Rune Waage

UK EMIR Refit Goes Live Today! The second phase of the EMIR refit module, the UK EMIR refit, has officially gone live today. Much like its EU counterpart, the UK EMIR refit maintains a strong focus on data quality, clarity on rules and guidance, and the standardization of trade repository operations. In the spirit of continuous improvement, the FCA has taken a cautious approach post EU EMIR refit go-live, enhancing industry guidance through periodic Q&A sessions. https://lnkd.in/dXEJC4nH This proactive stance has been instrumental in addressing common challenges and issues observed post-go-live of the EU EMIR refit. UK firms can draw on the insights and lessons from the EU EMIR refit to reduce exceptions and facilitate a smoother transition, particularly in areas such as level modification, event date accuracy, delta field population, valuation amount & clearing status, valuation timestamp and execution timestamp. As we navigate the initial stages of the UK EMIR refit go-live, some challenges are to be expected. However, rest assured that our team of experts at Kroll is here to support you with any post-go-live issues. #fca #emirrefit #emir #regulatoryreporting #derivatives #regreporting #ukemir

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Here is an interesting webinar coming up on information sharing. There are still issues in the US and I am sure they will be discussed. See below to join this discussion sponsored by BioCatch

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Next year, UK banks will face the significant challenge of repaying £100bn in Covid-era loans to the Bank of England. This repayment, stemming from the Term Funding Scheme for Small and Medium-Sized Enterprises (TFSME), could exert substantial pressure on the Gilt Repo Market and introduce heightened competition for deposits. The TFSME, a critical programme rolled out during the early days of the Covid-19 pandemic, provided over £193bn to more than 70 lenders, including high street giants like Barclays and Lloyds, as well as digital and specialist banks such as Starling and Aldermore. Designed to stabilise the economy by encouraging continued lending to small businesses, the scheme has now reached a point where repayment is imminent, with £100bn due over the next 18 months. As banks scramble to find the necessary funds, a variety of strategies will come into play. Larger institutions like Barclays and Lloyds may rely on existing liquidity or low-cost borrowing options. However, smaller lenders will likely need to explore more expensive avenues, such as tapping into wholesale markets, securitisation, or aggressively competing for savers’ deposits. This impending "dash for cash" is expected to intensify competition among banks to attract deposits, which could be beneficial for savers as interest rates on savings accounts may rise. However, this situation is not without its challenges. Increased competition for deposits is likely to put pressure on bank balance sheets and squeeze net interest margins—the difference between the interest banks earn on loans and what they pay on deposits—thereby affecting profitability. The Bank of England has already flagged these concerns, noting that replacing TFSME funding could be particularly challenging as the central bank itself continues to offload its own bond holdings. The confluence of these factors could make the coming months especially volatile for banks and their customers. In response to these pressures, some banks, like Metro Bank, are preemptively selling off assets to shore up liquidity and avoid being caught in the rush for funds. Metro Bank, which borrowed £3bn under the TFSME, recently sold a £2.5bn mortgage book to NatWest as part of its strategy to sidestep the intense competition and preserve profitability. As we move into 2024 and beyond, the financial landscape in the UK is poised for significant shifts. Banks will need to carefully navigate these turbulent waters, balancing the need to repay TFSME loans with the imperative to maintain profitability and meet customer expectations. For savers, the potential for higher deposit rates is a silver lining, but for banks, the challenge of managing liquidity and sustaining growth in a competitive environment will be a complex and critical task. Read my Guide to the Bank of England’s New NBFI Repo Facility here: https://lnkd.in/ekYzFb6g Want to be notified about all my posts? Ring my bell 🔔

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Second resolvability assessment makes for major banks to be better prepared for major idiosyncratic or systemic deterioration.

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Important tips and strategies to avoid being in a backlog situation!

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UK EMIR- New EMIR Q&A from FCA Following consultation that closed on 23 July 2024 on a third and final set of draft Q&A’s, FCA has now published it on the UK EMIR reporting Q&A's webpage. Recent published information outlines that spread bets can be reported at the position level, similar to contracts for difference (CFDs) under the new regulations. https://lnkd.in/dxaB_djE). The FCA has issued a minor update to the UK EMIR Validation rules, effective from 30 September 2024. This update corrects typographical errors in the conditions for fields 2.44 and 2.46, and revises the requirements to mandate the reporting of Field 2.41 (Venue of Execution) at the position level, consistent with their guidance in Q&A 6.3. https://lnkd.in/dgH6rApV #fca #emirrefit #emir #regulatoryreporting #derivatives #regreporting

