All - Center for the Study of Financial Market Evolution (CSFME)

Treasury Department Assesses Liquidity in Fixed Income Markets

by David Schwartz J.D. CPA | Thursday, May 26, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

On May 5, 2016, the Department of the Treasury kicked off a series of blog posts on the fixed income market intended to “share our perspective on the available data, discuss key structural and cyclical trends, and reiterate our policy priorities.” The posts are authored by a team of seasoned Treasury officials: James Clark, Deputy Assistant Secretary for Federal Finance; Chris Cameron, financial mathematician; and Gabriel Mann, policy advisor in the Office of Debt Management at the U.S. Treasury Department.

FSB Review Concludes that Taming of Shadow Banking is Far From Complete

by David Schwartz J.D. CPA | Wednesday, May 25, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

According to a peer review published the by Financial Stability Board (FSB) on May 25, 2016, regulation of shadow banking remains at an early stage, and much progress remains to be made. According to the report, notwithstanding the progress made, “more work is needed to ensure that jurisdictions can comprehensively assess and respond to potential shadow banking risks posed by non-bank financial entities, and support FSB risk assessments and policy discussion.”

Transfer Agent Regulation Poised to Step Into the 21st Century

by David Schwartz J.D. CPA | Thursday, May 19, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

On December 22, 2015, the Securities and Exchange Commission left a present in all our stockings with its publication of a 208-page advanced notice of proposed rule making and concept release on the regulation of transfer agents. Modernizing the aging rules for transfer agents has been rumored for awhile, but no doubt fell behind other priorities related to the financial crisis and Dodd-Frank mandates. Commissioner Luis Aguilar and now former Commissioner Daniel Gallagher have both been fairly vocal about the need for new transfer agency rules. Both would have preferred an actual rule proposal, but apparently will have to settle for an advanced notice/concept release at this stage.

Basel Chair Calls for More Research into Bank Risk Models

by David Schwartz J.D. CPA | Thursday, May 19, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

In his December 2, 2016 keynote speech at the second Conference on Banking Development, Stability and Sustainability, Basel Committee Chairman Stefan Ingves invited the financial industry and academics to help better calibrate capital and liquidity standards. As the Committee finalizes Basel III, Ingves said that he welcomes research and rigorous analysis of how the Committee should think about the capital benefits of allowing banks to use internally modeled approaches to calibrate appropriate capital floors.

BIS Publishes Survey on Integration of Regulatory Capital and Liquidity Instruments

by David Schwartz J.D. CPA | Sunday, May 15, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

In March 2016, the Bank for International Settlements (BIS) published a paper reviewing the current knowledge and empirical data on the effects of new bank capital and liquidity requirements. This literature review is comprised of three essays surveying the current body of research and empirical studies on liquidity and its interaction with capital and on other supervisory requirements.

Fordham Students Submit Comment Letters to Basel Committee

by David Schwartz J.D. CPA | Saturday, May 14, 2016 | All, ROSE

On May 16, 2016, Fordham students participating in the Center’s Regulatory Outreach for Student Education (ROSE) Program submitted their winning comment letter on the Basel Committee’s December 17, 2015 consultation, “Identification and Measurement of Step-in Risk.”

Five teams of Fordham economics, finance, accounting, and law students participating in the ROSE Program researched and drafted comment letters, which were then submitted for judging by a panel of industry experts. The letters were then submitted to the Basel Committee on Fordham letterhead.

The ROSE Program brings together students from across the university to study our financial system, how it affects society, and, specifically, current issues in financial regulation. This year’s groups included both graduate and undergraduate suduents bringing a diverse range of perspectives and skills to the task. The consultative document, with its breadth and depth, offered an excellent opportunity for them to comment.

OFR Data Finds US Banks Still the Most Systemically Important

by David Schwartz J.D. CPA | Wednesday, April 27, 2016 | All, Change Overview and Rationale

On April 13, 2016, the Office of Financial Research (OFR) published its annual systemic importance data for the world’s larges banks. Based on data released in 2013 and 2014 by the Basel Committee, the OFR’s report examined data for the global 30 banks designated as G-SIBs, which included eight US bank holding companies. The OFR’s data collection and analysis is particularly significant because, beginning this year, regulators will employ this systemic importance data in determining capital requirements for banks.

FSOC Asks for Enhanced and Regular Data Collection for Securities Lending

by David Schwartz J.D. CPA | Wednesday, April 20, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

In their April 16, 2016 report, Review of Asset Management Products and Activities, the Financial Stability Oversight Council (FSOC) requested that regulators make coordinated and permanent efforts to collect more data on securities lending. Noting that that current data collections do not provide regulators and policy makers with enough information to even know the size of the market for securities lending, the FSOC urged enhanced and regular data collection and reporting, as we all as interagency data sharing regarding securities lending activities.

OFR Publishes Repo Survey Results. Calls for Better Data Standards.

by David Schwartz J.D. CPA | Tuesday, April 19, 2016 | All, Change Overview and Rationale

The Office of Financial Research released results of its survey of the bilateral repo markets. The report, “The U.S. Bilateral Repo Market: Lessons from a New Survey,” provides aggregate statistics on U.S. dealers’ bilateral repo agreements and economically equivalent securities lending activities. The data for three “snapshot” dates in 1Q2015 were collected from the U.S.-affiliated securities dealers of nine bank holding companies as part of a voluntary pilot program run by the OFR and the Fed with input from the Securities and Exchange Commission. Among other things, the data collection found that: (1) the majority of repo activity involves the delivery or receipt of U.S. Treasuries[1], with equities a distant second; (2) the most common maturity is one day; and (3) rates are widely dispersed across asset classes.

More Challenges for Fund Directors in the New Regulatory Environment

by David Schwartz J.D. CPA | Monday, April 18, 2016 | All, Commentary

Securities and Exchange Commission Chair Mary Jo White’s March 29 speech to the Mutual Fund Directors’ Forum can be seen as a showcase of the philosophical differences between market regulators and banking supervisors. For directors, the speech also reveals the sometimes conflicting results of the compliance forces created by these two complementary regulatory systems.

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