CASLA: CCPs feel northern chill
03 June 2016 Toronto
Image: Shutterstock
The limited size of Canada’s securities lending industry means that only unilateral action by all participants could spearhead the creation of a Canadian central counterparty (CCP), according to panellists at CASLA's Conference on Canadian Securities Lending.
A representative for service providers in the region stated that they “stand ready for when the industry wants it [a CCP]”, but a panellist from a large Canadian bank highlighted that the limited number of industry participants means that “there really isn’t any point”.
Another panellist added that the high quality of Canadian banks’ credit ratings also means the demand for a CCP doesn’t exist in the same way it does in the US and Europe.
A buy-side panellist offered some limited hope for CCP in the future, suggesting that “we haven’t seen much innovation in the CCP world, but with the net stable funding ratio on the way in 2018, any potential netting opportunities will be needed”.
The future looks much less gloomy in the US, however, as one custodian panellist argued that the popularity of CCPs in the US is growing, with increasing numbers of market participants “joining the CCP bandwagon every year”.
A representative for service providers in the region stated that they “stand ready for when the industry wants it [a CCP]”, but a panellist from a large Canadian bank highlighted that the limited number of industry participants means that “there really isn’t any point”.
Another panellist added that the high quality of Canadian banks’ credit ratings also means the demand for a CCP doesn’t exist in the same way it does in the US and Europe.
A buy-side panellist offered some limited hope for CCP in the future, suggesting that “we haven’t seen much innovation in the CCP world, but with the net stable funding ratio on the way in 2018, any potential netting opportunities will be needed”.
The future looks much less gloomy in the US, however, as one custodian panellist argued that the popularity of CCPs in the US is growing, with increasing numbers of market participants “joining the CCP bandwagon every year”.
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