Agent Lending Newsletter - 3Q 2013
Welcome to the third quarter edition of J.P. Morgan's Agent Lending Newsletter. After the hectic second quarter, the summer months and third quarter were no less busy. As you will read in our market updates, there was a noticeable divergence between fixed income and equity lending markets. For fixed income we saw a modest increase in demand across the U.S. and Europe, particularly for lenders who own corporate bonds. It was a tough quarter for equity lending, with equity markets continuing to rise. The rise in stock prices led borrowers to refinance down fees on specials, as hedge fund appetite to short stocks continued.
We were pleased to see many of our clients at the IMN Beneficial Owner Conference in London in September. If Beneficial Owner attendance is any sort of barometer then it was a record year. J.P. Morgan was represented on a number of panels and workshops by Samantha Brown, Dan Rudd, John Shellard, Mark Tidy and Paul Wilson. Regulation is the current hot topic across the industry, specifically Basel III capital requirements and revised leverage ratio framework and disclosure requirements, and how these will impact borrowers, agents and lenders. In this newsletter, Judy Polzer, our Head of Quantitative Research and Analytics, provides a summary of some of the anticipated impacts of Basel III on the industry.
At the end of August, ahead of the G20 meeting in St. Petersburg, the Financial Stability Board ("FSB") published its "Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos". A summary is included in this newsletter, but key focus areas are Transparency, Collateral Policy and Structural Elements. The deadline for feedback to the FSB is November 28.
Lastly, please make a note of February 27, as this is the date for J.P. Morgan's joint securities lending and collateral management conference in London. We encourage you to attend this event as it will cover many topical subjects across the lending, financing and collateral management industries, and will include discussions and debates from leading J.P. Morgan and industry experts.
We hope you enjoy this newsletter.