Watch your step in 2017
Richard Colvill of Consolo offers a four-letter breakdown of all the fast-approaching regulatory deadlines that are due this year

This year should be an interesting one. Many of the regulations that we have all been focused on for what seems like forever will kick in and we, and the regulators, will see the impact they will have.

Whether its MiFID II, SFTR, CSDR, EMIR, BRRD, or any other four-letter acronym you can think of, 2017 will be a year of Challenging Regulatory Assessment and Performance (or keeping the theme of four letter acronyms, CRAP).

In all seriousness, some regulations, such as the European Market Infrastructure Regulation (EMIR), have the potential for significant impact on the securities financing markets, even though they relate to a different aspect of the financial services industry.

The regulators have made it clear that the collateralisation demands EMIR enforces can be met by the market and assume it will be moved via financing structures to meet the demands.

How this will affect demand as more firms come under the collateral requirements, only time will tell, but it could be positive.

Others, such as the Markets in Financial Instruments Directive and Securities Financing Transaction Regulation, require huge investment from firms.

There are no obvious new opportunities, just a huge logistical and technical challenge and a hefty bill—although effective utilisation of the data internally could identify otherwise missed opportunities.

One of the biggest challenges will be how to meet all of the regulations without breaching others—there are a number of potential conflicts as well as some requirements that are open to interpretation and so run the risk of being applied differently.

The securities finance markets have met many challenges in the past and have always found a way to continue to function and make money, and I am certain this will be no different in 2017, but the number of significantly changing regulations has the potential to create the perfect storm.

Meeting the requirements and keeping the business viable will be a challenge for some, if not all market participants, and has the potential to significantly change the industry landscape. Some participants will choose alternate market access or to re-think their strategic positioning in the market.

The weight of impact is likely to be relative with a disproportionate burden falling on smaller firms that don’t have the economies of scale or IT budgets to spend, as well as operations world where a lot of the requirements will need to be met.

We will have a better view of the overall impact by 2018 and there is little doubt that the way firms undertake this year of CRAP will define the way the market looks and functions for years to come
The latest features from Securities Lending Times
SFTR dominated ISLA’s 26th Annual Securities Finance and Collateral Management Conference, but there was also room for MiFID II, Brexit, equities as collateral and more. Drew Nicol was there to report on the highlights
Senior business analyst Gilbert Scherff and securities finance and collateral management marketing director Martin Seagroatt break down what will be required of SFTR and explain how Broadridge Financial Solutions can help
Join Our Newsletter

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

Subscribe now
Getting to the final technical standards may indeed just mark the end of the beginning, but it is a significant milestone on this particular road. David Lewis of FIS Global maps out the rest of the journey to be made
SIX Securities Service—through SIX Repo—is developing a new methodology based on the seamless sourcing and pooling of collateral. Head of repo and securities finance Nerin Demir explains
Calypso Technology pits the viable options for a quick fix against implementing a strategic long-term solution for growth, and investigates the possibility of combining these options for the optimal securities finance solution
Matt Wolfe, vice president of new products and business development at OCC, explains how the central clearer is enhancing its stock loan programme to better serve the market
Rob Chiuch and John Templeton of BNY Mellon Markets discuss the potential impact of allowing equities to be used as collateral in the US
Tracey Adams of Lombard Risk examines examples of three challenges faced by market participants caught up on the first wave of SIMM
Country profiles
The latest country profiles from Securities Lending Times
Being an exciting emerging market is all well and good, but how long can that status really apply before interest wanes? India is doing its best not to find out
Hugh Leonard, director of repo sales at Australia and New Zealand Banking Group, explains how the Australian market has excelled in recent years
Asset Servicing Times

Visit our sister site
for all the latest asset servicing news and analysis
Securities lending is in a strong place in Australia. Dane Fannin, head of capital markets in the Asia Pacific at Northern Trust, explains the available opportunities
Federico Ortega Gilly of Mexico’s Nacional Financiera explains why his country’s securities lending market is ripe for foreign investment
Russia’s National Settlement Depository has had a busy year making its securities finance market more robust and attractive to outside investors. The CSD’s Alina Akchurina explains the innovations being implemented
South Africa’s securities lending industry is on the verge of embracing a modern T+3 settlement cycle that could boost the country’s market
Experts on Canada’s securities lending industry discuss the market’s qualities compared to others, finding it to be a strong source of HQLAs
A difficult end to 2015 has not deterred securities borrowers and lenders in Asia, where certain markets enjoyed significant growth and offered new opportunities
The latest interviews from Securities Lending Times