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The Bank of England yesterday published a Dear CEO letter giving feedback from their recent thematic review of non-systemic banks and building societies' recovery plans. Over the last eighteen months they reviewed the recovery planning capabilities of c70 non-systemic UK banks and building societies. The letter sets out the areas for improvement, planned next steps, and effective practice examples. Two broad themes are covered, including some practical pointers in the appendix: 👉 scenarios need to be severe enough to challenge the firm's viability 👉 firms need to improve their calculation of recovery capacity This will be a topic at the forthcoming CEOs conference in June. See the letter here: https://lnkd.in/e3XsN4_d

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Week 22: After a tougher week for fixed income RM Funds see excellent opportunities within credit to exploit after the weakness seen post UK CPI within UK credit and fixed income. The back up in yields is now offering tremendous value for money: 5 year yields touched 3.4% on 27th Dec and at one point last week touched 4.3%. We (still)do not believe we see the wides of last year/Overall in credit we (still) favour the front end with 1 year IG offering circa 5.4% and we are u/w longer dated A & BBB credit which is offering 80-130bp over gilts. Spreads have begun to widen over recent weeks, RM Funds suspect this will continue over the coming months. Sector positive: Natgrid rights issue shows the defensive nature and size of the assets the SVS RM Infrastructure bond allocates into.

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Guy - this is an emerging and important element of AI. The complexities introduced by both the criminal and regulator in the Financial Crimes domain in the Digital era are creating "unsustainable" situations for Financial Services providers of all sizes. The creation of Digital Workers using Generative AI is a great way to reduce costs, improve outcomes, and improve the customer experience. For example, we have shown where a Digital Worker can review and extract KYC information from a complex legal document in 2 minutes, compared to a human worker requiring 50 minutes. The challenge is in how you build, deploy, and manage Digital Workers working alongside Human Workers...which is where IBM (and Ceenic Solutions) can help. Guy Parker #DigitalWorkers #GenerativeAI #DigitalKYC #CeenicSolutions #IBM #FinancialCrime #CounterFraud

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FCA EMIR REFIT 🚀 Did you know there's a field in UK EMIR that's not in EU EMIR REFIT? 🤔 Stay tuned for more insights. #refit #ukrefit #EMIR #regulatoryreporting #transactionreporting

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Exceptional speech delivered by the Central Bank of Cyprus Governor at the “ESG Impact on Credit Risk” conference organised by ICAP CRIF. In a few minutes, the Governor has covered the gist of Risk Management; taking into account not only traditional risks but novel risks such as ESG, Geopolitical, and Cyber risks as well, is the only way for a robust risk management. The management of risks in lending and investement should be holistic and not specific to safeguard the health of the backbone of our economies. #riskmanagement #cbc #governor #esg #geopolitcs #cyber

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UK: the Financial Crime Agency (FCA) fines Barclays £40 million. The FCA has fined Barclays £40 million in total for its failure to disclose certain arrangements with Qatari entities in 2008. https://lnkd.in/e_y7QwmJ Barclays Fined £40 Million Over Qatar Fundraise Disclosures. Penalty was reduced from £50 million planned by the FCA. Move ends final probe into UK bank’s crisis-era fundraising. "Barclays Plc has been fined £40 million ($50.3 million) over the lender’s “reckless” failures to disclose details of its rescue by Qatar during the 2008 financial crisis, ending an eleven-year-long battle with British regulators. The UK’s Financial Conduct Authority warned the lender back in 2013 that it planned to impose a penalty after finding Barclays didn’t fully disclose an agreement to pay advisory fees to Qatari investment vehicles as part of the bank’s crisis-era capital-raising efforts." https://lnkd.in/eX6av7Xe

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UK - FCA, CP24/17: Enhancing the National Storage Mechanism The Regulator is consulting on proposals to change the requirements for submitting regulated information to the National Storage Mechanism (NSM). Read CP24/17 (PDF) Why we are consulting We want to introduce more comprehensive data requirements to improve the NSM’s functionality. This will make it easier for NSM users to find information submitted by regulated market issuers. We also propose a requirement for Primary Information Providers (PIPs) to use a standard method for submitting information to the NSM. Who this is for Issuers with securities admitted to trading on UK regulated markets and PIPs that disseminate and file regulated information for them. Investors, analysts, and other market participants that use the NSM. https://lnkd.in/eb6cKnU3 Reg-Intel @ illumini.ai #UK #FCA #Compliance #Risk #Legal #Reporting #Securities

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How cloud technology is revolutionising financial crime compliance In the evolving financial landscape, institutions are increasingly harnessing cloud technology to bolster their financial crime compliance strategies. https://buff.ly/4enmXGR #FinTech #FinServ #Banking #CloudComputing

