Category: Securities Lending

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Know Thy Counterparty: SEC Enforcement Action Against Adviser for Failing to Perform Adequate Repo Counterparty Diligence

On November 6, 2018, the U.S. Securities and Exchange Commission (“SEC”) brought an enforcement action against a (formerly) registered investment adviser (“Adviser”), for failing to meet its diligence and compliance responsibilities under the Investment Advisers Act (“IAA”) relating to certain repurchase agreement (“repos”) facilities it offered to its clients. The Adviser offered nine repo facilities … Continue Reading

Tri-Party Repo Data: March 2017

The Federal Reserve Bank of New York (FRBNY) released their monthly statistics of the U.S. tri-party repo market for March 2017. Beginning with the March 2017 data, the FRBNY will no longer publish the PDF and excel files containing single month statistics to which we ordinarily provide a hyperlink. Instead, tri-party repo statistics will only … Continue Reading

Defending Bankruptcy Exemptions for Repos and Sec Lending

One great thing about a new Congress is that bills pending at the end of the prior Congress must be reintroduced. This wipes the slate clean of problematic proposals and reduces the risk of something slipping through without sufficient debate. For example, the proposed Bankruptcy Fairness Act of 2016 (BFA) expired with the 114th Congress. … Continue Reading

Margin on Non-Cleared Swaps – Are Money Market Funds Eligible Collateral?

On October 22, 2015, the prudential banking regulators (which includes the OCC, FDIC and the Federal Reserve Board) approved the final version of the non-cleared swap margin rule (available here). We will be considering many aspects of this rule in a series of postings, but in this posting we focus on a single discrete issue: … Continue Reading

Office of Financial Research Reviews Transparency in Repo and Securities Lending Markets

On April 23, 2015, the Office of Financial Research (“OFR”), the research arm of FSOC, published a brief entitled “Repo and Securities Lending: Improving Transparency with Better Data”.  The brief reviewed the reporting by the major segments and major participants in the repo and securities lending markets.  With respect to market segments the brief found … Continue Reading

Tri-Party Repo Data: March

The Federal Reserve Bank of New York released their monthly statistics of the U.S. tri-party repo market for March 2015. As of March 10, 2015, the total collateral in the U.S. tri-repo market increased $41.75 billion to $1.661 trillion. Most of the increase was in U.S. Treasury collateral which increased $51.19 billion to $651 billion.  … Continue Reading

SEC Extends No-Action Relief for Cleared Swaps for Another Year

On December 19, 2014 the SEC extended the expiration date of a series of no-action letters which provide that the staff of the SEC will not recommend enforcement action under section 17 of the Investment Company Act of 1940 if, subject to certain conditions, registered investment companies post margin with certain derivatives clearing organizations or … Continue Reading

Centrally Clearing of Repo May be Expanded; Mutual Funds To be Included

The Wall Street Journal has reported that the Fixed Income Clearing Corp. may seek permission, as soon as next month, from the Federal Reserve and the Securities and Exchange Commission to clear repo trades between banks and certain qualified investors such as mutual funds (see, Large Banks Backing New Safeguards in Short-Term Lending Markets, subscription required). … Continue Reading