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Enjoy the ride
18 December 2007
In the financial market turmoil stirred up by the subprime crisis and dragged out by uncertainty and periodic waves of credit downgrades, an environment has been created that securities finance players can actually enjoy and profit from. Marek Sanders takes a look at what's happening to the industry.
Read more:
subprime
credit markets
financial market turmoil
The sudden subprime storm that swept across credit markets has packed a greater punch than most in the financial industry can remember. Over the summer, banks and broker-dealers who had over the past few years become more certain of themselves than ever before found from one moment to the next that the solid ground they stood upon was actually cracking ice.
With no idea how thick it was, nor what subprime nasties lurked beneath, and watching helplessly as the occasional fund around them slipped and disappeared beneath, they have carefully and fearfully retreated, taking with them both confidence and liquidity from the markets.
The stress of these changing times has not been avoided by securities financing desks and businesses, with the doubts and problems that surround corporate paper having a big impact on the way collateral is viewed and used in all securities finance transactions. Excluded asset classes, a diversion...
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