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CASLA: Canada is underdeveloped and must rethink collateral approach

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CASLA: Canada is underdeveloped and must rethink collateral approach

The Canadian market requires improvement, especially in terms of repo and collateral, according to panellists at the Canadian Securities Lending Association (CASLA) conference in Toronto.

The panel discussed post-trade challenges in the session entitled ‘Market Infrastructure Revolution: Navigating Post Trade Challenges and Partnering in Industry Transformation’.

Moderated by Steve Everett, head of business strategy and Post Trade Innovation at TMX, panellists agreed that the Canadian market requires improvements in the collateral space.

According to Nick Chan, managing director, head of financial resource management at BMO Capital Markets, “Canada is unique”.

“When I look at how we operate compared to other jurisdictions, we tend to come through things by collaboration, discussion and standardisation,” he added.

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Triparty was not a term that was known to local Canadian participants until very recently, said Chan, who believes that this has come from “the fact that we have had good access to well-developed funding markets that did not rely on us to have much collateral reuse”.

During the discussions, Chan indicated that collateral has become a core part of the way the Canadian market manages risk. In the area of collateral reuse, he believes that “we have been underdeveloped, and there is an opportunity to evolve”.

He continued: “The Canadian market has been very resilient, but there is an opportunity for us to evolve the infrastructure to pave the way for more innovation and liquidity, which will lead to more Canadian market participation in the future.”

Following this topic, Maksym Padalko, operations and policy advisor at the Bank of Canada, highlighted that the country lacks a general collateral market. In addition, he stated that the term repo market could also “be more active”, and usage of Canadian collateral or securities in foreign markets, such as in the US and Europe, could be expanded.

“In terms of the importance of having the proper infrastructure, there are broad systemic benefits,” Padalko explained. “If you have a well developed term repo market, for example, and you face sudden volatility like what we have seen in the past, term repo markets can help to absorb some of those shocks — such as risks, big price moves and margin calls — in the near term.”

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Adding to the debate, Value Exchange CEO Barnaby Nelson pinpointed how the “incredible costs” the industry carries everyday to support the current infrastructure in the collateral repo space, from a balance sheet, risk-weighted asset (RWA) and operational cost perspective, was “striking”. He asked: can we afford not to?

He concluded: “There is no way we can run our collateral and repos in 10 years in the same way that we do now. We are just entering the triparty era in Canada, arguably, the revolution is well advanced in Europe and Asia. It would be wrong to think we have the luxury of time.”

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Baker McKenzie Welcomes Finance & Projects Principal Matthias Schemuth in Singapore | Newsroom | Baker McKenzie

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Baker McKenzie Welcomes Finance & Projects Principal Matthias Schemuth in Singapore | Newsroom | Baker McKenzie

Baker McKenzie today announced that leading project finance lawyer Matthias Schemuth has joined the Firm’s Singapore office* as a Principal and Asia Pacific Co-Head of Projects in its Finance & Projects practice, alongside Partner Jon Ornolffson in Tokyo.

Matthias joins the Firm from DLA Piper, bringing more than 20 years of experience in the energy and infrastructure sectors across Asia Pacific. He advises sponsors, developers, commercial banks, multilateral lending agencies, and export credit agencies on the structuring and financing of large-scale projects. His practice also spans international banking, structured commodity and trade finance, with a strong focus on emerging markets. Matthias has been consistently recognised by Chambers Asia Pacific and Who’s Who Legal as a leading project finance practitioner.

James Huang, Managing Principal of Baker McKenzie Wong & Leow in Singapore, said: “We are excited to welcome Matthias to our team. His expertise and proven record in managing teams will be invaluable as we expand our regional and global finance offerings for clients.”

Emmanuel Hadjidakis, Asia Pacific Chair of Baker McKenzie’s Banking & Finance Practice, commented: “Asia Pacific is seeing strong momentum in infrastructure development, energy transition investments, and cross-border project financing, much of it centred in Singapore. Having Matthias on board will further enhance our ability to help clients seize opportunities in the region’s evolving energy and infrastructure markets.”

Steven Sieker, Baker McKenzie’s Asia Chief Executive, added: “Matthias’s appointment underscores Baker McKenzie’s continued commitment to investing in exceptional talent across key markets to support our clients in navigating today’s increasingly complex business and regulatory environment.”

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Matthias said: “I’m thrilled to join Baker McKenzie and contribute to its strong growth in Asia Pacific. The Firm’s global reach and local depth provide an unparalleled platform for delivering innovative projects and financing solutions to clients in this dynamic region.”

With more than 2,700 deal practitioners in more than 40 jurisdictions, Baker McKenzie is a transactional powerhouse. The Firm excels in complex, cross-border transactions; over 65% of our deals are multijurisdictional. The teams are a hybrid of ‘local’ and ‘global’, combining money-market sophistication with local excellence. The Firm’s Banking & Finance lawyers are ranked in more jurisdictions than any other firm by Chambers.  

Matthias’s hire continues the expansion of Baker McKenzie’s global team. His joining follows the recent arrivals of Carole Turcotte in Toronto; Tom Oslovar in Palo Alto; Jenny Liu in New York and Palo Alto; Helen Johnson, Mark Thompson, Nick Benson, Kevin Heverin, James Wyatt and Michal Berkner in London; Jan Schubert in Frankfurt; Todd Beauchamp and Charles Weinstein in Washington DC; Dan Ouyang, Winfield Lau, and Ke (Ronnie) Li in Beijing, Shanghai, and Hong Kong; and Alexander Stathopoulos in Singapore.

*Baker McKenzie Wong & Leow is the member firm of Baker McKenzie in Singapore

 

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3 finance stocks to buy on rising 10-year Treasury rates

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3 finance stocks to buy on rising 10-year Treasury rates
The Federal Reserve gave investors an early Christmas present by lowering interest rates by 25 basis points (i.e., 0.25%) marking its third rate cut this year. In the past, a change like this in the “long end” of the interest rate yield curve has triggered a predictable, investable pattern. Typically, this pattern would be bearish for finance stocks, particularly banks—investors would buy bank stocks when rates rose and sell them as rates fell….
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Reservists’ families protest outside Finance Minister’s home

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Reservists’ families protest outside Finance Minister’s home

Dozens of protesters from the “Religious Zionist Reservists Forum” and the “Shared Service Forum” demonstrated Saturday evening outside the home of Finance Minister Bezalel Smotrich in Kedumim.

The protesters arrived with a direct and pointed message, centered on a symbolic “draft order,” calling on Smotrich to “enlist” on behalf of the State of Israel and oppose what they termed the “sham law” being advanced by MK Boaz Bismuth and the Knesset’s haredi parties.

Among the protesters in Kedumim were the parents of Sergeant First Class (res.) Amichai Oster, who fell in battle in Gaza. Amichai grew up in Karnei Shomron and studied at the Shavei Hevron yeshiva.

Protesters held signs reading: “Smotrich, enlist for us,” along with the symbolic “draft order,” calling on him to “enlist for the sake of the State’s security and to save the people’s army – stand against the bill proposed by Bismuth and the haredim!”

Parallel demonstrations were held outside the homes of MK Ohad Tal in Efrat and MK Michal Woldiger in Givat Shmuel.

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Representatives of the “Shared Service Forum” said: “We are members of the public that contributes the most, and we came here to say: Bezalel, without enlistment there will be no victory and no security. Do not abandon our values for the sake of the coalition. The exemption law is a strategic threat, and you bear the responsibility to stop it and lead a real, fair draft plan for a country in which we are all partners. It’s in your hands.”

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