News

SEC Approves 'Negative Affirmation' Rule

By Mike Kentz
June 11, 2016, IFR

The Securities and Exchange Commission has included language in a rule-making finalized last week that some market participants say undermines the point of the entire rule-making itself.

The SEC will allow firms transacting in security-based swaps to comply with a new rule governing trade affirmation procedures via a process known as “negative affirmation”. Under the new rule, when one firm reaches out to another to confirm trade details but does not receive a response, the trade is still considered “affirmed” and is pushed through.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

House Committee Moves to Cut Funding for Financial Regulators

By Lisa Lambert
June 9, 2016, Reuters

A bill to slash funding for the U.S. Securities and Exchange Commission, Internal Revenue Service and other financial regulators passed a key committee in the U.S. House of Representatives on Thursday after a long partisan fight.

The expansive legislation would also place a halt on the payday lending restrictions that the Consumer Financial Protection Bureau recently proposed.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

SEC Adopts Trade Acknowledgment, Rules for Swaps

By Lisa Lambert
June 8, 2016, Reuters

The U.S. Securities and Exchange Commission on Wednesday said parties in swaps must now acknowledge their trades electronically within a day, and also promptly verify or dispute the terms of the swap under rules it had adopted.

"These rules will result in more accurate and timely documentation for security-based swap transactions, which is a cornerstone of effective risk management," said the chair of the top U.S. securities regulator, Mary Jo White, in a statement. "They mark another significant step in completing the comprehensive regulatory framework for security-based swaps required by the Dodd-Frank Act."

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Banks Remodel Issuance Structures to Combat TLAC

By Louie Woodall
June 6, 2016, Risk

A number of the largest dealers in the U.S. structured products market are understood to be in the process of setting up new finance company subsidiaries – a move designed in large part to help them continue selling structured notes in significant volume after the imposition of new capital rules that will severely restrict issuance of the products at the bank holding company level.

A draft Federal Reserve rule published in October 2015 largely renders structured notes ineligible to fill total loss-absorbing capacity (TLAC) buffers for U.S.-based global systemically important banks (G-SIBs). The so-called clean holding company rules also prohibit "excluded liabilities" – including structured notes – from making up more than 5% of a G-SIB holding company's capital stack.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

SEC Moves to Curb Leveraged ETFs

By Dave Michaels
June 6, 2016, The Wall Street Journal

It is a rare case of regulator’s remorse.

During a deregulatory heyday a decade ago, the Securities and Exchange Commission approved a type of exchange-traded fund allowing mom-and-pop investors to try to double or even triple the daily return of stock markets or bet on such swings in the opposite direction.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

SEC Prepares Dodd-Frank Buy-Side Stress Tests

By Steve Marlin
June 2, 2016, Risk

Could the US banking system withstand a doomsday scenario characterised by a severe global recession, heightened corporate financial stress and negative short-term rates? What if real GDP drops to –7.5% and unemployment spikes to 10%, while stock prices lose 50% and home prices fall by 25%?

The US Federal Reserve Board’s 2016 stress test for large US banks – the Comprehensive Capital Analysis and Review, or CCAR – is designed to answer that very question.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Banks Set for Capital Reprieve as E.U.-SEC Derivatives Talks Drag

By Silla Brush
May 27, 2016, Bloomberg

Banks using some U.S.-based clearinghouses to handle their derivatives trades are set to win a reprieve from tougher capital rules as the European Union continues talks with the Securities and Exchange Commission on regulatory equivalence.

The European Commission, the E.U.’s executive arm, plans a six-month delay in increasing capital charges on trades at clearinghouses in countries whose rules haven’t been deemed equivalent to those in the E.U., a commission official said. That includes SEC-regulated clearinghouses, including ones run by the Options Clearing Corp. and the Depository Trust and Clearing Corp. Without the delay, billions of dollars in capital requirements would kick in on June 15.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

U.S. Securities Regulator Takes Aim at Exchange-Traded Funds

By Lisa Lambert
May 20, 2016, Reuters

The top U.S. securities regulator is taking aim at exchange-traded funds, with the agency's chair on Friday saying that recent events have called for giving the popular funds "enhanced attention."

The statements by Mary Jo White, chair of the Securities and Exchange Commission, were the frankest warning yet that the agency could tighten regulation of the funds.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

U.S. Futures Regulator Targets Cyber Security, Automated Trading

By Lisa Lambert
May 19, 2016, Reuters

The U.S. Commodity Futures Trading Commission plans to finalize rules on cyber security, automated trading, and position limits this year, as it tidies up final requirements related to the Dodd-Frank financial reform law, its chairman said on Thursday.

The CFTC has been examining the thoroughness of cyber security at exchanges and other entities it oversees, and uncovered unspecified deficiencies at some, said Chairman Timothy Massad at the Reuters Financial Regulation Summit.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

E.U., U.S. Race to Spare Banks $5 Billion Clearing Capital Hit

By Silla Brush
May 16, 2016, Bloomberg

European Union and U.S. financial regulators are racing to agree on a plan to prevent billions of dollars in capital requirements from hitting banks’ trades in stock options and other securities starting next month.

The European Commission, the E.U.’s executive arm, and the U.S. Securities and Exchange Commission have stepped up talks ahead of June 15, when the capital increases are set to apply to E.U. banks’ trades at U.S. clearinghouses run by the Options Clearing Corp. and the Depository Trust and Clearing Corp. E.U. law requires banks to have more capital for trades at foreign clearinghouses that the bloc’s regulators say lack oversight and rules equivalent to its own.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Independent Fund Directors Rattled by Change in Role

By Chris Flood
May 15, 2016, Financial Times

The investment community has hit back at U.S. regulatory proposals designed to prevent the collapse of another mutual fund after the demise of a large junk bond product run by Third Avenue, the New York asset manager.

