Management of cyber risk among main challenges for repo traders
07 September 2018 London
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The main challenges for repo traders are compliance with evolving regulation, managing cyber risk, and ensuring the harmonisation and standardisation is in place to enable the industry to take advantage of new technology, according to Juliette Kennel head of Securities and FX Markets at SWIFT.
Kennel added: “On the post-trade side, the biggest challenge for investors and repo traders is probably understanding the impacts of new regulation and ensuring back-office operations are in place to comply with the new requirements.”
Kennel made the comments in a recent article written by Securities Lending Times, in which other industry experts commented on how to navigate the waves of change in the repo market.
When asked the same question, Godfried DeVidts, director of European affairs, Nex Group and chair of ICMA’s European repo and collateral council said the stability of the underlying assets is an ongoing concern.
DeVidts said: “There are some major challenges ahead linked to the mandatory buyin
regime being introduced by the EU Central Securities Depositories Regulation.”
“This will create perverse behavioural incentives, which will likely include increased volatility in markets—especially where there are identified short positions—and challenge the ability of participants, especially from the buy-side, to react quickly to the situation.”
Frank Gast, head of Eurex repo, stated that Brexit may be one of the biggest hindrances to the repo market in the future.
He elaborated: “Brexit, US politics and elections in the European area create volatility over financial markets and lead to a flight-to-quality towards core European markets.”
“Given the role that London plays in the repo market, where a lot of the collateral comes from core investment banks, Brexit may have a significant influence on the repo market in the coming year.
To read the full interview, check out the latest issue of Securities Lending Times and get our latest issue delivered to your inbox.
Alternatively, pick up your physical copy of Securities Lending Times at the London IMN 22nd Annual European Beneficial Owners' Securities Finance & Collateral Management Conference on 12 and 13 September.
Kennel added: “On the post-trade side, the biggest challenge for investors and repo traders is probably understanding the impacts of new regulation and ensuring back-office operations are in place to comply with the new requirements.”
Kennel made the comments in a recent article written by Securities Lending Times, in which other industry experts commented on how to navigate the waves of change in the repo market.
When asked the same question, Godfried DeVidts, director of European affairs, Nex Group and chair of ICMA’s European repo and collateral council said the stability of the underlying assets is an ongoing concern.
DeVidts said: “There are some major challenges ahead linked to the mandatory buyin
regime being introduced by the EU Central Securities Depositories Regulation.”
“This will create perverse behavioural incentives, which will likely include increased volatility in markets—especially where there are identified short positions—and challenge the ability of participants, especially from the buy-side, to react quickly to the situation.”
Frank Gast, head of Eurex repo, stated that Brexit may be one of the biggest hindrances to the repo market in the future.
He elaborated: “Brexit, US politics and elections in the European area create volatility over financial markets and lead to a flight-to-quality towards core European markets.”
“Given the role that London plays in the repo market, where a lot of the collateral comes from core investment banks, Brexit may have a significant influence on the repo market in the coming year.
To read the full interview, check out the latest issue of Securities Lending Times and get our latest issue delivered to your inbox.
Alternatively, pick up your physical copy of Securities Lending Times at the London IMN 22nd Annual European Beneficial Owners' Securities Finance & Collateral Management Conference on 12 and 13 September.
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