S&P Global has appointed Helen Burgess as sales director for the market intelligence division.
Burgess has close to three decades of industry experience, most recently serving as global strategic relationship manager for fixed income e-sales and business development at Liquidnet. She was with the company for more than 10 years, before which she was director of global bond sales and business development at Cantor Fitzgerald.
Earlier in her career, Burgess was part of the European convertible bond sales and business development team at Credit Suisse.
Commenting on her appointment via LinkedIn, Burgess said: “[I am] thrilled to be part of a dynamic team in the market intelligence division and look forward to connecting with you all in person.”
Regulation is hampering bank treasuries from fully leveraging securitisation as part of their liquidity stress buffer, a new survey has found.
The Association for Financial Markets in Europe (AFME) survey examined bank treasuries’ asset allocation drivers in relation to securitisation. The findings support AFME’s call for revising the use of securitisation under the Liquidity Coverage Ratio (LCR). The LCR, AFME said, could play a key role in assisting the restoration of the EU securitisation market, if properly calibrated.
Shaun Baddeley, head of securitisation at AFME, said: “It is clear from the survey that lack of appetite by bank treasury functions for securitisation post implementation of LCR is directly linked to the overly onerous requirements and haircuts applied to the product in LCR and indirectly linked to the impact of overarching securitisation regulation upon supply and demand. It is important we find regulatory solutions that ultimately create the right conditions for the return of a vibrant securitisation market.”
Adam Farkas
Adam Farkas, CEO of AFME, said: “In recent months, it has become clear that European policymakers recognise the vitally important role that securitisation needs to play in order for Europe to remain competitive and to be economically prosperous. The results of the survey give insight into one facet of the challenges arising from non risk sensitive prudential frameworks. This is just one of a package of reforms needed to foster the return of a healthy securitisation market, which is needed to support the significant funding needs of Europe over the coming years”.
The survey found that reduced appetite for securitisation for High Quality Liquid Assets (HQLA) purposes is predominantly due to regulatory constraints, such as haircut levels, LCR eligibility criteria and limited eligible asset availability.
Respondents suggested the following factors would facilitate future investments in asset backed securities: better treatment of securitisation under the LCR; increased issuance; a better return on regulatory capital; and a larger investor base.
In Q1 2024, €60.7 billion of securitised product was issued in Europe, an increase of 43.8% from Q4 2023 and an increase of 69.2% from Q1 2023. Of the €60.7 billion issued, €33.3 billion was placed, representing 54.9% of the total, compared to 67.3% of issuance in Q4 2023 and 55.4% of issuance in Q1 2023.
Bloomberg Index Services today launched Bloomberg FX Fixings (BFIX) value tomorrow outright rates (T+1) for 20 currencies, a service claiming to be the only benchmark on value T+1 basis currently available to the market.
On May 28 2024 the US securities settlement was accelerated to T+1, a move that raises the risk that transaction funding may not occur in time, due to dependency on FX settlement processes involving trade matching, confirmation and payment, all to be completed within currency cut-off times.
The new BFIX value T+1 rates will enable users to send FX orders into their executing counterparts without being physically present in the designated time zone. While sell-side banks can currently offer this service through forwards desks on a T+1 basis, taking opposite risk from the spot desk on a T+2 basis, the forwards desk inherits a ‘tom next’ FX swap which may ultimately impact banks’ credit facilities when done in sizable volumes.
Using BFIX T+1 benchmarks, banks can seek to match or ‘net’ orders to reduce credit impact at scale.
Colin Gallagher, Bloomberg
“Providing a solution to what will be a very challenging process for the FX market is where the Bloomberg Index team steps up to meet client needs,” said Colin Gallagher, BFIX benchmark and currency indices product manager at Bloomberg Index Services. “With extensive use of BFIX in currency derivative products, accurate date alignment and a stable window environment for bank execution, BFIX is now a well-established FX benchmark clients rely on globally and BFIX T+1 is a natural evolution to our offering.”
