Tuesday, January 3, 2017

Fed Finds Serious Liquidity Flaw in the Volcker Rule

Author: David Schwartz

Industry experts and regulators have debated for some time now about the effects regulation may or may not be having on liquidity. Critics of tough new bank regulations claim that the increased regulatory requirements, such as the higher capital requirements and new liquidity standards have reduced liquidity and banks' market-making capacity. Regulators, on the other hand, have been skeptical and have called for evidence showing regulations negatively affecting liquidity. In a study published on December 22, 2106, the Fed itself has produced just such evidence.

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Thursday, December 29, 2016

SEC Chief Plans a Defiant Departure

Author: David Schwartz

SEC Chair Mary Jo White is not sticking around at the SEC after the inauguration next month. But she does not plan to be idle in her remaining time at the Commission. In a pointed response to an earlier request by GOP senators to stop issuing new rules called for by Dodd-Frank, White has vowed to push ahead with a list of open regulatory matters.  Chairman White’s letter strikes a defiant tone and asserts the necessary and statutory independence of the SEC from political meddling.   

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Wednesday, December 28, 2016

Is Blockchain the Future of Securities Lending?

Author: David Schwartz

By now, all but the most strident luddite has heard of Bitcoin, the notorious stateless crypto-currency. Naturally, financial firms and regulators have started to take notice of Bitcoin. But it is not necessarily the currency they are interested in. Rather, they are exploring the technology that makes the virtual currency possible. Computer-driven concepts borrowed from Bitcoin like the blockchain, distributed ledgers, and self executing contracts are starting to become the new frontier in areas like securities lending and repo.  

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Friday, December 23, 2016

Industry Leaders Want Dodd-Frank Fixed Not Scrapped

Time to Deal with the Devils in the Details

Author: David Schwartz

As we mentioned last week it is premature to write the obituary for Dodd-Frank. Regulators have publicly recommitted themselves to seeing Dodd-Frank implemented fully. But regulators are not the only ones who would like to hold on to at least some aspects of the new regulatory landscape. Recently in speeches and congressional testimony, rather than calling for wholesale repeal, leaders of several of the largest banks and trade groups in the U.S. financial industry have advocated revision and refinement of the regulations under the Act, preserving what works while changing what does not.

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Friday, December 16, 2016

Dodd-Frank Won't Go Gently into that Good Night

Regulators are dedicated to the unfinished work of Dodd-Frank

Author: David Schwartz

Listening to the pundits, the press, and the political class, one gets the impression that the repeal of the Dodd-Frank Act and its new regulatory landscape is imminent and certain.  But to paraphrase Mark Twain, the rumors of Dodd-Frank’s death have been greatly exaggerated. Lately, regulators at the Fed, CFTC, and OCC have been giving full-throated rhetorical support to the post-crisis financial reforms already in place, and have both tacitly and explicitly been signaling their commitment to completing what they believe is the unfinished work of the new financial regulatory regime.  While the electoral triumph of those long opposed to Dodd-Frank almost certainly will introduce a strong deregulatory assault against the legislation, it does not necessarily mean the death of every aspect of Dodd-Frank Act. 

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