Collateral pains stinging buy side
06 December 2017 London
Image: Shutterstock
鈥淩egulation is limiting possibilities for the securities lending market鈥�, according to Habib Motani an international financial markets lawyer at Clifford Chance.
At Global Custody Forum in London yesterday, panellists discussed collateral challenges and the ways in which the market is adapting, but sometimes struggling, under new regulatory frameworks.
Motani commented that other constraints including 鈥渟crutiny of detail, the potential increase of liquidity credit risk and funds鈥� increased liquidity holding greater amounts, sometimes makes it difficult for my clients to provide their services鈥�.
Guido Wille, member of the executive board at Clearstream, added that, because of regulations, such as the European Market Infrastructure Regulation and the second Markets in Financial Instruments Directive, the buy side is facing challenges around collateral.
Wille said: 鈥淪ecurities lending has skyrocketed in the last three to four years, everyone has to have collateral, that鈥檚 been forced by regulations. The buy side has also been forced to look at collateral services.鈥�
Viraj Kulkarni, founder and CEO of Pivot Management Consulting, predicted that regulation would 鈥渋ncrease the cost of investment in the coming years鈥�.
Panellists agreed that among the main drivers for opportunity in the securities lending sector were the refining of regulatory rules and improvements in automation.
One panellist advised the audience to keep following Europe鈥檚 expertise in terms of its advancement in financial technology.
At Global Custody Forum in London yesterday, panellists discussed collateral challenges and the ways in which the market is adapting, but sometimes struggling, under new regulatory frameworks.
Motani commented that other constraints including 鈥渟crutiny of detail, the potential increase of liquidity credit risk and funds鈥� increased liquidity holding greater amounts, sometimes makes it difficult for my clients to provide their services鈥�.
Guido Wille, member of the executive board at Clearstream, added that, because of regulations, such as the European Market Infrastructure Regulation and the second Markets in Financial Instruments Directive, the buy side is facing challenges around collateral.
Wille said: 鈥淪ecurities lending has skyrocketed in the last three to four years, everyone has to have collateral, that鈥檚 been forced by regulations. The buy side has also been forced to look at collateral services.鈥�
Viraj Kulkarni, founder and CEO of Pivot Management Consulting, predicted that regulation would 鈥渋ncrease the cost of investment in the coming years鈥�.
Panellists agreed that among the main drivers for opportunity in the securities lending sector were the refining of regulatory rules and improvements in automation.
One panellist advised the audience to keep following Europe鈥檚 expertise in terms of its advancement in financial technology.
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