eSecLending’s Post

Financial institutions today encounter significant challenges in efficiently allocating internal costs within the intricate landscape of capital markets. The diversity of products, complexity of transactions, and ever-changing market conditions further exacerbate this difficulty. From Brokerage, Clearing, and Exchange (BC&E) fees to charges for Agent Banks and Custody Services, understanding and managing these costs is vital for maximising income and achieving transparency. Download this whitepaper to explore insights and strategies, from a recent executive roundtable in New York - for enhancing cost transparency in capital markets. https://lnkd.in/g5aEDtjT #tradingfees #brokeragefees #bce #costofincome #capitalmarkets #TLMfeesandexpense

Financial institutions today encounter significant challenges in efficiently allocating internal costs within the intricate landscape of capital markets. The diversity of products, complexity of transactions, and ever-changing market conditions further exacerbate this difficulty. From Brokerage, Clearing, and Exchange (BC&E) fees to charges for Agent Banks and Custody Services, understanding and managing these costs is vital for maximising income and achieving transparency. Download this whitepaper to explore insights and strategies, from a recent executive roundtable in New York - for enhancing cost transparency in capital markets. https://lnkd.in/g5aEDtjT #tradingfees #costofincome #feesandexpense #costtransparency #brokeragefees #bce

Banks today encounter significant challenges in efficiently allocating internal costs within the intricate landscape of capital markets. The diversity of products, complexity of transactions, and ever-changing market conditions further exacerbate this difficulty. From Brokerage, Clearing, and Exchange (BC&E) fees to charges for Agent Banks and Custody Services, understanding and managing these costs is vital for maximising income and achieving transparency. Download this whitepaper to explore insights and strategies for enhancing cost transparency in capital markets. https://lnkd.in/g5aEDtjT #tradingfees #costofincome #feesandexpense #costtransparency #brokeragefees #bce #fems

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐍𝐞𝐭𝐭𝐢𝐧𝐠? 𝐇𝐨𝐰 𝐝𝐨𝐞𝐬 𝐢𝐭 𝐑𝐞𝐝𝐮𝐜𝐞 𝐑𝐢𝐬𝐤𝐬 𝐚𝐧𝐝 𝐁𝐨𝐨𝐬𝐭𝐬 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲? Netting occurs when trading partners agree to offset their positions or obligations, reducing a large number of individual positions to a smaller number (or a single position). This netted position is then used to settle outstanding debts, either through cash or securities transfer. 𝐊𝐞𝐲 𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐨𝐟 𝐍𝐞𝐭𝐭𝐢𝐧𝐠: 1️⃣ 𝐓𝐫𝐚𝐧𝐬𝐚𝐜𝐭𝐢𝐨𝐧 𝐂𝐨𝐬𝐭 𝐑𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧: Minimizes the number of transactions and related communication expenses.   2️⃣ 𝐂𝐫𝐞𝐝𝐢𝐭 𝐚𝐧𝐝 𝐋𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲 𝐑𝐢𝐬𝐤 𝐑𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧: Lowers the exposure to credit and liquidity risks by netting settlement obligations.   3️⃣ 𝐄𝐧𝐡𝐚𝐧𝐜𝐞𝐝 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲: Central Counterparties (CCPs) and Central Securities Depositories (CSDs) improve securities and funds transfer efficiency and boost liquidity within the system.   4️⃣ 𝐂𝐨𝐥𝐥𝐚𝐭𝐞𝐫𝐚𝐥 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬: Reduces the collateralization requirements for members, easing liquidity demands.   𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐍𝐞𝐭𝐭𝐢𝐧𝐠:   ➡ 𝐂𝐥𝐨𝐬𝐞-𝐎𝐮𝐭 𝐍𝐞𝐭𝐭𝐢𝐧𝐠: Terminates existing contracts and nets obligations post-default.   ➡ 𝐒𝐞𝐭𝐭𝐥𝐞𝐦𝐞𝐧𝐭 𝐍𝐞𝐭𝐭𝐢𝐧𝐠: Aggregates amounts due into a single payment.   ➡ 𝐍𝐞𝐭𝐭𝐢𝐧𝐠 𝐛𝐲 𝐍𝐨𝐯𝐚𝐭𝐢𝐨𝐧: Cancels offsetting obligations and creates a new net obligation.   ➡ 𝐌𝐮𝐥𝐭𝐢𝐥𝐚𝐭𝐞𝐫𝐚𝐥 𝐍𝐞𝐭𝐭𝐢𝐧𝐠: Involves multiple parties, often through a clearinghouse.   𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐍𝐞𝐭𝐭𝐢𝐧𝐠:   In a swap agreement: ➡ Investor A is due $100,000 from Investor B.   ➡ Investor B owes $25,000 to Investor A. ➡ Netting results in Investor A receiving $75,000 from Investor B.    #Finance #RiskManagement #Netting #FinancialMarkets #Efficiency #Liquidity #CreditRisk #FinancialStability #Clearinghouse #Securities

The Depository Trust & Clearing Corporation (DTCC)'s FICC’s Government Securities Division clears record-setting USD$9.2 trillion in daily activity #usfintech #fintech #fintechnews #finance #technology #financialtechnology #trading #settlements #securities

SIFMA and SIFMA AMG have released the 2024 Master Treasury Securities Clearing Agreement, addressing the SEC's new requirement for clearing a substantial portion of Treasury cash and repo markets by June 2026. Key points: - The agreement aims to streamline documentation needs for market participants. - It's the result of collaborative efforts between broker-dealers and asset managers. - This initiative supports market resilience and liquidity in the Treasury market. At CRC, we emphasize the importance of firms: 1. Identifying in-scope transactions 2. Planning clearing and margining processes 3. Determining Technology solutions 4. Establishing robust transition plans Stay ahead of this industry initiative with Compliance Risk Concepts (CRC)! We're here to guide you through this evolving regulatory change, providing strategic operations, technology solutions, and business execution services to manage your project. Click below to read more: 🔗 https://lnkd.in/eqyM4kHC #TreasuryMarket #FinancialRegulation #SECCompliance #SIFMAUpdate #RiskManagement #FinTech #ClearingAgreement #MarketLiquidity #ComplianceStrategy #FinancialServices

The Depository Trust & Clearing Corporation (DTCC)'s FICC’s Government Securities Division clears record-setting USD$9.2 trillion in daily activity #usfintech #fintech #fintechnews #finance #technology #financialtechnology #trading #settlements #securities #australianfintech

As we navigate the complexities of regulatory compliance and the pressures of cost in the ever-evolving cash securities market, it's clear that the time is right for a shift in our post-trade processing approach. With transaction volumes soaring and settlement timeframes shrinking, the need for automation, efficiency, and accuracy has never been more critical. Standards are the cornerstone of this transformation, and I'm excited to discuss with Global Custodian the potential of one such standard that's making waves: the Unique Transaction Identifier (UTI).

As the financial industry continues to prioritize market efficiency, Valentino Wotton, sheds light on the transformative impact of Unique Transaction Identifiers (UTIs).

In addition to EY's recent piece with SIFMA on the US Treasury and Repo Clearing mandate from the SEC, we are pleased to share some further thoughts on this transformational change to market structure. Market participants need to ensure they have a plan for maintaining market access through at least one of the multiple access models offered by The Depository Trust & Clearing Corporation (DTCC). Participants are analyzing the costs, risk, resiliency, liquidity and operational consequence of each model. The time to market for these efforts will be a challenge for the industry, we encourage all market participants to start now. #repo #fixedincome #capitalmarkets Brendan Maher, CFA Neal Ullman