IMN: No business effect, says European Commission
18 September 2014 London
Image: Shutterstock
A directive aimed at improving transparency in securities finance will not adversely affect the business in any way, promised a policy officer of the European Commission.
Martin Mitov addressed the European Beneficial Owners鈥� 网爆吃瓜 Lending Conference in London with a keynote speech that focused on the reporting of securities finance transactions.
Mitov said the European Commission鈥檚 proposal on securities finance transaction reporting, developed in response to the Financial Stability Board鈥檚 investigation into 鈥榮hadow banking鈥�, 鈥渋s all about transparency鈥攊t doesn鈥檛 restrict the transactions themselves鈥�.
The proposal will see market participants reporting to trade repositories 鈥渢o achieve more transparent markets鈥�. All counterparties doing business within the EU must report trades, including repo and securities lending and borrowing transactions.
Under the proposal, all UCITS and alternative investment funds must disclose more information about securities finance transactions to investors, while rules surrounding collateral rehypothecation will also change.
Counterparties will soon have to ask the permission of the giver before putting any collateral received to work. This will apply to any instruments as defined by the Markets in Financial Instruments Directive.
Mitov commented: 鈥淭his proposal does not restrict market practice. It鈥檚 an important step in understanding and reducing risk.鈥�
Martin Mitov addressed the European Beneficial Owners鈥� 网爆吃瓜 Lending Conference in London with a keynote speech that focused on the reporting of securities finance transactions.
Mitov said the European Commission鈥檚 proposal on securities finance transaction reporting, developed in response to the Financial Stability Board鈥檚 investigation into 鈥榮hadow banking鈥�, 鈥渋s all about transparency鈥攊t doesn鈥檛 restrict the transactions themselves鈥�.
The proposal will see market participants reporting to trade repositories 鈥渢o achieve more transparent markets鈥�. All counterparties doing business within the EU must report trades, including repo and securities lending and borrowing transactions.
Under the proposal, all UCITS and alternative investment funds must disclose more information about securities finance transactions to investors, while rules surrounding collateral rehypothecation will also change.
Counterparties will soon have to ask the permission of the giver before putting any collateral received to work. This will apply to any instruments as defined by the Markets in Financial Instruments Directive.
Mitov commented: 鈥淭his proposal does not restrict market practice. It鈥檚 an important step in understanding and reducing risk.鈥�
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