Friday, June 11, 2021

Apple Sauce or Orange Juice?

The Inadequacy of Existing Databases in Securities Finance

Author: Ed Blount

Databases designed for specific purposes often fail when asked to solve a different problem. As an example, the securities finance databases of leading data providers such as FIS Astec, Datalend, and IHS Markit, designed more than 20 years ago for performance benchmarking, are inadequate when queried for the purpose of the loans themselves. Even regulatory databases enriched with new SFTR filings to help authorities monitor leverage, are unable to determine the propriety of the loans.

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Monday, June 7, 2021

RESTORING TRUST IN MARKETS: RMA Podcast Series

Creating ESG Models to Change Negative Views of Financial Markets

Author: Ed Blount

Good morning, this is Ed Blount and I am speaking to you from the Center for the Study of Financial Market Evolution here in Washington, D.C. I've been asked by my good friends at the Risk Management Association, RMA, just up the road in Philadelphia, to offer some thoughts on "how data-based models can be used to change the negative views of financial markets that are held by some bank customers and regulators, especially in the wake of the pandemic."  So, that is an interesting question.

I'm going to approach the answer in two parts:

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Saturday, May 22, 2021

Get Your ESG House in Order

Here Come the Regulators.

Author: David Schwartz

Environmental, social, and governance (ESG) investing has taken global financial markets by storm over the last few years. Post-pandemic, the demand for ESG investments has only intensified and has proven to be much more durable than a fad. However, lack of consistency and transparency threatens the trustworthiness of ESG as a category, and has led to accusations of 'greenwashing.'  As a result, US regulators and their counterparts in the EU and UK have begun building regulatory and enforcement momentum, focusing on the quality and accuracy of ESG disclosures by asset managers and investment funds. Accounting and other standard setters have joined their regulatory brethren in calling for consistency in financial and non-financial ESG reporting.

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Tuesday, May 11, 2021

Live by the Sword. Die by the Sword. Part 1

How the Online Gamestop Crowd Missed the Big Picture

Author: David Schwartz

January's GameStop frenzy, where amateur online retail traders took what they hoped would be a rollicking joyride through the world of high finance, has left regulators scratching their heads about what to do next and the retail buccaneers themselves with quite a hangover. Some of the online buccaneers have made their next move clear and filed a class-action lawsuit against seemingly everyone who's anyone in the world of retail and wholesale securities trading. The lesson to take away from the GameStop frenzy may be that structures, securities finance markets, and participants reacted to the online investors' disruptive and provocative activity as they should have. Collusion or conspiracy was not necessary to prompt the built-in guardrails and circuit-breakers to engage. They could not have been expected to react otherwise. The online buccaneers have perhaps learned that what you don't know can, indeed, hurt you. And when you live by the sword, you die by the sword. 

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Friday, April 23, 2021

Fund Advisers Brace for ESG Scrutiny

SEC to Mandate More Public Disclosure of Proxy Votes

Author: David Schwartz
After nearly twenty years of study, the Securities and Exchange Commission seems poised to rewrite the rules on proxy disclosure for mutual funds. Two SEC commissioners predicted within days of each other that there will be radical revisions to how regulated investment companies will report their proxy voting behavior. Both Acting Chair Allison Herren Lee and Commissioner Caroline Crenshaw said in separate speeches last month that the SEC's current proxy reporting form is not meeting the needs of investors. Shareholders, they said, need more and better proxy voting information to evaluate whether fund managers are sticking to the fund's stated proxy policies, especially funds that have made commitments to ESG principles. 
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