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

BNY Mellon Regulatory News Spotlight: CFTC & SEC Begin Finalizing OTC Reform -- Final Definition of Swaps Approved as Part of Dodd-Frank

As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) are writing rules to regulate the swaps marketplace, and recently approved the final product definitions for swaps and security-based swaps. These final rules will further define the swap regulatory oversight environment as co-regulated by the CFTC and the SEC.

Business:  Collateral Services
Publication date:   July 2012

Securities Lending -- Impact of Regulatory Initiatives on Borrower Default Indemnification

Indemnified agency securities lending still serves a vital role by generating income for beneficial owners and supporting financial market liquidity. Nevertheless, although the outcome of many of the regulatory regime changes discussed in this article remains uncertain, the overarching theme to the proposals is a tightening of restrictions affecting agent banks' indemnified securities lending programs.

Business:  Collateral Services
Publication date:   September 2012

VIDEO: Regulation's Reach - A New Day for Borrower Default Indemnification

James Slater, Global Head of Securities Lending and Finance at BNY Mellon, explores how new and proposed regulation seems likely to change customary securities lending practices related to borrower default indemnification.

Author:   James Slater
Business:  Collateral Services
Publication date:   October 2012

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

VIDEO: Collateral Front and Center - Regulation Triggers Renewed Focus on Collateral

BNY Mellon's Kurt Woetzel, Global Head of Operations, Technology and Collateral Services, and Nadine Chakar, Executive Vice President, Global Collateral Services, discuss the impact of Dodd-Frank and the European Markets Infrastructure Regulation on collateral management. In addition to expecting increased demand for high-quality collateral, Woetzel and Chakar believe both sell- and buy-side firms will be under pressure to optimize their collateral.

Authors:   Kurt Woetzel, Nadine Chakar
Business:   Collateral Services
Publication date:   November 2012

To Clear or Not to Clear ... Collateral is the Question

The fundamental post-crisis regulatory reform of the OTC derivatives markets will have a profound effect on all users of OTC derivatives. This paper examines the impact and looks at what avenues are open to institutional investors who - with the advent of the Dodd-Frank Act, EMIR and other equivalent rules - face substantial business and operational challenges around executing, clearing, collateralising and reporting OTC derivatives trades.

In collaboration with:   Rule Financial
Business:   Collateral Services
Publication date:   December 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