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LATEST: Germany's Commerzbank AG has been fined €1.45M for #AML failings at a subsidiary, regulator BaFin announced today (Mon). We report. Also today, in Britian the Financial Conduct Authority's plans to 'name and shame' banks more often and at the outset of inquiries are set for the scrapheap. The proposals have met an unprecedented backlash from #government, #banks and #lawyers. The 'name and shame' plan was outlined amidst much fanfare in February in the FCA's new 'bad cop, bad cop' approach to regulation. But as the City of London warned the regulator was driving financial institutions out of Britain, the plan is set for the sidings. We report. #followthemoney #aml #cft #compliance #banks #banking #fintech #finreg #regtech #FCC Stephen Rae James Treacy Alisha H. https://lnkd.in/egqYJp-D

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𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗖𝗼𝘂𝗹𝗱 𝗕𝗲𝘁 𝗼𝗻 𝟭𝟬-𝗬𝗲𝗮𝗿 𝗧𝗿𝗲𝗮𝘀𝘂𝗿𝘆-𝗕𝘂𝗻𝗱 𝗬𝗶𝗲𝗹𝗱 𝗦𝗽𝗿𝗲𝗮𝗱 𝗪𝗶𝗱𝗲𝗻𝗶𝗻𝗴 Investors should take advantage of the current relief phase to add to Treasury-Bund yield spread widening positions, Commerzbank Research said, which has targeted levels above this year’s high of 224 basis points. ---𝘊𝘓𝘐𝘊𝘒 𝘚𝘏𝘖𝘙𝘛 𝘓𝘐𝘕𝘒 𝘈𝘛 𝘛𝘏𝘌 𝘌𝘕𝘋 𝘖𝘍 𝘛𝘏𝘐𝘚 𝘗𝘖𝘚𝘛 𝘛𝘖 𝘙𝘌𝘈𝘋 𝘖𝘕--- 𝗳𝗿𝗼𝗺 𝘄𝘀𝗷 Disclaimer: https://www.rfr.bz/l08de52 #RetirementPlanning #FinancialServices #Stocks #IRA #FinancialMarkets #EconomicTrends https://www.rfr.bz/l54603c

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Central Banks, Goal Independence, and Inflation Targets Central banks often make some of the most radical changes to their frameworks after crises. As expected, Sushil Wadhwani is proposing what could be considered one of the most thought-provoking changes to the BOE's monetary policy framework given the recent price stability crisis. Among other factors, he argues that allowing the BOE to set its inflation target, similar to what is done by the U.S. Fed, could help the bank improve its credibility, lower the yield on UK bonds and in turn lower the government's debt interest bill. He states that "it is plausible that markets believe that it is easier for politicians to amend the level of the inflation target than for independent technocrats to significantly amend their interpretation of price stability". Can independent experts be trusted more than politicians in anchoring the BOE's inflation target? Indeed, neither of the parties can be fully trusted based on experience. However, I would lean towards a goal-dependent central bank based on the following: 1. Lack of a generally acceptable framework for inflation targets amongst experts: The current target is not backed by any empirical evidence thereby making it lack credence among many technocrats. Therefore, independent experts hold different opinions on the interpretation. The implication of this is that the interpretations of the targets might change whenever there's a change in the leadership of the bank. For instance, the current central bank governor of Nigeria increased the bank's inflation target of the banks from a range of 6% - 9% to 21.4%. 2. Sticking to what has been working: The inflation target in the UK set by the politicians has remained unchanged for over thirty years. Even though Liz Truss would have made changes to the BOE's inflation mandate if she had not resigned as the Prime Minister, I believe the frequency of changes in the targets by politicians would be lower than that of the experts. Again, politicians tend to keep things simple, unlike experts who often complicate things when caught in their ideological supremacy battles. 😪 What is the way forward? First, the empirical evidence supporting the target needs to be agreed upon to standardize the measurement and interpretation of inflation targets. The methodology should be simple, easily replicated, and interpreted. For example, there is a reason why Peter Cooke's capital adequacy ratio of 8% has stood the test of time. 🤐 Second, there should be laws backing these methodologies such that it would be difficult for experts or even politicians themselves to shift the goalpost. Howbeit, these are merely anecdotal pieces of evidence which need further empirical investigation for validity. ✌ Bank of England #macroeconomics #economics #centralbanks #monetarypolicy #centralbanking #politics

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An interesting letter from the PRA today updating on the approach to AI: https://lnkd.in/eaNQnyVV The identification of four areas for further regulatory clarifications: 1) Data Management 2) Model Risk Management 3) Governance 4) Operational Resilience and Third-Party Risks These formed the core of our recent articles on AI and are the key areas firms should be seeking to review over 2024 to ensure that they are making the best use of the opportunities presented by new innovative tech, while ensuring that systems and controls remain appropriate, proportionate and scalable to the new ways of working.

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