Wednesday, November 11, 2020
In today's post, I thought I'd share with BLPB readers a few tidbits of information that caught my eye this morning:
1) Today, the Financial Stability Board (FSB) released the "2020 list of global systemically important banks (G-SIBs)." Topping the list of 30 are Citigroup, HSBC, and JP Morgan Chase.
2) The FSB also recently released a discussion paper for public consultation: Regulatory and Supervisory Issues Relating to Outsourcing and Third Party Relationships. Reading it has now been added to my "do to list" as it addresses issues such as banks' reliance on cloud computing, a topic I wrote about in Banking on the Cloud (w/David Fratto and Lee Reiners), an article for last year's BLPB symposium.
3) Bill Ackman, CEO of the hedge fund Pershing Square, is "hedging the pandemic again."
4) Ok, so this one didn't really catch my eye so much as I went looking for it! I'm working on finishing this year's BLPB symposium article... Huang and Takát's The CCP-bank nexus in the time of Covid-19 shares the happy news that despite the intense market volatility of March 2020, clearinghouses performed well. However, procyclical margin calls by clearinghouses did create liquidity squeezes during this time of market stress. The authors state that "Going forward, the interaction of CCPs [clearinghouses] with clearing member banks is critical ("CCP-bank nexus"). Importantly, actions that might seem prudent from an individual institution's perspective, such as increasing margins in a turmoil, might destabilise the nexus overall. Therefore, central banks need to assess banks and CCPs jointly rather than in isolation." Sounds incredibly wise to me!