Goldman Sachs International – the UK based subsidiary of The Goldman Sachs Group, Inc. (GS - Analyst Report) – can now resort to Bank of England during crisis. The company has obtained approval to access funding from the Bank of England’s Sterling Monetary Framework (SMF), according to a filing of Goldman Sachs International that disclosed first-half 2015 results.Through SMF, the Bank of England aids financial stability by serving as a 'backstop' provider of liquidity insurance to the member companies. The SMF outlines policies governing the use of the central bank’s sterling balance sheet.As of Jun 30, 2015, Goldman has not accessed any funding through SMF. Goldman’s approval to access SMF reflects Bank of England’s efforts to widen access to broker dealers and central counterparties (CCP). The central bank has recognized the growing importance of non-banks in the financial system following the crisis. Regulations that direct the clearing of trades in financial instruments through CCPs have lowered down the extent of connectivity between banks, and this resulted in CCPs gaining importance in the financial system. As per the 2015 annual report of SMF, as of January 2015, 50% of the global over-the-counter (OTC) interest rate derivatives market is currently centrally-cleared, increasing from 31% in April 2012.Further, the crisis proved that turmoil in broker-dealers’ activities can create havoc in the capital markets. Both broker-dealers and CCPs are exposed to liquidity risk owing to their critical functions. In November 2014, the Bank of England made broker-dealers and CCPs eligible to apply for accessing SMF.The annual report highlighted, “Given their (broker-dealers and CCPs) systemic importance to the UK economy, the provision of liquidity insurance through the SMF will assist these firms to manage their liquidity in times of market-wide or firm-specific liquidity stress”. The Times of London, which earlier reported about Goldman receiving the approval, mentioned that Goldman became the first foreign-based bank that is known to have won approval to access the SMF. Goldman currently carries Zacks Rank # 2 (Buy). Some other top-ranked stocks in the finance space include Arlington Asset Investment Corp. (AI - Snapshot Report), Piper Jaffray Companies (PJC - Snapshot Report) and Interactive Brokers Group, Inc. (IBKR - Analyst Report). All three stocks sport a Zacks Rank #1 (Strong Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Goldman Sachs International , which specialises in investment finance and institutional client services, has gained approval to access funding from the Bank of England"s Sterling Monetary Framework (SMF). This reflects recent efforts of the Bank of England to extend access to SMF to broker dealers and central counterparties ( CCP ). The April 2012 annual report of SMF , as of April 2012 showed that 50% of the global over-the-counter interest rate derivatives market is currently centrally cleared. This marks a 50% increase since April 2012 . SMF wants to provide insurance liquidity to broker-dealers given their systemic importance to the UK economy.