"The soaring cost of default protection on Deutsche Bank may not be all it seems. Recent weeks have seen the bank's share price collapse amid speculation it may struggle to raise the capital needed to cover a new settlement with US authorities, but traders believe an accompanying surge in Deutsche Bank's credit default swap (CDS) spread is at least partly a result of Germany's new bail-in rules – a conclusion that also has implications for how dealers measure and hedge exposure to the German bank. A legal change to the debt waterfall of German banks on January 1 means Deutsche Bank's senior unsecured debt is now subordinated to other operational liabilities, including derivatives, making it less likely the bonds would be repaid in full in a default. In other words, its recovery rate would be lower. Given the most common Deutsche Bank CDSs reference this debt, it means selling protection is now riskier."
"Insurance or reinsurance sidecar vehicles will be put to work to enable investors to co-invest alongside insurers and reinsurers in the pension and longevity risk transfer market, predicts Prudential’s Amy Kessler."
"Perhaps a wider audience need to get involved with prioritising and solving post-trade automation, which gave birth to the idea of a discussion group for that purpose. We launched the idea of a Post Trade Forum in this article to which we already have volunteers. "
"Since September 1, the non-cleared margin rules have required many large banks to exchange initial margin on NDFs for the first time. Initial margin for non-cleared NDFs is higher than for cleared trades. As a result, NDF clearing has surged."
"Quarter-end is often a tumultuous period. Banks typically rein in collateral lending as they shore up balance sheets, driving up rates on repurchase agreements. When banks curb repo activity, money funds -- the key cash providers in the transactions -- need alternative places to invest. In the past few years, one option they’ve turned to is directing more money into the Federal Reserve’s reverse repos, the tool the central bank uses to put a floor under its target for overnight rates. But this quarter, the movements are out of the ordinary, partly because of the looming Oct. 14 deadline for the overhaul of rules governing money funds. Treasury repo rates have reached the highest since 2008. Meanwhile, the amount of money piling into the Fed’s overnight reverse repos surpassed $270 billion, one of the highest levels since officials began testing the program in 2013."
"IBM has agreed to buy Promontory Financial Group — a consultancy so influential it has been dubbed the industry's "shadow regulator" — in a move that could extend artificial intelligence into every aspect of banking."
The electronic fixed-income market is evolving quickly, but industry insiders caution that investment grade and high yield corporate bond markets cannot bypass crucial developmental stages.
"The cost of borrowing overnight cash in the repo market is poised to hit levels not seen since the financial crisis as dealers aggressively pare their balance sheets ahead of a quarter-end deadline for regulatory reporting."
"IBM is set to acquire Promontory Financial, a Washington-based financial consulting firm, as part of a broader effort to use artificial intelligence to analyse regulations and provide advice to financial institutions"
"The UK’s insurance industry has given the biggest hint yet that it will push for changes to the Solvency II capital rules following Britain’s vote to leave the EU."
"Amid mounting concern about Deutsche Bank AG’s ability to withstand pending legal penalties, about 10 hedge funds that do business with the German lender have moved to reduce their financial exposure."
"Today, at the internationally renowned Longevity 12 conference, Prudential's Amy Kessler will discuss the pressing need for the retirement industry to continue to innovate to support the risk management needs of pension funds and insurers in our graying society. Kessler is senior vice president and head of Longevity Risk Transfer at Prudential Financial, Inc."
"As fintech firms continue to seek new opportunities to apply their technologies to industry-wide challenges, they are setting their sights on an area of untapped potential – the industry’s back office."
"These headwinds are not going to die down soon. As a result, banks must have, and must be perceived to have, robust capital cushions to avoid the kind of rough treatment by markets that Deutsche Bank continues to experience. This is particularly true of the European banking system, where, unlike its U.S. counterpart, comprehensive efforts to overcome past slippages were hampered at times by the urgent need to address a sovereign debt crisis that even threatened the integrity of the euro zone."
"By some measures, banks are stronger than they have been since the 1930s. At the same time, their stocks seem more fragile."
"Here, we paint a picture of the bank's financial health in a dozen charts. "
"The ASX has completed a prototype post-trade solution using blockchain technology, and is looking to make a final decision on whether to implement it at the end of 2017."
"The buy side blames nearly 20% of all trade fails on incorrect settlement instructions, according to TABB Group research. By moving to a centralized, standardized SSI shared model, investment managers can expect significantly reduced exception-handling and as much as $1 million to $2 million annually in savings as a result. With the methodical approach the industry is taking to address certain legacy issues and roll out the central utility model to ever-expanding numbers of instruments and geographies, a pain-free SSI vision is at hand."
"The U.S. Commodity Futures Trading Commission (Commission) today expanded the existing clearing requirement for interest rate swaps. The Commission voted unanimously to approve an amendment to Commission regulation 50.4(a) that establishes a new clearing requirement determination."