The initial launch includes 20 deliverable currencies against the United States Dollar (USD), including Australian Dollar, British Pound, Czech Koruna, Danish Krone, Euro, Hong Kong Dollar, Hungarian Forint, Israeli Shekel, Japanese Yen, Mexican Peso, New Zealand Dollar, Norwegian Krone, Offshore Deliverable Chinese Renminbi, Polish Zloty, Romanian Leu, Singapore Dollar, South African Rand, Swedish Krona, Swiss Franc, and Thai Baht.
Bloomberg FXGO, the firm’s multi-bank FX trading solution, will be facilitating client auto-routing ticketing.
Meme stocks, including the notorious GameStop, have surged in recent weeks, recalling the flash crash of 2021 where short sellers got slammed by the retail army, bringing trading platforms screeching to a halt. With prices soaring once again, are institutional investors still on the line, or are things different this time around?
GameStop jumped in price yesterday after Keith Gill (AKA Roaring Kitty) – one of the prime movers behind the 2021 short selling squeeze – was revealed to be holding a reported 5 million shares worth US$115.7 million, as of last Friday’s closing price.
After a post on Reddit appeared to reveal Gill’s substantial holdings, shares in pre-market trading on Monday were about 84% higher to US$42.55. While Gill’s return has clearly affected GameStop’s share price, the effect on the wider markets this time has been comparatively muted.
Gill tweeted for the first time in three years in the early hours of 13 May. As a result, GameStop stock saw a similar bump, up 82% just before 10am EST 13 May. But according to Vanda Research, only US$15.8 million was pumped into GameStop, compared to US$87.5 million in 2021.
Hedge funds are less exposed to the social media-driven surges associated with meme stocks this time around. Melvin Capital, which bore the brunt of the 2021 short squeeze, shuttered in 2022. Having learned their lesson, most hedge funds now aren’t shorting – although some are making long bets on the market Renaissance Technologies for example, the algo firm founded by the late mathematical trading legend Jim Simons, reportedly owned 1 million GameStop shares at the end of March, a position worth US$13 million at the time. The brief GameStop surge in May valued RenTech’s stake at US$65 million.
The events of 2021, which some suggest saw Gill turn a roughly US$50,000 investment into US$50 million on the back of a 1,700% share value increase through the first few weeks of January 2021, led to Congressional hearings and investigations by the US Securities and Exchange Commission (SEC). Retail trading app Robinhood sought to protect institutional investors, much to the chagrin of retail traders, by halting trades in rocketing meme stocks on the app. After the craze died down, Gill dropped off the internet and disappeared from view.
While the SEC made no formal statement on May’s GameStop jump, former SEC chair Jay Clayton said in an interview with CNBC that meme stock frenzies are bad for financial markets.
“There is nothing illegal about saying I like a stock,” Clayton added. “There are things illegal about saying I like a stock and taking activity in the marketplace that’s designed to drive behaviour.”
The meme stock surge is also credited with catalysing the major ongoing SEC market structure reforms, with the 2021 ‘GameStop saga’ highlighting risks around payment for order flow, and the retail reliance on a small number of market makers.
“The events of last January gave us an opportunity to consider how we can further our efforts to make the equity markets as fair, orderly, and efficient as possible,” SEC Chair Gary Gensler said in 2022.
With the ongoing reforms creating significant controversy in the US market, it remains to be seen the impact they will have when (or if) they are finally enacted. And with a potential change in US political administration on the cards later this year, it could be all change once again for the financial markets.
Hong Kong Exchanges and Clearing (HKEX) has confirmed the appointment of Carlson Tong as chairman of the board of directors, following regulatory approval.
He replaces Laura Cha, and will stay in post until the conclusion of HKEX’s annual general meeting in 2025.
Tong has more than 45 years of industry experience, and has been a non-executive director since 2023.
