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Regulators Point to Risks From Rapid-Fire Trading, Clearing

By Ryan Tracy
May 19, 2015, The Wall Street Journal

The rise of computerized trading and the changing roles of big banks are reshaping financial markets and potentially raising new vulnerabilities, U.S. regulators said in their annual report on financial-system threats.

The Financial Stability Oversight Council—a group of senior officials including the heads of the Federal Reserve and the Securities and Exchange Commission—also pointed to emerging risks from clearinghouses, a group of middlemen firms that have become a crucial part of market infrastructure.

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SEC Faces Cross-Border Criticism

By Mike Kentz
May 9, 2015, IFR

Buyside firms are criticising the SEC for diverging from the CFTC on a recent proposal that allows credit derivatives traded between two US banks to stay outside the scope of Dodd-Frank trading requirements if they are booked through overseas affiliates – even when the traders themselves are based in the US.

Grievances surrounding regulatory divergence are becoming a common refrain from market participants hungry for harmonisation – but supporters say this is one area where the two agencies may have to diverge.

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Futures Watchdog Can’t Afford Routine Inspections, Massad Says

By Dave Michaels and Jesse Westbrook
May 5, 2015, Bloomberg Business

The top U.S. derivatives regulator said his agency lacks resources to conduct even routine inspections of the exchanges and other companies it polices.

“We simply can’t get into these entities on a regular basis,” Commodity Futures Trading Commission Chairman Timothy Massad told lawmakers in Washington on Tuesday, speaking two weeks after the arrest of a trader accused of manipulating a futures market over five years. “We don’t even get to many of the clearinghouses and exchanges once a year. That is a big problem,” Massad said, as he asked for more money.

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SEC Nods to Industry in Proposals on CEO Pay, Overseas Swaps

By Dave Michaels and Silla Brush
April 29, 2015, Bloomberg Business

The U.S. Securities and Exchange Commission delivered a pair of rule proposals Wednesday that tilted toward the interests of Wall Street and corporate America as the regulator plodded through a backlog of mandates from the 2010 Dodd-Frank Act.

The five-member SEC voted unanimously to propose a measure that would allow overseas banks to conduct some derivatives trades without having to comply with U.S. regulations. The SEC also proposed a requirement for companies to show annual comparisons of executive pay and the stock’s performance. The rule would allow companies to omit new stock and options, which can make up the biggest part of compensation.

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SEC Takes Different Harmony Approach

By Mike Kentz
April 25, 2015, IFR

While the CFTC remains embroiled in tense negotiations with European regulators regarding the reach of Dodd-Frank derivatives rules outside the US, the SEC has remained above the fray by taking a starkly different approach to derivatives rulemaking.

The agency has moved considerably slower – it issued its first substantive Dodd-Frank rulemaking in January of this year, compared with the CFTC passing its first rules in 2011.

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Volcker Urges U.K.-Style Regulatory Reform

By Barney Jopson and Sam Fleming
April 20, 2015, Financial Times

Paul Volcker, former head of the Federal Reserve, has issued a radical call for the US to follow the UK’s lead by streamlining its mishmash of financial watchdogs in order to close worrisome gaps in regulation.

Mr Volcker said that reforming the regulatory structure was an unfinished task left over from the financial crisis as he warned that lending by non-banks — known as shadow banks — was creating unchecked risks.

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Special Report: How Wall Street Captured Washington's Effort to Rein in Banks

By Charles Levinson
April 9, 2015, Reuters

In the aftermath of the 2008 financial crisis, Keith Higgins was certain: Banks weren’t to blame.

Higgins, a top attorney at prominent law firm Ropes & Gray LLP, was chairman of an American Bar Association committee on securities regulation. As such, he lobbied strenuously against a rule U.S. regulators were drafting that would require banks to disclose a lot more about asset-backed securities like those that had just torpedoed the economy.

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SEC Names OCIE Acting Director

April 10, 2015, Automated Trader

The Securities and Exchange Commission has announced that Marc Wyatt will serve as Acting Director of the agency's Office of Compliance Inspections and Examinations (OCIE). He succeeds Andrew Bowden, who announced that he will be leaving the SEC to rejoin the private sector at the end of April.

Mr. Wyatt has served as the Deputy Director of OCIE since October 2014, where he has led the Technology Controls Program and served as a member of the office's Operating and Executive Committees. He also is the national co-coordinator of OCIE's Private Fund Specialized Working Group and recently participated in the creation of its Private Fund Examination Unit, whose attorneys, accountants, and examiners specialize in examinations of advisers to private funds. Mr. Wyatt joined the SEC in December 2012 as a senior specialized examiner focused on examinations of advisers to hedge funds and private equity funds.

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SEC Shifts Focus to Ratings Firms, Fund Valuations As Crisis-Era Cases Fade

By Aruna Viswanatha
March 18, 2015, The Wall Street Journal

As U.S. securities regulators turn their attention away from the financial crisis, they’re looking more closely at credit rating firms and fund valuation issues, the top enforcer at the Securities and Exchange Commission will tell lawmakers on Thursday.

In a sign the pipeline for crisis-era cases has largely run dry, the SEC renamed the unit that brought many of its cases for shoddy mortgage securities that allegedly fueled the 2008 financial crisis.

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CFTC Enforcement Chief to Revive Use of In-House Courts

By Sarah N. Lynch
March 12, 2015, Reuters

The U.S. derivatives regulator's enforcement director said on Thursday that his division planned to revive the use of in-house administrative courts, after more than a decade of bringing contested cases only to federal courts.

"We are going to start to do that very soon," said Aitan Goelman, the enforcement chief of the Commodity Futures Trading Commission, in remarks at Georgetown Law's Corporate Counsel Institute. He added that the move would help the agency, which has a very constrained budget.

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