We have seen a dramatic increase in interest in hedging FX risk related to investments by private equity funds. The precipitous decline in the value of sterling has caused complications for funds which are in the process of acquiring UK assets. For deals which are still going ahead, many sponsors are using or considering deal … Continue Reading
The UK referendum has caused uncertainty in the financial services industry, but what does it mean for alternative capital providers? And could it create some business opportunities? Alternative capital providers are unregulated, or at least non-bank, financial institutions. Alternative finance embraces lenders from the smallest participants in peer-to-peer platforms to multibillion dollar global alternative lending … Continue Reading
Investors in crowded sectors may look on the opportunities created by the supply chain as medieval adventurers once looked on the fabled kingdom of Prester John. Huge volumes of illiquid credit are created in sale transactions every day as goods and services are sold. This credit locks up working capital for sellers and limits their … Continue Reading
It’s been a busy Christmas and New Year’s season for US regulators. After three years of work, the Federal Reserve Board announced in mid-December that five federal agencies have issued final rules to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”), which is intended to limit proprietary … Continue Reading
On 4 September 2013, the European Commission published a draft regulation on the regulation of European money market funds. Money market funds are important investors in certain types of securitisation, particularly asset backed commercial paper, and the draft Regulation includes some detailed provisions dealing with this relationship. This is explained in the recitals: “Due the fact … Continue Reading
Over the last 12 months we have seen a marked increase in interest in trade receivables financing in general and trade receivables securitisation in particular. This is a specialised area which brings with it unique challenges but also stable long term financing opportunities. Introduction Trade receivables are commercial debts generated by the sale of goods … Continue Reading
As part of the Dodd-Frank financial reforms, the U.S. Commodity Futures Trading Commission (“CFTC”) increased its oversight of “swaps”. One change stemming from Dodd-Frank is that a “swap”, as defined in the Commodity Exchange Act and CFTC regulations, is now a “commodity interest”. The CFTC regulates collective investment vehicles that invest in commodity interests, which … Continue Reading
The Basel Committee on Banking Supervision announced yesterday that it had finalised the rules for the Liquidity Coverage Ratio or LCR i.e. the main mechanic for regulating liquidity in the Basel III package of reforms. The LCR requires that a bank hold a sufficient stock of “High Quality Liquid Assets” to meet its net cash outflows … Continue Reading
A new consultation paper published earlier this week by the Basel Committee on Banking Supervision will inevitably cause uncertainty and is likely to affect investment decisions long before the new rules take effect. The paper sets out the Committee’s proposal to revise the treatment of securitisation exposures and is largely inspired by the belief that … Continue Reading
European Central Bank and Bank of England liquidity schemes require that loan-level data be disclosed on a regular basis (no less than quarterly) with respect to asset-backed securities which are to be used as collateral. On 27 November the ECB announced that it would postpone the introduction of mandatory loan-level data reporting requirements to 3 … Continue Reading
According to the preamble, the European Credit Rating Agency Regulation ((EC) No 1060/2009) is intended to mitigate possible conflicts of interest and ensure high quality and sufficient transparency of ratings and the rating process. The Council of Europe has recently published what may be the final form of the second amendment to the rating agency … Continue Reading
Quite apart from its economic merits, the attractiveness of ABS for investors has become something of a hostage to financial regulation. On 26 September 2012, Jonathan Faull, director-general, Internal Market and Services at the European Commission wrote to Gabriel Bernardino of EIOPA (the European insurance regulator) suggesting that capital requirements under Solvency II for “long-term investment”, … Continue Reading
