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ESMA chair rubbishes collateral shortage fears 

June 30, 2016

Drew Nicol, Securities Lending Times

Concerns of a collateral shortage in the wake of the implementation of the European Market Infrastructure Regulations (EMIR) were dismissed as unfounded by the Steven Maijoor, chair of the European Securities Markets Authority (ESMA), in a keynote speech at ISLA’s annual conference.

“Within ESMA’s remit, EMIR contributed to a huge increase in the demand for collateral. Despite this, predictions of a major shortage of collateral in the system do not seem to have materialised, although ESMA continues to closely monitor market developments,” Maijoor stated.

Moving on to discuss the European Central Bank’s recent quantitative easing policy, delegates at ISLA’s Annual Securities Finance and Collateral Management Conference in Vienna heard that “it is also very challenging to assess the net effects of bond purchases by central banks on collateral availability due to the multiple transmission channels”.

Maijoor, speaking on 23 June, added that, according to ESMA’s own research, the policy had led to a spike in the price of high-quality government bond collateral in the repo market, but that the premium was offset by the bank’s securities lending programme. Read more

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