Featured Product

    ECB Issues Results of September Survey on Credit Terms and Conditions

    November 04, 2020

    ECB published results of the September 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets. The survey respondents reported an easing of credit terms and conditions over the June 2020 to August 2020 review period. This represents a partial reversal of the widespread tightening of credit terms and conditions observed in the previous two survey rounds. Additionally, the initial margin requirements decreased for almost all types of OTC derivatives. ECB also published survey guidelines and detailed data series on the survey.

    The survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets is conducted four times a year and covers changes in credit terms and conditions over three-month reference periods ending in February, May, August, and November. The results of the September 2020 survey are based on responses from a panel of 26 large banks, comprising 14 euro area banks and 12 banks with head offices outside the euro area. Respondents reported a significant easing of overall credit terms for all counterparty types. This overall easing masks some divergence between price and non-price terms. Whereas price terms eased significantly, non-price terms on balance tightened for all counterparty types, except banks. Respondents mainly attributed the easing of price terms to an improvement in general liquidity and market functioning, but they also suggested that the willingness to take on risk as well as the competition from other institutions were additional motivations for offering more favorable conditions to counterparties.

    The survey respondents also reported increased pressure from all counterparty types, except investment firms, to obtain more favorable conditions, with this being the most pronounced from non-financial corporates. The maximum amount and maturity of funding offered against euro-denominated collateral increased for most types of collateral. Haircuts applied to euro-denominated collateral and financing rates or spreads decreased for funding secured by nearly all types of collateral. Moreover, the demand for funding of all collateral types except equities weakened. In a reversal of the situation reported in the June 2020 survey, participants saw the liquidity of collateral improving for all collateral types and collateral valuation disputes decreasing. Finally, the initial margin requirements decreased for almost all types of OTC derivatives. Respondents also reported that the maximum amount of exposures had decreased for OTC equity and commodity derivatives. Liquidity and trading deteriorated for credit derivatives referencing structured credit products as well as for equity and interest rate derivatives. The volume, duration, and persistence of valuation disputes decreased across all types of derivatives.

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, Insurance, SESFOD, OTC Derivatives, Credit Terms and Conditions, Credit Risk, Margin Requirements, Securities Financing Transactions, ECB

    Related Articles
    News

    FED Proposes to Extend Data Collection Under Stress Testing Guidance

    FED proposed three-year extension, without revision, of the information collection FR 4202, titled "Recordkeeping Provisions Associated with Stress Testing Guidance."

    March 08, 2021 WebPage Regulatory News
    News

    FCA Proposes Updates to Guidance on Mortgage Repossessions

    FCA updated the draft guidance for firms to ensure that mortgage customers whose homes may be repossessed are treated fairly and appropriately, particularly where there are risks of harm to customers who are vulnerable as a result of the COVID-19 pandemic.

    March 05, 2021 WebPage Regulatory News
    News

    FCA Announces Cessation Timeline for Certain LIBOR Benchmark Settings

    FCA issued a statement on the cessation or loss of representativeness of the 35 LIBOR benchmark settings published by ICE Benchmark Administration or IBA.

    March 05, 2021 WebPage Regulatory News
    News

    EBA Publishes Reporting and Disclosures Framework for Investment Firms

    EBA published a package that includes the final draft implementing technical standards on supervisory reporting and disclosures of investment firms.

    March 05, 2021 WebPage Regulatory News
    News

    BIS Examines Use of Big Data and Machine Learning at Central Banks

    BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.

    March 04, 2021 WebPage Regulatory News
    News

    APRA Finalizes Reporting Standard for Operational Risk Requirements

    APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.

    March 03, 2021 WebPage Regulatory News
    News

    ECB Publishes Guide for Determining Penalties for Regulatory Breaches

    ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.

    March 02, 2021 WebPage Regulatory News
    News

    MAS Sets Out Good Practices to Manage Operational Risks Amid COVID

    MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.

    March 02, 2021 WebPage Regulatory News
    News

    ACPR Announces New Data Collection Application for Banks and Insurers

    ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.

    March 02, 2021 WebPage Regulatory News
    News

    BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox

    BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.

    March 02, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6659