The drive towards greater transparency across the securities
finance market will be one of the few areas where financial
policy moves forward without disruption, experts claim.
Banks, broker-dealers and investment houses face an
uncertain era under the Trump administration, which is
threatening to dismantle existing rulebooks in the US -
including parts of Dodd-Frank.
Meanwhile Brexit has added to the lack of regulatory clarity
for global market players; particularly as London,
Europe’s financial capital, looks like it will no
longer be bound by EU legislation.
However, efforts to shed more light on securities finance
trades (SFTs) will continue unabated, according to one of State
Street's top regulatory experts.
"Achieving transparency across securities lending, repo and
derivative markets remains critical to regulators on both sides
of the Atlantic," said Glenn Horner, speaking at an RMA event
in New York this week hosted by law firm Debevoise &
"It looks to be one of a few areas where regulators in their
respective regions will remain steadfast and the market can try
to move forward."
Horner's legal responsibilities at Boston-based State Street
cover agency securities lending, custody and equity derivatives
on a global basis.
As a result, he is keeping a close eye on SFTR in Europe,
which will force firms to report SFTs to trade repositories
Information on parties involved in a trade, principal
amount, currency, collateral assets, repo rate, lending fee,
margin lending rate, haircut and maturity date are all
A final draft of the complex regulatory technical standards
is expected within the next couple of months after delays
occurred at the end of 2016.
SFTR, according to Horner, looks "onerous" when compared to
the US approach of collecting data on
"European market participants have expressed concern over
the time consuming nature of SFTR, as well as the associated
technical complexity and costs," he added.
"In addition, the technology budgets of US banks operating
in Europe are heavily linked to the US. This may need to be
adjusted with SFTR."
US and European regulators have argued that a paucity of
securities finance data prevented them from fully identifying
and responding to certain vulnerabilities during the 2007-09
Meanwhile, officials at FSB - who co-ordinate global
regulation - are keen on collecting securities finance data
worldwide to form a global standard.
"This looks unlikely given the current political climate and
potentially weaker international cooperation," Horner
"Even so, SFT transparency across regions will continue to