It seems that the era of mergers between physical and synthetic finance businesses is finally upon us.
Earlier this year, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) announced revisions to the framework for margin requirements for non-centrally cleared derivatives, giving participants a bit more time until we see the end of the OTC markets as we know them in late 2016.
The securities finance industry is currently digesting the heavy meal that has been Basel III, CRD-IV, Dodd-Frank and related regional regulatory initiatives impacting the global market.
The post-crisis banking regime has obliged financial institutions to make connections between previously distinct classes of risk. The traditional view of a sequential flow of risk has been replaced by an infinite, interconnected loop with collateral and liquidity at the center alongside risk weighted asset considerations.
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This report outlines a conceptual blueprint for the implementation of an effective policy for collateral transfer pricing (CTP) to improve overall efficiency in asset usage for firms
As stated by the International Capital Market Association in April 2014, new regulations are having an impact across all areas of collateral fluidity.