Esma’s Maijoor: securities finance is ‘opaque’

Esma’s Maijoor: securities finance is ‘opaque’

Reporting of securities financing transactions will give regulators a good insight into collateral cycles, according to Steven Maijoor, chair of the European Securities and Markets Authority (Esma).

He said he was “very happy” that the European Commission had proposed introducing rules to require such transactions to be reported on trade repositories.

“Securities financing transactions were left outside the scope of MiFID, so it is now an opaque market. I am confident that such a change could bring the same benefits as we are now observing with the reporting of derivatives to trade repositories under Emir.”

Maijoor said introducing this requirement was important to allow regulators to have a better picture of collateral and its risks to the functioning of financial markets. The collateral market, which includes securities lending, repo and collateral transformation, has attracted attention from regulators as it is expected to become more important in the financial markets as demand rises for high-quality collateral.

Maijoor spoke about the increasingly crucial role of collateral and said that at times it can become relatively scarce. While Maijoor did not have an opinion on whether the collateral market is systemically important, he said “it is clear that we do not have a sufficient understanding of the functioning of this part of the market.”

Maijoor was speaking at the International Capital Markets Association’s (Icma) annual general meeting and conference in Berlin on June 5.

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