15 November 2012
Concord
Reporter: Mark Dugdale
Securities Lending default image
CCPs do not conform
The heterogeneous nature and diverse ownership of central counterparties (CCPs) worldwide mean that they do not conform with regulatory initiatives to impose a single framework for operations and risk management, according to a new report.

Research firm Finadium interviewed major CCPs worldwide to find out how they view the role of collateral for both risk management and as a potential competitive lever in the marketplace.

Its subsequent report—CCPs and the Business of Collateral Management—was released on 15 November.

Stock, options and futures exchanges own 60 percent of recognised CCPs, said the report. “This ownership structure makes CCP activity part of the strategic direction of the exchange itself; decisions made at the exchange level trickle down as opposed to CCP decisions trickling up.”

Boards of industry representatives or outside parties run the remaining 40 percent.

“These ownership structures complicate the process of categorising the intentions of the CCP community; some CCPs operate truly as utilities for the benefit of their users while others are inclined towards market growth through acquisitions and new product development. Further, many exchanges including the CME, ICE and London Stock Exchange are competitive, publicly traded entities, putting their fully owned CCP functions in a competitive position as well.”

While different CCPs offer a range of services for user convenience and as a competitive differentiator, “CCPs worldwide are not necessarily converging to provide one set of advanced functionalities”, said the report.

“CCPs universally say that they are looking to provide efficient services, but the definition of efficiency may vary depending on local market conditions. institutions typically called CCPs may also not be counterparties for every product; some organisations may simply offer clearing, reporting and collateral management services but may leave the counterparty risk to the original trading parties. These variations are important to remember for both users and regulators.”

More Industry news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Northern Trust expands UAE operations
24 May 2017 | Abu Dhabi | Reporter: Stephanie Palmer
Northern Trust has opened a new branch office in Abu Dhabi, as part of a continuing focus on business in the UAE
EquiLend hires Hollyoake for post-trade team
23 May 2017 | London | Reporter: Drew Nicol
EquiLend has secured Emily Hollyoake as a post-trade product specialist
Prime brokers failing to retain hedge funds
17 May 2017 | New York | Reporter: Drew Nicol
Just under 40 percent on hedge funds surveyed by Preqin switched prime brokers in 2016
Canadian pension fund win streak continues
15 May 2017 | Toronto | Reporter: Drew Nicol
Canada’s pension funds achieved a fourth consecutive quarter of growth, posting returns of 2.9 percent in Q1, according to RBC Investor & Treasury Services
Citi joins Axoni’s financing round for DLT
12 May 2017 | New York | Reporter: Drew Nicol
Distributed ledger technology developer Axoni has secured Citi as a contributor to its funding round, bringing the total amount raised to more than $20 million
Lendable value at all time high
12 May 2017 | London | Reporter: Drew Nicol
All major regions recorded double-digit percentage rises in lendable inventory in the past 12 months, taking the total value of lendable assets to a record-breaking $17 trillion
Rashid Bin Ali Al-Mansoori, CEO of the Qatar Stock Exchange, said the need for access to securities lending and covered short selling had been impressed upon him by international investors present at the roadshow