Securities

Institutions designed to provide stability have become the system’s linchpins.

Segregation of assets in accounts that bear the name of the owner is one of the unstoppable regulatory and commercial trends of our time. While custodian banks have invested considerable resources in the development of ingenious arguments against segregation, one third party lender is pleasantly surprised to find concerns about asset safety are increasing the attractions of its business model.

Blue Cross Blue Shield and 11 other institutional investors have failed in their attempt to open a new lawsuit against Wells Fargo in relation to losses of over $8.2m incurred in the bank’s securities lending programme during the financial crisis.

Although the proposal to introduce a global Financial Transaction Tax (FTT) in Europe with the objective of raising public finances has been rejected, 11 states have nevertheless provisionally agreed to cooperate to implement the tax. The 11 states include: Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain; and the European Commission has issued a proposal whereby the 11 member states are expected to agree on and possibly implement the FTT in mid-2014.

Despite the technical difficulties of adapting CCPs to the securities lending industry, regulatory changes make their introduction "inevitable."

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