Basle III


12 Sep 2018 — Bill Hodgson

The OTC Space is pleased to invite you to the Model Risk Management Forum on 19-20 September in London. Get to grips with the best practices and emerging innovations of model risk management and governance, and get a 15% discount on tickets as a guest of The OTC Space.

07 Nov 2016 — Samantha Hodgson

Our magazine Rocket 8 is coming soon, packed with inside viewpoints and expert knowledge. Save or update your address to be eligible to receive a copy now, or purchase a subscription through the shop.

16 Sep 2016 — Amanda Cai

Ever since the dramatic banking collapse in 2008 Regulators and Central Banks have been pre-occupied with finding the magic bullet that prevents another systematic financial crisis arising in the future. 

12 Aug 2016 — Bill Hodgson

Where else can you get such useful insight into the OTC markets for free? Articles in Rocket 7 cover MiFID II Data Quality, Staying Ahead of Reporting Regulations, Concerns about Meeting the Bilateral Margin Regulations Deadlines, The Role of your OMS, Automated Documentation Tools, The ISDA Working Group on Uncleared Margin Regulations, All-to-All Trading, and more.

28 Apr 2016 — Bill Hodgson

The PDF (downloadable) edition of Rocket is now available, including articles on ISDA Protocols, The Future of Trading, Indirect Clearing, Front and Back Loading, Anti-Abuse Legislation, MIFID Open Access, Portfolio Compression, The ISDA SIMM (Initial Margin) Model, Systems Transformation, Data Harmonisation for Trade Reporting, The Regulatory Reporting Mountain, Diversity in Banking, and a really useful piece from our Russian correspondant on Blockchain.

27 Apr 2016 — David Bullen

Interest rate markets have changed substantially since the financial crisis, both visibly and also less obviously in their market structure. These differences challenge asset management firms attempting to operate on behalf of their clients, especially in liability-driven investing (LDI), where the rules and market are continuing to change around them.

15 Feb 2016 — Diana Higgins

The disclosure of the leverage ratio in Basel III has put pressure on banks to improve their capital levels. In April 2015 Commerzbank announced raising €1.5 billion in capital to improve its leverage ratio to 3.9%. Deutsche Bank’s Co-CEO Anshu Jain said that that the bank’s single most important strategy was to increase the leverage ratio from 3.4% to 5%. This article explains how compressions can also help banks to increase the leverage ratio while reducing their operational and credit risk.

28 Oct 2015 — Samantha Hodgson

The team here at The OTC Space are pleased to announce the upcoming launch of Rocket 5. With all original content, we're confident it's going to be popular; the last edition got lots of positive feedback.

11 May 2015 — Martin Seagroatt

The financial system is shifting towards greater use of collateral to mitigate counterparty credit risk. On a systemic basis, this is reducing credit risk; however it is creating new market and liquidity risk on the collateral held, potentially resulting in weak points in the resilience of the financial system

02 Apr 2015 — Jon Skinner

With adjustments to Basel III nearing completion, it's not clear whether client clearing ROE can be rendered sustainable by clearing fee increases alone.  Here I look at a way to reduce capital burdens of bank clearing members by eliminating client-driven exposures whilst keeping banks providing client clearing - the Pure Agency client clearing model.

31 Mar 2015 — Jon Skinner

With regard to systemic counterparty risk reduction the bank regulators' minimum capital, liquidity reserve and margin levels are a major incentive.  The current fine-tuning debate and regulatory rule adjustment are understandable given the financial implications.  

By contrast the lack of discussion of clearing mandates might imply they are a straight systemic counterparty risk win through promotion of consolidation, netting and margining in CCP facing portfolios.  Unfortunately it is not that simple - clearing mandates also entrenching bilateral counterparty risk by limiting key risk reduction techniques.

Here I explore these limitations and suggest some solutions.

21 Mar 2015 — Jon Skinner
Regulators have declared their intent to implement the Standardized Approach for measuring Counterparty Credit Risk (SA-CCR) in critical parts of Basel III capital rules.  This starts to go live at the beginning of 2017 for default fund capital and the leverage ratio implementation will follow.  
Here I take a high-level view of the effects on capitalization of clearing members house and client portfolios and whether capital rule changes are likely to make client clearing a commercially sustainable business.