He has held a number of prominent roles in the sector during his career, including chairman of the Securities and Futures Commission between 2012 and 2018. A large part of his career was spent at KPMG, in senior positions at KPMG, including APAC chairman, member of the global board and global executive team, chairman of the China and Hong Kong divisions and a partner at KPMG Hong Kong.
HKEX has also added Huang Yiping and Chang Sun to its Mainland China advisory group, a panel of senior industry experts who counsel HKEX on developments in China’s financial markets and economy.
Fenergo has launched AI Powered CLM, a set of AI tools designed to improve operational efficiency, accelerate onboarding and improve end-user experiences.
Using the client lifecycle management (CLM) service, clients will be able to more accurately identify and mitigate financial crime risk, Fenergo said. The firm also seeks to make it easier for clients to meet regulatory obligations around know your customer (KYC), anti-money laundering (AML) and sanctions measures.
The product has been launched against a backdrop of increased penalties for a lack of regulatory compliance, a changing regulatory landscape and more sophisticated financial crime, the firm added.
Three separate AI functionalities are included in the new service: intelligent document processing and advanced reporting, which are currently available, and AI assistant, which will be rolled out by Q4 2024, Fenergo stated.
Intelligent document processing reduced manual document handling by up to 72%, according to the firm, automating labour-intensive manual tasks and reducing the chance of human error.
Advanced reporting allows analysts to create new reporting queries through a no-code, AI-driven service. The solution also allows users to create AI-generated advanced analytics visualisations, which Fenergo said will help to accelerate decision making by providing actionable insights.
AI assistant will use generative AI and natural language processing to reduce the time and cost of firms’ operations, Fenergo commented, improving risk management and alleviating workloads.
Through the expansions, Fenergo also aims to reduce the costs associated with KYC and anti-money laundering (AML) compliance and accelerate time to revenue.
Stella Clarke, chief strategy officer at Fenergo, commented: “Regulators across the globe are tightening their grip on financial crime prevention, enforcing tougher penalties for compliance failures and launching new initiatives like the EU’s Anti-Money Laundering Authority.
“Against this backdrop, it is crucial banks look to bolster their capabilities with regards to client onboarding, due diligence and regulatory reporting – especially considering the growing shortage of compliance professionals globally. Harnessing the power of artificial intelligence and machine learning to deliver greater efficiencies can no longer be seen as a bonus in the context – it must be an integral element of their strategy.”
Jeffrey Mortara, global co-head of equity capital markets, Societe Generale
Societe Generale has made a series of hires at its New York office as it continues to expand its Americas equity capital markets (ECM) platform.
Nicholas Cunningham and Ashish Sanghrajka have been appointed as ECM senior bankers, with Cunningham focusing on the industrial sector and financials sponsors and Sanghrajka specialising in healthcare.
Thomas Feuerstein has also been named as an ECM senior banker, relocating from Societe Generale’s Paris division. Focusing on technology, he will also be responsible for enhancing connectivity for European clients operating in US ECMs.
David Getzler will remain in post as head of ECM US.
The four report to Jeff Mortara, global co-head of ECM and head of the Americas technology investment banking practice, who joined the company in May.
UBS Group completes next stage of Credit Suisse merger
UBS Group has completed the merger of UBS AG and Credit Suisse AG, completing the project within the expected timeline.
Credit Suisse AG has been deregistered in the Commercial Register of the Canton of Zurich, and no longer exists as its own entity. UBS AG now holds all Credit Suisse AG rights and obligations, including debt instruments.
By completing the merger, UBS is able to migrate Credit Suisse clients and operations to its own integrated platforms in line with business, client and product-specific requirements. Clients will initially continue to interact with UBS using existing Credit Suisse platforms and tools.
The merger of Credit Suisse (Schweiz) AG and UBS Switzerland AG is expected to conclude in Q3 2024, pending regulatory approval. The transition to a single US intermediate holding company is scheduled for 7 June 2024.
Sergio Ermotti, UBS Group CEO, commented: “Today we have achieved a significant milestone in our integration journey. The merger of our parent banks is critical to facilitating the migration of clients onto UBS platforms. It will also unlock the next phase of cost, capital, funding and tax benefits from the second half of 2024.
