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No bonanza yet for big funds from new rules to cut risk 

January 6, 2014
Simon Jessop, Reuters

* Regulation-fuelled "collateral crunch" not seen in 2014

* Fees to borrow government debt fell in 2013 - Sungard

* Basel III bank capital rules crimp collateral demand

If pension funds, insurers and sovereign wealth funds were hoping to cash in on lending "high quality" assets to those scrambling to meet tougher collateral requirements in 2014, they are likely to be disappointed.

The phasing in of the U.S. Dodd-Frank Act and its European equivalent EMIR (European Markets Infrastructure Regulation) over the next 18 months is expected to boost demand for assets like top rated sovereign debt to back derivative trades.

But for all the industry warnings of a squeeze in supply -dismissed by regulators as a tactic to lobby for weaker rules - the amount of available collateral outstripped demand last year and things are unlikely to change much near term.

Read more: Reuters

 
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