Wednesday, March 30, 2016

GAO Finds U.S. Financial Regulatory Structure Fragmented and Inefficient

Recommends Action by Congress on Overlapping Regulations and the FSOC

Author: David Schwartz J.D. CPA

In a report released March 28, 2016, the GAO concluded that fragmented and overlapping oversight has created inefficiency in the U.S. financial market regulatory structure. The GAO recommended that Congress should consider taking steps to reduce or better manage fragmentation and overlap, and also determine whether legislative changes are needed to align Financial Stability Oversight Council's (FSOC) authorities with its mission to respond to systemic risks.

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Monday, March 14, 2016

Despite Delay, MiFID II Remains a Priority

Author: David Schwartz J.D. CPA

Among the priorities in the European Commission’s (EC) list of its planned initiatives for 2016 is a new push to refine a package of reforms under its Markets in Financial Instruments Directive (MiFID II). After announcing just last month that MiFID II implementation would be delayed by year to January 3, 2018 due to the overwhelming complexities involved, the EC indicated that it would focus on a number of technical points in MiFID II that need to be specified further.

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Monday, February 15, 2016

B of E Issues Consultation on Systemic Risk Buffer for Ring-Fenced Banks

Author: David Schwartz J.D. CPA

On January 29, 2016, the Bank of England (B of E) issued a consultation paper laying out its proposed framework for the systemic risk buffer (SRB) to be applied to ring-fenced banks and large building societies holding more than £25 billion of retail and small and medium enterprise deposits. The proposals are intended to provide clarity to banks on how much capital they will be required to reserve in connection with the activities of their "ring-fenced" arms.

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Thursday, January 28, 2016

OFR Report Highlights Unintended Consequences of Swaps CCPs

Author: David Schwartz J.D. CPA

On January 27, 2016, the Office of Financial Research (OFR), an arm of the Treasury Department created under the Dodd-Frank Act, issued its fourth annual report to Congress. The report highlights the results of OFR research, risks to financial markets, and OFR priorities for the coming year. Notable among its findings, the report suggests that reforms mandating central counterparties in the formerly OTC swaps market could unintentionally increase systemic risk in the long run rather than reducing it.   

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Wednesday, November 4, 2015

Basel Tightens the Reins on Internal Risk Modeling by Banks

Author: David Schwartz J.D. CPA

In a November 2, 2015 speech in Madrid,  Stefan Ingves, Chairman of the Basel Committee and Governor of Sveriges Riksbank,  announced that the Basel Committee on Banking Supervision will revisit internal risk modeling by banks. According to Mr. Ingves, "ample evidence has accumulated to suggest that the current role of internal models in the regulatory framework does not strike the right balance between simplicity, comparability and risk sensitivity."  While "the use of internally modelled approaches was a defining feature of Basel II," the Basel Committee expects to revisit this reliance on internal modeling and, perhaps, broadly eliminate it for some risk categories.

 
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