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Securities finance rules come to head
06 February 2014
Market welcomes clarity on future regulations but there are still many unknowns around their impact on securities lending
The securities lending industry is finally getting to a point
where a lot of rules that have been up in the air for the past
couple of years are starting to be finalised, panellists
discussed at the IMN beneficial owners' international
securities lending conference, in Austin, Texas.
Judy Polzer, head of securities lending product, JPMorgan,
said: "[Market participants] may not be thrilled by the rules
but at least they know what they are and can really devote time
to figuring out how to create new products and keep the market
going. Hopefully we will be able to move on." She added that
financial markets are "very adaptive".
Among other regulations, panellists discussed the new US money
market fund (MMF) rules, which are expected to be finalised by
the US Securities and Exchange Commission (SEC) later this
Kevin Bannerton, head of Americas liquidity management,
Deutsche Bank, said that following previous conversations with
regulators, there is room for modifications between the
proposals and final rules, for example the widening of retail
Scott Olson, senior managing director and head of global
product development, regulatory affairs and product tax, State
Street Global Markets, pointed out that the Financial Stability
and Oversight Council (FSOC) mentioned in the original MMF
reform proposals that the rules could apply to other vehicles
beyond 2A7 funds.
Olson said the rules could be extended to cover all cash
collateral pools, group trusts, and common trust funds, which
would be of "extreme concern".
Bannerton agreed, saying it is "only a matter of time before
the pools are brought under the rules too".