The U.S. Securities and Exchange Commission raised concerns about the role of independent fund directors, who are meant to police how funds are run, following the liquidation of Third Avenue’s $788m high-yield fund last December.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Swap Reporting Standards Due This Year

By Helen Bartholomew
May 14, 2016, IFR

The Financial Stability Board is preparing to publish best practice standards for a harmonized global swaps reporting regime before the end of this year, which should answer a long-running debate over who should report data and present guidelines for ensuring global regulators can access systemically important information.

A big divide exists between the CFTC’s single-sided reporting requirements, which apply to the majority of U.S. swaps, and dual-sided reporting under the European Markets Infrastructure Regulation.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Repo-Rescue Plan Turns to Banks, Asset Managers

By Katy Burne
May 12, 2016, The Wall Street Journal

Securities-industry officials are asking a number of banks and large asset managers to help shore up a key short-term lending market.

Depository Trust & Clearing Corp., an industry utility that operates much of the plumbing for Wall Street’s trading, is seeking pledges to help cover an expected cash shortfall if a member of its Fixed Income Clearing Corp. unit defaults, said people familiar with the talks.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: Better Balance Needed to Combat 'Regulatory Fatigue'

By Dan DeFrancesco
May 11, 2016, Waters Technology

The regulations won’t stop coming.

That was the message from U.S. Securities and Exchange Commission (SEC) director of division of trading and markets Stephen Luparello at this year’s Securities Industry and Financial Markets Association (SIFMA) Ops conference last week in Miami.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

The Academic Insights Behind Fears of a Buy-Side Crunch

By Luke Smolinski
May 11, 2016, Risk

Arguments about the systemic risk of asset managers often descend into attacking the wrong targets, thinks a former member of the Federal Reserve Board. "You have to be clear," he says. "It's not the kind of systemic risk like a replay of Lehman Brothers: big institutions toppling over. [The concern] is that if things went really wrong and you got a big wave of redemptions… credit spreads would widen very substantially and you get a credit crunch. That would knock a percentage point or two off GDP growth."

Recently the concern among regulators seems to have shifted from the idea that key big asset managers are systemically risky to the idea that a high enough number of fund redemptions could worsen a financial crisis. A BlackRock or a Pimco would not be the main driver in this model, but would provide the mechanism for further panicked sales and price falls, rather than being the fire blanket as long-term investors that regulators want them to be.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Analysis: SEC’s Luparello: Stream of Regulations Won’t Stop Soon

By Dan DeFrancesco
May 9, 2016, Waters Technology

Complying with new regulations is a constant burden every financial firm deals with, and it seems that trend isn’t likely to end anytime soon, according to a U.S. Securities and Exchange Commission (SEC) director.

At SIFMA Ops 2016 in Miami Beach, Fla., Ira Hammerman, executive vice president and general counsel for the Securities Industry and Financial Markets Association (SIFMA), asked Stephen Luparello, director of division of trading and markets at the SEC, if the regulators ever consider regulatory fatigue or overload.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Consolidated Audit Trail, While Costly for Brokers, May Not Go Far Enough

By Matt MacFarland
May 6, 2016, SNL Financial

A centralized system for tracking equities and options trades is within sight, almost four years after a Regulation NMS rule requiring it was adopted.

The consolidated audit trail, or CAT, will make a huge trove of trading data available to the SEC to investigate market failures in unprecedented detail. Regulators view it as a necessary tool for understanding today's equity and options markets, which transact at sub-second speeds across dozens of trading venues.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: SEC Proposals Target Mutual Funds

By Andrew Rogers
May 8, 2016, InvestmentNews

The regulatory environment for financial services is ever-changing, and periods following market disruptions create opportunities for regulators to propose new rules to prevent further failures. For example, the financial crisis of 2008 resulted in Dodd-Frank, which set forth new rules centered on capitalization requirements to prevent similar events. Regulators are now proposing rules for advisers and investment companies that will change the mutual fund universe.

The mutual fund industry has created an alphabet of share classes based on broker commissions and platform fees. Proposed fiduciary standards from the SEC requiring representatives to select investments in the best interests of investors (along the lines of the Labor Department's recently released fiduciary rule for retirement advice) may limit the ability to sell classes with higher expenses and load commissions. This may result in the collapse of many classes of mutual funds.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

Comment: The SEC: Still Fiddling with a 1940 Era Carburetor

May 3, 2016, AllAboutAlpha

Steven A. Keen of Perkins Coie has posted an insightful discussion of section 18 of the Investment Company Act of 1940, and of the pending proposed regulation under that mandate, Rule 18f-4, on one of that firm’s blogs, the Derivatives & Repo Report.

Both that proposal and Keen’s observations are worth some examination here, not least because a good engine- parts metaphor is relatively rare in this field.

full article describe the image (free)

SocialTwist Tell-a-Friend Related Posts with Thumbnails

SEC Proposes Design of New Audit System to Better Catch Market Manipulation

By Dave Michaels
April 27, 2016, The Wall Street Journal

U.S. market regulators on Wednesday proposed a massive data repository that will eventually allow them to sift through billions of daily trading records to detect market manipulation and probe bouts of extreme market disruption.

The Securities and Exchange Commission’s consolidated audit trail will enable regulators to track 58 billion daily transactions submitted to stock and options exchanges, as well as private-trading venues maintained by brokerage firms. Plans for the CAT, as it is called, were spurred by the May 6, 2010, flash crash, when more than 20,000 trades were executed at clearly erroneous prices and nearly $1 trillion in equity-market value was wiped out before prices rebounded.

full article describe the image (subscription)

SocialTwist Tell-a-Friend Related Posts with Thumbnails