6 minute read
2021 Year in Review: The securities finance
Securities Finance
2021 Year in Review
2021 casts short-selling into the spotlight
Last year was the year that short-selling and securities lending made front pages globally, leading to increased scrutiny from regulators.
JANUARY
Final phase of Europe’s SFTR goes live The fourth and final phase of Europe’s stock loan and repo reporting rules went live on Monday January 11.
The latest wave sees non-financial counterparties (NFCs) come into scope of the Securities Financing Transactions Regulation (SFTR), which requires firms to report details of their securities finance transactions to a trade repository.
Short sellers lose more than $5 billion on GameStop GameStop shares continue to rally and are now up more than 370% in 2021, as shorts in the stock drop more than $5 billion (£3.6 billion).
In pre-market trading the security rose as high as $260, an increase of 76% from its last close of $147.98. The company’s shares soared for a fourth straight day and are now worth $10 billion, according to figures from MarketWatch.
FEBRUARY
US regulator to release report into GameStop affair The US Securities and Exchange Commission (SEC) intends to release a “timely study” of the events that unfolded in the US equity market.
The decision comes after highranking individuals within the country’s financial system met to discuss the recent market volatility, during which GameStop shares soared more than 1,600%.
MARCH
Regulators must remain ‘impartial’ on short activism Regulators must take an “impartial” view of short activism, according to sustainable securities lending body Global PSSL.
The organisation underlined that short selling supports a wellfunctioning market, while providing an opportunity for market participants to discover poor governance and environmental and social mismanagement.
APRIL
Credit Suisse reshuffles board after Archegos incident Credit Suisse has announced a number of changes to the group’s executive board following the incident that unfolded just over a week ago involving family office Archegos Capital Management.
Credit Suisse and Nomura said in late March they would incur significant losses after Archegos was forced into a fire sale of assets and defaulted on its market calls on March 26.
US regulator welcomes new chair Gary Gensler US regulator the Securities and Exchange Commission (SEC) has welcomed Gary Gensler as chair of the body, after the Senate voted 53-45 in his favour on Wednesday.
Gensler, who was nominated for the role by US president Joe Biden, will play a crucial role in enforcing and drafting the rules that govern Wall Street and other investors.
MAY
US plans to boost transparency in short-selling The US is considering new rules to force firms to disclose more information about their short-selling activities in what could be a significant development for the world’s largest securities finance market.
Gary Gensler, the new chairman of the Securities and Exchange Commission, said he has instructed staff to propose new guidelines around transparency in the stock loan market.
JUNE
US regulator looks to increase short sale transparency The US Securities and Exchange Commission (SEC) has announced its plan to increase market transparency with the introduction of new regime surrounding short sale disclosure.
The move comes as part of the SEC’s annual regulatory agenda and following a period of heightened volatility in the US equity market, partly due to an increase in retail market participation.
JULY
Trade association calls on EU to delay CSDR The European Fund and Asset
Management Association (EFAMA) has called for a further delay to the EU’s Central Securities Depositories Regulation (CSDR) after it was announced that a review was underway.
The trade association expressed its concerns earlier in the month on the implementation schedule of the regulation following a review that was still unclear.
AUGUST
Clearstream complies with European settlement regulation Clearstream, the Deutsche Boerseowned post-trade services provider, has achieved full compliance with Europe’s Central Securities Depositories Regulation (CSDR).
The announcement from the group comes after its German central securities depository Clearstream Banking AG was awarded its CSDR license.
SEPTEMBER
Wematch, Pirum partner on European settlement regulation Securities finance fintech Wematch has partnered with connectivity specialist Pirum to develop a service to enable clients to avoid fines under European settlement regulation.
The two London-based firms, that launched jointly last year a front-toback securities lending platform, said this latest delivery enables firms using Pirum’s Trade Risk Manager to cover failing trades using the Wematch platform.
OCTOBER
Short-selling is compatible with ESG principles - think-tank Short-selling is compatible with environmental, social and governance (ESG) investment principles, a thinktank has claimed.
Financial think-tank Planet Tracker said shorting an unsustainable listed firm is an acceptable strategy for ESG investors and is an important part of the responsible investor’s toolkit.
Half of firms see US equities on T+1 by 2026 - Citi Almost half of the respondents to a survey by Citigroup believe that the US equity settlement cycle will be reduced to T+1 in the next five years, reflecting growing pressure for a cut in the US.
The US bank published the results of a global study that polled over 400 banks, brokers and asset managers on some of the key issues around custody and settlement.
EquiLend hits record trading day in a busy September EquiLend said it had its busiest trading day at the end of September, reflecting a strong month of trading driven by heightened demand in Europe and North America.
The London-based securities lending platform had its busiest single day of trading on September 21 when it executed over 126,000 transactions with a combined value of $173 billion (£127bn), the firm said in a statement.
State Street completes first trade on buy-side repo platform US banking giant State Street said it has completed the first trade on its new buy-side peer-to-peer repo platform, marking another key step in the gradual adoption of peer-to-peer solutions.
State Street said the first trade on the innovative new platform was executed by a large asset owner and an investment manager but did not disclose their names.
NOVEMBER
Credit Suisse to close prime services business Credit Suisse plans to close its prime services business as the Swiss banking giant moves to a new strategy in the wake of the Archegos default and the Covid pandemic.
Credit Suisse said its board has agreed “a long-term strategic direction for the Group and approved the introduction of a global business and regional matrix structure”.
Euronext to maintain repo clearing link with LCH Euronext has said it does not plan to expand its Italian repo clearing service into other European markets after announcing a decision to develop its Italian clearing house to support its various European equities and derivatives exchanges.
Anthony Attia, Euronext’s global head of primary markets and posttrade, said the exchange group will maintain its current repo clearing relationship with LCH SA, the French arm of the LSE Group clearing house.
Euroclear eyes settlements using central bank digital currencies Euroclear Group is looking to move next year from experimentation to production on the use of central bank digital currencies (CBDCs) for settlements.
Having successfully tested the use of CBDC for the settlement of French government bonds, Euroclear told Global Investor that the next stage would be to deploy the offering.
DECEMBER
UK loses e33bn of repo trading due to Brexit - report The UK has lost €33bn of repo trading to Europe due to Brexit, according to the latest European repo survey from the main fixed income trade body.
The International Capital Market Association published its latest European Repo Survey that tracked repo trading activity in the first six months of 2021.
For Securities Finance daily news go to: www.globalinvestorgroup.com
