Recent Changes In The Repo Market
As the global economies recovered from the Financial Crisis in 2008, global governments and regulators introduced substantial new regulation which dramatically changed the financial landscape. Dodd-Frank and Basel III were created to stabilize the financial system and make sure another financial crisis never happens again, but there were unintended consequences. By increasing the capital requirements on bank assets, it prompted many banks to exit or substantially reduce asset intensive businesses. Their Repurchase Agreement (Repo) businesses were among the first affected. Beginning in 2015, banks began shedding Repo assets reducing their presence in the Repo market, stopped making markets for clients in Repo, and even eliminated trading with many Repo counterparties. Consequently, liquidity declined in the Repo market. Hedge funds, broker-dealers, money funds, cash investors, private investment funds, and professional trading groups all experienced a strain on their liquidity. A solution was needed to provide clients with better access to the Repo market.
A New Concept In Securities Finance
Curvature Securities was created as a conduit between the inter-dealer securities finance market and clients who have limited access to securities finance. Our sole business is securities financing. Unlike many other banks and broker-dealers, we provide clients access to securities financing with reliable availability of balance sheet. We are a broker-dealer set up for the sole purpose of securities finance. That’s all we do!
Excellence in securities financing is the hallmark of Curvature Securities. Our founder, Terry Pigott, and the members of his team, capitalize on their unique expertise and experience in the securities finance markets. Curvature is a privately-owned SEC registered FINRA broker-dealer. We are a full Fixed Income Clearing Corporation (FICC) Repo netting and comparison member, as well as a participant with DTCC. There are no other lines of business at Curvature besides securities finance. No proprietary trading, no investment banking, and no client cash is held at Curvature. We are a one purpose business dedicated to securities finance.
Curvature’s primary business is Repo financing in U.S. government securities, but we have also added Equity Finance to our financing platform in 2019. In equities, our counter parties are all broker-dealers, trades are booked only on an overnight basis, and all transactions are riskless-principal.
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