Advanced Securities Consulting

On September 10, 2024, Michael S. Barr, the Federal Reserve Board Vice Chair for Supervision, delivered a speech at the Brookings Institution outlining potential changes to the Basel III Endgame and G-SIB Surcharge proposals, originally released in July 2023. Barr characterized these changes, developed collaboratively by the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), as both "broad and material".While Barr did not specify an exact release date for the reproposal, he indicated that it would be reviewed in an open board meeting, followed by a 60-day comment period. Implementation is anticipated one year after the final rule's release.

Shadow banking is history, say banking leaders, a thing of the past. New compliance and risk management systems based on the Securities Finance Transaction Regulation (SFTR) and the industry’s evolving Common Domain Model (CDM) will enable financial service providers to regulate their clients' exposure to counterparties with far more specificity than ever before possible. Originally accepted as a regulatory imposition, bankers are now viewing the SFTR reports of their loan principals as a platform to help state pension funds and others meet their ESG and tax compliance goals with unprecedented precision — along with proof of funding.

As of September 2024, LUCY stock is exhibiting heightened market attention due to significant price swings, trading volume, and utilization metrics. A closer look at these key data points and trends offers valuable insights for investors.

In January 2026, when the new regulatory disclosure (SLATE) rules become effective, lending agents will face consultants to Beneficial Owner lenders who will adjust their best execution models to a new reference standard before awarding a contract solicitation. Best practice in performance benchmarking will inevitably evolve to cite best execution as the “mean average error” of an agent’s rebate rates when compared to its peers’ actual rates, all factors having been normalized. Consultants to securities lenders have taken note of the upcoming public data release into the public domain. Soon, their institutional clients’ selection committee fiduciaries will be able to evaluate the best execution reports of their bidding agents. This will be one material benefit to the industry of SLATE transparency: greater oversight and efficiency of their lending programs for Beneficial Owners. A. How Predictive Pricing Will Improve Fiduciaries’ Oversight – and Revenues Boards of directors and their RFP advisors will soon come to expect winning bidders to provide independent, validated proof of precision pricing – and offer a daily exception report. The analysis for that report would not be reliable with today’s sample-based datasets. However, with SLATE, every sample can be extrapolated to the regulatory market census. SLATE data…

Many Believe FINRA Exceeded its Mandate On June 10, 2024, the SEC extended the period by which it must take action on FINRA’s proposed SLATE Rules from June 21, 2024 to August 5, 2024. The extension provides the SEC with more time to consider the proposed rule change and comments received. FINRA’s proposed rulemaking, which […]

Data Engineering by Dan Hammond “More data and transparency are good, but it would be helpful to know what it will be used for.” That point was raised by a panelist at a recent securities finance industry conference. It’s a good question! We all know why the regulators want transparency, but the panel was talking about the potential impact on the industry from the upcoming securities lenders’ SLATE public disclosures by FINRA. In just about 18 months, institutional securities lenders will have to file detailed reports with the SEC about their securities loans. Analysts for stock borrowers, using the publicly available data from those reports, will be able to track and compare their costs to borrow securities from different lending agents[1]. Lenders will use the public data to benchmark the revenue from their loans. Lending agents will use the array of cost elements in the data to calibrate their pricing models at slightly off than the midpoint rate for each issue. That rate will be to the lender’s advantage when adjusted for collateral type, term and counterparty risk. DEFINING THE GOLDILOCKS RATE: BEYOND MEAT, INC. (BYND: MAY 2024) As a rule, the midpoint of that tranche, the second highest spread…

Time is Running out for Lenders to Prepare for T+1 and N-PX Loan Recall Wrinkles The securities industry is transitioning to a T+1 settlement cycle, where trades settle one business day after the transaction date. While this shift promises benefits like reduced market risk and lower costs, it poses significant challenges for securities lenders.

On April 2nd, 2026, an effusion of data from a daily trove of U.S. regulatory filings will create resources to drive many new use cases for artificial intelligence in capital markets. A clear opportunity exists in securities finance, where practitioners have repeatedly stated that major IT investments will be needed to comply with the many new regulatory mandates. “Black box" AI platforms may seem a ready solution but can also create nightmares for client reviews and lawsuits.In our opinion, public data can clarify the rational limits of influence for predictive artificial intelligence. The best courtroom-ready models will display an audit trail based on the replication of critical decision parameters and vectors from past markets. Vendor data in securities finance may be more timely and deeper than the public releases but, for judicial purposes, the public data will provide foundational evidence for the “bounded rationality" of decision-makers, as defined by the late Herbert Simon, Nobel Laureate and the father of Artificial Intelligence.

When, on October 13, 2023, the Securities and Exchange Commission released its long-awaited final 10c-1 rule on reporting and public disclosure of securities loans (explained here), the most important passage, at least to the commercial data vendors who support the securities finance community, stated that, "the final rule could render existing securities lending data services less valuable, potentially leading to less revenue for the firms currently compiling and distributing these data for a fee."[1] But is that true? Are bonuses and careers really at risk?? As shown in the table below, there is hope for vendors because the public data release will either omit or delay several data elements that are crucial to many important vendor applications today.

The Securities and Exchange Commission (SEC) recently adopted final rules on money market (2a-7) fund reforms. These reforms are designed to make money market funds more resilient and liquid, potentially making them safer and more attractive vehicles for mutual funds to use as collateral pools for their securities lending programs.