 |
|
|
The Federal Reserve Bank of Chicago's Financial Markets Group is a multidisciplinary initiative to study financial markets and the clearing and settlement operations that support these markets, with particular focus on Chicago derivatives exchanges and clearinghouses. NewsHedges in the warehouse: The banks get trimmed (PDF, 56KB)Federal Reserve Bank of Chicago staff from the Financial Markets Group and Banking Supervision and Regulation studied how banks protect themselves against credit risks when banks hold loans temporarily before selling them through securitizations. This edition of the Chicago Fed Letter reviewed the effectiveness of banks' hedging strategies in the context of the recent heavy losses in financial markets.Intraday Liquidity Management and Payment System Risk Policy (PDF, 100KB)The Federal Reserve Bank of Chicago submitted a public comment on the Board of Governors' Consultation Paper on Intraday Liquidity Management and Payment System Risk Policy (Docket No. OP-1257). The Consultation Paper noted that banks frequently delay the release of large-value Fedwire payments until late in the day, raising operational and systemic risk concerns.The Bank's comment focused upon reports that Fedwire payments associated with the settlement of exchange-traded derivatives contracts, which are both systemically important and time-sensitive, have been routinely delayed. In preparing the comment, Bank staff analyzed confidential settlements data and was able to corroborate for the first time in a systematic way anecdotal reports of delay. The comment letter pointed out that late-in-the-day bunching of settlement payments could have adverse consequences during periods of financial turmoil, an additional reason for the Board's expressed policy concerns. To address these concerns, the Bank endorsed changes to the Federal Reserve's Payments System Risk policy that would result in the reduction or elimination of daylight overdraft charges for fully collateralized overdrafts. The President of the Federal Reserve Bank of Chicago submitted the comment letter on behalf of the Bank, together with a staff commentary prepared by Carol Clark, David Marshall, and Robert Steigerwald from the Financial Markets Group. Nicholas Buchholz and Victor Lubasi provided valuable assistance in the preparation of the letter. |
|
 |
 |
 |
||
|
Home | Contact Us | E-mail Notification | Jobs | Privacy Policy | Legal Notices | Publications
|
||
|
||