Esma set to backtrack on mandatory asset segregation

Maintaining the status quo would avoid disrupting securities financing and collateral reuse

No defence: a global custodian says Esma has indicated it won’t back mandatory segregation

The European Securities and Markets Authority (Esma) is expected to back down over plans that first surfaced two years ago, which would have forced a level of asset segregation in the custody chain, prohibiting the healthy functioning of tri-party repo and securities financing.

“The general view of the industry is we are in a much better place and Esma are moving away from strict segregation,” says one global custodian.

Esma published a second consultation on asset segregation under the

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