“As we embark on this transitional phase of operational consolidation, we will remain focused on serving our clients, following through on our strategy, investing in our people, and acting as a pillar of economic support in the communities where we live and work.”
Darren Smith, head of listed derivatives EQS, Liquidnet
Liquidnet has launched Roll Seeker, a tool to improve workflows associated with the execution of futures rolls.
Roll Seeker will enable the bilateral negotiation of blocks at mid prices in fixed income and equity index calendar rolls, Liquidnet explained, helping users to discover contra end-user liquidity interest.
It has been developed in response to client demand, with Darren Smith, head of listed derivatives EQS at Liquidnet, noting that “one of the key pieces of feedback from clients we received when planning and launching the listed derivatives project at Liquidnet was that we should bring a Liquidnet approach to the space. We’ve already introduced a suite of liquidity and volume analytics, but the next step was to bring the experience of Liquidnet’s block crossing business in equities to the listed derivatives space, and the most obvious place for this is in the calendar rolls.”
The tool will be accessible directly, through users’ execution and order management systems, or via the Liquidnet desk, which provides automated contingent functionality with the exchange order book.
Roll Seeker will improve the structure of the bilateral negotiation process and facilitate best execution with minimal information leakage, the company stated.
Initially available for UK and European fixed income and equity index futures, Liquidnet has indicated its intentions to expand the service to a broader range of products. Smith reported: “We’ve already expanded the ways in which members can interact with Liquidnet in this space, allowing them to indicate interests directly, but we’d also look to expand the number of products on offer. We think there is an opportunity in some of the Asian calendar rolls.”
Commenting on the release, Mike du Plessis, global head of listed derivatives at Liquidnet, said: “Roll Seeker is an exciting extension of our execution services, bringing efficiency to an area of the market that has often been overlooked, all while strictly respecting our agency model. This means we are unconflicted, seeking to facilitate maximum informational control and choice for our members as they consider their execution methodology in real-time, trade-by-trade.”
“Roll Seeker follows hot on the heels of our pre-trade analytics release. We are already working on smart ways to integrate Roll Seeker with a variety of order types and algorithms in order to provide even more functionality to our members.”
Brian Steele, managing director and president of clearing and securities services, DTCC
Since T+1 implementation in the US, affirmation rates have risen to 94.55%, according to DTCC.
This marks a substantial increase from January 2024, where the percentage of transactions affirmed by the Depository Trust Company (DTC) cutoff time (9:00 PM ET on trade day) was 73%.
Improvements were seen across the board, with the self affirmation rate of custodians and investment managers rising most drastically from January (51% to 84.29%). The investment manager auto affirmation rate was up to 97.5%, from 92% in January, while prime broker affirmation increased from 81% to 98.6%.
Commenting on these results, Brian Steele, managing director and president of clearing and securities services at DTCC, said: “After working closely with the industry for over three years, we are pleased these efforts are driving a smooth transition, including very high same day affirmation rates.”
Fail rates have also fallen since T+1 came into play, with the CNS fail rate dropping to 1.9% on 29 May – down from the 2.01% average rate for T+2 settlements in May – and the DTC non-CNS fail rate falling to 2.92% from 3.24% over the same time period.
The National Securities Clearing Corporation’s (NSCC) clearing fund decreased by 29% on last quarter’s average value to US$9.1 billion following the move to T+1, and dropped by 25% from last month’s average value.
Tim Cuddihy, managing director and group chief risk officer at the corporation, commented: “One of the key industry benefits of T+1 is the significant decrease in clearing fund requirements, which have decreased by around $4 billion – a significant reduction that is enhancing liquidity, increasing efficiency and mitigating risk for market participants.”
Steele concluded: “While we are proud of this progress, we will continue to collaborate with SIFMA, ICI and the industry to ensure a successful T+1 implementation in the coming days and weeks.”
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