Thursday, March 30, 2017

OFR Launches Initiative to Reduce Regulatory Reporting Burden

Author: David Schwartz

In a March 16, 2017 address before the Financial Data Summit in Washington, DC, Richard Berner, Director of the Office of Financial Research (OFR), announced an initiative to identify areas of “duplication, overlap, and inefficiency in regulatory reporting.” The initiative is being undertaken in partnership with with the Financial Stability Oversight Council (and its member agencies). The goal of the project is to “improve data quality and reduce the reporting burden” faced by regulated financial firms. 

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Monday, October 24, 2016

ISDA Says it's Time to Revamp the Derivatives Markets

Author: David Schwartz

The fast pace and broad scope of new regulation are driving participants in the complex derivatives markets to adapt quickly. Layers of old infrastructure and practices built up over time need to be overhauled to keep up with new regulation, technological change, and overall structural changes in derivatives markets.  In a September 15, 2016 white paper, the International Swaps and Derivatives Association, Inc. (ISDA) has called for greater standardization and automation of derivatives trade processes in order to improve efficiency, reduce complexity, and lower costs for market participants.  According to ISDA’s chief executive Scott O’Malia, "More recently, the sheer pace of regulatory change has meant firms have been under pressure to tackle the next pressing deadline. The result is a derivatives infrastructure that is duplicative and based on incompatible operating standards, and this isn’t sustainable.”  The white paper identifies a number of ways the ISDA proposes to automate and streamline the significant reporting, trading, clearing and collateral management requirements that have emerged as a result of regulatory changes. In addition, the paper highlights areas where greater standardization and investments in technology, like blockchain, can make traded processing faster, more efficient, and more cost-effective at all stages of derivatives trading.

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Monday, October 10, 2016

FSOC Wants Better Securities Lending and Repo Data

Author: David Schwartz

In its 2016 annual report published in July, the Financial Stability Oversight Council (FSOC) said that more and better data was needed to assess the potential systemic risks associated with securities lending and repo.  The super-regulator called for more transparency and better data collection from both lenders and borrowers in securities lending and repo markets. “Without comprehensive information on securities lending activities across the financial system,” the FSOC report said,"regulators cannot fully assess the severity of potential risks to financial stability in this area.” In addition, the FSOC recommended better coordination of data collection by U.S. regulators with their foreign counterparts, noting that “current estimates suggest that half of global securities lending activities take place outside of the United States.”  Better international cross-border data coordination is necessary because, "the extent to which particular market participants operate across national boundaries is not clear from available data, so it is difficult for regulators to determine how stresses in a foreign jurisdiction may affect securities lending activities in the United States."

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Friday, July 1, 2016

FINRA and SEC to Focus on Advisor Fees

Author: David Schwartz

Both FINRA and the Securities and Exchange Commission have indicated a renewed interest in the fees charged by investment advisors. In a May 2016 notice, FINRA announced a mutual fund fee waiver sweep intended to gather information regarding whether advisors had mechanisms in place to ensure that mutual fund investors are receiving promised fee waivers and reimbursements.  The SEC’s investor advocate Rick A. Fleming announced in his annual report to Congress published on June 30 that improved disclosure of fees and expenses charged by financial advisers is a top priority for his office in the new fiscal year.  

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Tuesday, December 1, 2015

Jumping into Dark Pools and Heading off Disruptive Trading

Author: SuperUser Account
Wednesday, November 18, 2015, was a busy day for the Securities and Exchange Commission.  That morning the Commission convened to propose new rules to enhance the transparency of alternative trading systems, including “dark pools.” Later that day, Chairman Mary Jo White testified before Congress about the Commission’s plans to combat disruptive trading, to require registration “of certain active proprietary traders and improvements of firms’ risk management of trading algorithms,” as well as plans for rules addressing pre-trade pricing transparency in fixed income markets.  
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