting all market participants. In some cases, such as the on-going work at the Financial Stability Board (FSB), these work streams are specific to securities lending. In other cases, such as the Basel III Accord, securities lending is just one part of broader reform packages that apply across financial institutions.

Authors:   Drew Demko, Dominick Falco, Bill Kelly, Kevin Ronan
Business:   Collateral Services
Publication date:   February 2013

Tri-Party Roundtable: Tri-Party Tribulations

Reprinted with the permission of Euromoney Institutional Investor PLC

An expert panel discusses the effect of impending regulations, diverging reporting requirements and innovating to meet clients' needs.

Author:   Adam Goddard
Business:  Collateral Services
Publication date:   June 2011

ETFs Reduce Risk Through Collateral Management

Reprinted with the permission of Incisive Media Services Limited

Exchange Traded Fund (ETF) providers are beginning to recognize the benefit of third-party collateral management as an effective tool to reduce risk. While swap-based or synthetic ETFs are arguably one of the most successful recent innovations in the marketplace, concerns about transparency and credit risk have driven ETF providers to look to multi-asset class collateral management as a way to protect against potential loss.

Author:   Paul Harland
Business:  Collateral Services
Publication date:   March 2011

A Critical Moment for Collateral Management

Reprinted with the permission of Black Knight Media Ltd.

As the financial crisis enters a new and uncertain phase, collateral management has taken on a new and profound significance. For an insider's view on the issue, Securities Lending Times turned to Paul Harland, Managing Director with BNY Mellon Broker-Dealer Services, who characterises the current environment as one of evolution, revolution and regulation.

Author:   Paul Harland
Business:  Collateral Services
Publication date:   September 2011