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Featured White Papers

Stress This House: A Framework for the Standardised Stress Testing of CCPs

As the use of clearing houses has increased, clearing members have found that there is currently no way for market participants to compare the risk and default management procedures of CCPs on a consistent basis.

The first tentative steps to address this issue were taken on 11 March, 2015, when the Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO) announced a review of stress testing by clearing houses. CCPs regularly stress test their default management processes; however, as yet there is no global standard for a stress testing framework.

This paper details LCH.Clearnet’s proposed stress testing framework that will inform and assist the review process being undertaken by CPMI-IOSCO. A standardised stress testing methodology will help improve transparency around CCP risk management. It will allow clearing members and regulators to compare different CCPs on a relative basis, to evaluate the strength and resiliency of clearing houses and to assess the extent to which a CCP’s pre-funded resources (default fund contributions and CCP skin in the game) would be consumed under a uniform set of stresses. In addition, it attempts to place CCPs on a level playing field regardless of confidence levels used to calculate margin, holding and methodology for sizing default funds, etc. Read LCH.Clearnet's full white paper


New study by BNY Mellon and Nobel Laureate Dr. Harry Markowitz puts spotlight on the growing importance of risk management for institutional investors

New study by BNY Mellon and Nobel Laureate Dr. Harry Markowitz puts spotlight on the growing importance of risk management for institutional investors

‘Down’ with alpha and ‘up’ with targeted returns, greater use of alternatives

Risk controls should be integrated at the enterprise level

Over 80% of institutional investors expect risk management to play an even greater role in the investment decision process in the future, according to a new study published by BNY Mellon, a global leader in investment management and investment services, in collaboration with Nobel Prize-winning economist Dr. Harry Markowitz. In addition, over the next five years 73% expect to spend more time on investment risk issues, while 68% expect to spend more time on operational risk issues. Only 25% of respondents, however, had a chief risk officer.

Entitled New Frontiers of Risk: Revisiting the 360O Manager, the new study looks at a broad array of risk-related topics and issues, including: market risk; investment risk measures; performance vs. liabilities; credit risk management; emerging markets and non-domestic investing; alternative investments; asset allocation; diversification vs. returns; liability-driven investing (LDI); operational risk management controls; operational risk insurance; liquidity risk; political risk; regulatory change; and best practices.

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Driving new efficiencies in the ETF post-trade segment

Clearstream believes that its ICSD-model for ETF settlement in Europe is a key component of the efficiencies that it can bring to ETF promoters. However, when distributing in T2S markets, it is important that ETF promoters can also benefit from the CeBM settlement efficiencies that T2S can offer for euro-denominated securities.

Philippe Seyll, Co-CEO of Clearstream Banking S.A. and Head of Investment Fund Services and Global Securities Financing at Clearstream, and Bernard Tancré, Executive Director for Investment Fund Services at Clearstream, speak to Bob Currie about how it is extending these efficiency gains to the ETF community.  Read article

 
Simplifying the post-trade environment for exchange-traded funds

BlackRock has migrated its Irish-domiciled iShares ETF range to an International Central Securities Depository (ICSD) structure, thus centralising the issuance process in one common depositary. Bob Currie speaks to Sander van Nugteren, Director iShares Capital Markets, BlackRock, about the background to this initiative and the benefits that this offers to ETF investors. Read article

 
Promoting ETF lending and use of ETFs as collateral

We have noted in the preceding articles that ETF lending has taken time to grow, despite ongoing industry efforts to encourage an active lending and borrowing market in exchange-traded products. This is likely to benefit the trading operation and will deliver a cheaper and more efficient market for ETF investors. FSR talks to Simon Colvin, Equity and Fixed Income Analyst, IHS Markit, about the challenges and opportunities this presents.  Read article

 
SEE Link extends its trading interoperability network for South-East Europe

In May 2014, the Bulgarian, Macedonian and Zagreb Stock Exchanges established a joint company, named SEE Link, to encourage capital markets development in South-East Europe (SEE) and to provide a regional infrastructure for trading securities listed on the three exchanges.

EBRD supported the initial phase of the SEE Link project with a €540,000 grant to introduce an electronic system for order-routing, enabling a broker – providing that it has the appropriate trading contracts in place – to route an order via this order routing technology to any of the SEE Link exchanges.  Read article

 
The UK asset management industry and Brexit

The UK’s referendum vote in favour of leaving the European Union (EU) is going to have a major impact on the country’s asset management industry, just as it will on other parts of the economy, writes Matthew Craig.  Read article

 
Changing perspectives on alternative investments

For institutional investors, the term ‘alternative assets’ now covers a very wide range of underlying investments. Matthew Craig reports on current trends.  Read article

 
e-Tutor raises bar in financial education and training

Strate, a Central Securities Depository for the South African market, has created a market-leading educational facility to support training and professional development within the fi nancial services industry.  Read article

 
Thrifty Shades of Play

By Paul Chapman, Managing Director, HornbyChapman, and fearless adventurer in the world of finance.  Read article

 
MIFID 2: The importance of product management

The relationship between fund manufacturer, distributor and the investing customer lies at the heart of the Markets in Financial Instruments Directive II (‘MIFID 2’) and the linked Regulation (‘MIFIR’), writes Steve Wallace, Lead Analyst, Prodigy Product Governance Software, Idea Group.  Read article

 
Could Blockchain be the Answer to Securing our Digital Identities?

Blockchain, the backbone technology behind Bitcoin, has grown exponentially since its inception in 2008. Since 2013, Google searches of “blockchain” have risen by 1900% and according to Accenture, 90 per cent of banks are now exploring blockchain technology. Read article

 
Spain introduces major reforms to its post-trade infrastructure for securities

Spain is engaged in a far-reaching reform of its clearing, settlement and registry system. Through legislation which was enacted by the Spanish parliament on 5 October 2011, modifications were introduced to its Securities Market Law that align market practice in Spain with that employed in other leading European securities markets andwhich set the foundations in place for implementation of TARGET2-Securities (T2S) for the Spanish market from September 2017.

FSR Editorial Director Bob Currie speaks to Jesús Benito, CEO of Spanish CSD Iberclear, about Spain’s ongoing programme of reforms to its registry, clearing and settlement system while gaining a user perspective from Rafael Gonzalez-Aller, Head of Direct Clearing and Settlement Services, Citi and Amadeo Lazaro Fernandez, Head of Market Infrastructures, Grupo Santander. Read feature

 

 



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