Trends in Capital Markets Analytics

US Capital Markets

New Volker Rules

The new Volker rules passed in 2019 and became effective on January 1, 2020 implement new rules and changes to the previous rulings:

• Modified definitions and criteria on trading accounts and trading desks
• Significant trading threshold raised from $10b to $20b
• New reportable metrics on transaction volume and positions
• New Foreign Banking Organization covered activities

FDIC Volker Rules:
FDIC Capital Markets Resources:

Intraday Liquidity Management

The intraday liquidity rules imposed on banks by US and foreign regulators will have a direct impact on a bank's ROI the bank liquidity management program is not efficient and optimized for capital usage and FTP. Banks will need to:

• Develop an effective working model for liquidity management that optimizes capital usage and funding costs
• Invest in new technology that integrating trading, treasury and collateral management activities in real-time
• Monitor intraday liquidity as part of the firm's intraday risk management activities

Federal Reserve Supervisory Rule SR14-1
Basel Committee on Banking Supervision (BCBS) 248
FDIC Resolution Plans

Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers

In June of 2019 the SEC established rules for security-based swap dealers and broker-dealers that sets minimum capital requirements and higher minimum net capital requirements on broker-dealers that use internal models. Key issues include

• Increased capital requirements for broker-dealers using internal models
• New segregation requirements for cleared and uncleared swaps applicable to security-based swap dealers and broker-dealers

Sec Final Rules for SCSD

Transition to Digital Documentation and Blockchain

On-going regulation around digital contract management is transforming the contract management lifecycle to support integration between dealer execution, settlement and continuing maintenance using digital documents tools, NLP, AI and blockchain technologies. Firms need to develop strategic plans addressing the following:

• Identify business lines will be forced to digitize their contract management process due to regulation and industry demand
• Determine business lines will yield the greatest
• Evaluate technologies needed to fully enable straight through processing
• Work with clients to engage and integrate client processes

Recordkeeping Requirements for Qualified Financial Contracts (QFCs) - Technical Points
U.S. QFC Stay Rules

Europe, Middle East, Africa (EMEA)

New Volker Rules

The UK and European financial markets have been undergoing dramatic changes in oversight and reporting beginning first with MiFID I and then MiFID II and SFTR. These new rules imposed operational intensive and costly intraday transaction reporting, daily collateral valuation reporting, and quarterly best execution reporting to name a few. Still more changes are coming:

• Brexit
• Benchmark Reform
• Mandatory Buy-ins under CSDR

ECB Risk Free Rates