Category: All | Page 19

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.

SEC Chair White and the Evolving Role of Fund Directors

by David Schwartz J.D. CPA | Thursday, April 14, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

In her March 29, 2016 keynote address before the Mutual Fund Directors Forum’s annual policy conference, SEC Chair Mary Jo White laid out some of her thoughts on the role of mutual fund directors in assessing risks and exercising their oversight responsibilities. In addition, she highlighted recent changes in markets and regulation affecting the role of fund directors, as well as some of the potential challenges ahead.

OCC Seeks to Bring Some Order to Financial Innovation

by David Schwartz J.D. CPA | Wednesday, April 13, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

Banking and financial markets have always been innovative. But globalization, new regulation, and changes in technology have heightened the pace of innovation dramatically. According to a whitepaper published in March 2016 by the Office of the Comptroller of the Currency (OCC), while banks continue to innovate, “rapid and dramatic advances in financial technology are beginning to disrupt the way traditional banks do business.” In the face of this disruption, the OCC has used this white paper to enumerate eight “guiding principles” that the agency says it has formulated “to guide the development of its framework for understanding and evaluating innovative products, services, and processes that OCC-regulated banks may offer or perform.”

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

by David Schwartz J.D. CPA | Tuesday, March 29, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

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.

Should Bank Repo Activity be Exempt from the NSFR?

by David Schwartz J.D. CPA | Tuesday, March 29, 2016 | All, Formal Regulatory Remedies

Banks drive economic growth by providing financing for consumers and businesses. To provide this vital financing, their business models rely heavily on cheap and efficient maturity transformation made possible, in part, through short-term financing. With an implementation date less than one year away, banks and their industry groups are raising the alarm about how the Basel III Net Stable Funding Ratio (NSFR) may drive up severely the cost of short-term financing, thereby stalling the engines of economic growth, harming global liquidity, and increasing rather than reducing systemic risks.

Basel Proposes Changes to Reduce Variation in Credit Risk Weighted Assets

by David Schwartz J.D. CPA | Wednesday, March 23, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

The Basel Committee on Banking Supervision today released a consultative document proposing a set of changes to the Basel III framework’s approaches for determining Banks’ regulatory capital requirements for credit risk. The goals of these changes are to (i) reduce the complexity of the regulatory framework and improve comparability; and (ii) address excessive variability in the capital requirements for credit risk.

Making Sense of the New Regulatory Environment

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

In an October 20, 2016 address before the British Bankers Association’s Annual International Banking Conference, Dr. Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank, highlighted the environment of uncertainty in which banks currently operate. In addition to such things as technological change and Brexit, he also spoke about the fear and loathing arising from regulatory uncertainty and hinted at some ways regulators can help to lessen the regulatory strain.

Is Liquidity Suffering from Too Much Regulation?

by David Schwartz J.D. CPA | Thursday, March 17, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

In a March 7, 2016 speech at the Institute of International Bankers Annual Washington Conference in Washington, DC, Federal Reserve Governor Lael Brainard remarked that new regulations may be having inadvertent effects on market liquidity. Governor Brainard’s statement is notable because Fed officials and regulators have been careful to avoid that inference.

Despite Delay, MiFID II Remains a Priority

by David Schwartz J.D. CPA | Sunday, March 13, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

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, including:

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