Wednesday, November 4, 2015

Basel Tightens the Reins on Internal Risk Modeling by Banks

Author: David Schwartz

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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Thursday, October 29, 2015

DTCC Studies the Risks of Interconnectedness

Author: David Schwartz

The financial crisis made clear that interconnectedness and complexity have the potential to magnify localized shocks and amplify and transmit them to the greater financial system.  Understanding the risks posed by our ever more interconnected global financial system is crucial to managing those risks.  To that end, DTCC has published a whitepaper providing an overview of the subject, surveying a selection of interconnectedness studies conducted thus far, and highlighting regulatory measures designed to address interconnectedness risks. Among other things, DTCC concludes that “firms must do more than monitor and mitigate these risks – they also need to focus on building resiliency so they can detect potential systemic shocks before they strike or recover from them as quickly as possible.”

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Wednesday, September 23, 2015

Regulators Focus on Liquidity Risk Management

Author: David Schwartz

Since the liquidity freeze during the financial crisis, liquidity risk management has been a concern to regulators thorughout the financial industry.  Last week, the Financial Industry Regulatory Authority issued guidance regarding effective liquidity management at broker-dealers and the SEC proposed new rules addressing liquidity management in open end funds.  

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Thursday, October 9, 2014

List of Open Consultations and Rule Proposals

Author: David Schwartz

With the November 15 and 16 G20 Summit in Brisbane fast approaching, policy makers and regulators in the US and the UK have been hard at work.  Not to be outdone, IOSCO, ESMA, and BIS have also been busy.  Eager to demonstrate progress on financial re-regulation and reform, there has been a flurry of consultation papers and rule proposals at all levels over the past quarter.  The following is a list, current as of October 9, 2014, of some of the more noteworthy proposals and consultation papers whose comment periods are currently open.  It should be noted that a number of these consultations close imminently.

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Monday, September 22, 2014

UK's Financial Reporting Council Issues New UK Corporate Governance Code

Better Corporate Governance and Risk Management Through Shareholder Engagement

Author: David Schwartz

The Financial Reporting Council (FRC), UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment, has issued a revised UK Corporate Governance Code.  The changes to the Code are designed to strengthen the focus of companies and investors on the longer term and the sustainability of value creation. One aspect of this refocusing is shareholder engagement.  The revised code seeks to ensure better communication between boards and shareholders by improving disclosure and transparency on proxy voting issues.  

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