For starters, brokerage firms swapping securities at their new Fed window — the Term Securities Lending Facility — do not supply the excess collateral that commercial banks do.
Swap Security Guards For Art Teachers: Apparently "low income kids who engage in the arts are three times more likely to have high attendance records and four times more likely to be involved in a student club or student government".
The Fed also is cutting back on a program in which investment firms can temporarily swap risky securities for Treasury securities.
Under the plan, the S.E.C. expects first to finish defining various terms of art — "security-based swap," "security-based swap agreement," and "mixed swap" — that are essential to the derivatives rules.
Section 716 begins with, "Notwithstanding any other provision of law no Federal assistance may be provided to any swaps entity with respect to any swap, security-based swap, or other activity of the swaps entity".
The mechanism allows banks to swap illiquid securities for government-guaranteed bonds for 20 years, instead of pushing the troubled assets off bank books entirely.
WALL STREET JOURNAL Commerzbank Looks to Raise $1 Billion of Capital | The German lender offered details on Monday of its plan to swap hybrid securities for new shares, Bloomberg News reports.
Back in March, when two of the entities were set up, banks and brokerage firms fairly beat down the Fed's door to swap unwanted securities for cash or Treasuries.
There's a particular niche of the financial services sector that is gaining more and more attention: the exchanges, which essentially provide the means for brokers and traders to swap stocks, securities, commodities and derivatives.
After its $81 billion default in 2001, Argentina offered to pay its creditors a third of what it owed 93% of the debt was eventually swapped for performing securities in 2005 and 2010.
