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

Latest FSB Global SIFI Consultation Draws Swift Criticism

by David Schwartz J.D. CPA | Saturday, December 19, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

Though the Financial Stability Board’s (FSB) March 4, 2015 consultation paper on Global SIFI designation is only a week old, it has already generated a chorus of criticism and condemnation from some of the asset management industry’s most powerful players. This second public consultation proposes revised methodologies for identifying non-bank non-insurer global systemically important financial institutions (NBNI G-SIFIs) based on comments received on the first consultative paper published in January 2014.

Reform Skeptic Rep. Hensarling to Hold Hearings on Dodd-Frank and the Power of the Fed

by David Schwartz J.D. CPA | Saturday, December 19, 2015 | All, Change Overview and Rationale

Long time financial reform skeptic and Dodd-Frank foe Jeb Hensarling (R-TX), chair of the Financial Services Committee, will hold hearings on what he believes to be the Federal Reserve’s lack of transparency and accountability. On Tuesday, July 14, 2015 at 10:00am...

CSMFE Submits Comments on FSB Data Collection Proposals

by David Schwartz J.D. CPA | Saturday, December 19, 2015 | All, Change Overview and Rationale, Disclosure Regimes, Formal Regulatory Remedies, ROSE

On February 12, 2015, the Center for the Study of Financial Market Evolution (“CSFME” or the “Center”) filed its response to the Financial Stability Board’s (FSB) consultation, Standards and Processes for Global Securities Financing Data Collection and Aggregation (“Consultation Paper”). The Consultation Paper proposes a system of data collection intended to help market supervisors infer changes in systemic risk that are said to be created by securities lenders, repo traders and margin lenders. Previously, as part of their larger workstream on shadow banking, the FSB recommended that national/regional authorities collect appropriate data on securities financing markets to help the FSB better assess ongoing financial stability. The Consultation Paper is a proposal regarding what kinds of data on repo, securities lending, and margin lending should be collected, how they should be collected, and in what format.

The Origins of Trusts and Fiduciary Duties

by David Schwartz J.D. CPA | Saturday, December 19, 2015 | All, Traditions

A trust is a fiduciary arrangement that allows a one party to transfer assets to a third party, or trustee, to hold assets on behalf of a single beneficiary or a number of beneficiaries. Trusts have myriad uses and are employed across a wide variety of property transfers, transactions, testamentary bequests, and business arrangements. They are so useful because they are so very flexible and can be custom tailored to restrict exactly how the assets are to be managed during the life of the trust, as well as how, when, and in what form the assets pass to the beneficiaries. Because trusts have such utility and so widely used, a large body of law has grown up around them. And since a key aspect of trusts is the placement of things of value in the care of a third party, the trustee, a corollary concept, fiduciary duty, has also grown to address the rights and responsibilities of trustees with respect to the property in their care, and with respect to the trust’s beneficiaries.

SEC Proposes Derivatives Regime for Mutual Funds, ETFs, and BDCs

by David Schwartz J.D. CPA | Monday, December 14, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

On Friday, December 11, as previously announced, the SEC voted to propose a new rule regarding the use of derivatives by mutual funds, closed-end funds, ETFs, and business development companies. Since as far back as the 1990s under Chairman Aurthur Levitt, the SEC has been concerned about the multitude of risks derivatives can raise for funds, including risks related to leverage and liquidity. But, with the dramatic growth in the volume and complexity of the derivatives markets over the past two decades and the increased use of derivatives by certain funds, the risks to funds and the associated investor protection concerns are now significantly greater.

More Changes to Come for Repo Markets

by David Schwartz J.D. CPA | Sunday, December 13, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

Reforms following the financial crisis have made ti-party repo far safer, finds a report published by BNY Mellon and PWC, but even greater changes lie in store. Based on a survey of market participants, the report found that the repo markets remain in a period of dramatic transition. While concluding that regulation and ongoing reform will continue to have a major effect on wholesale funding, the report also predicts that market forces and changes in the structure and profitability of the business will have major effects on repo volumes and economics over the next few years.

U.S. Leads the Way in Money Market Reform

by David Schwartz J.D. CPA | Thursday, November 19, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

In a report published earlier this week, the Board of the International Organization of Securities Commissions (IOSCO) found that, among the major jurisdictions in the money market fund (MMF) industry, the United States has made the most progress in regulatory reforms. Using the most current data available, IOSCO determined that the global MMF market is dominated by five jurisdictions: the U.S., France, Luxembourg, Ireland and China. Together, these five jurisdictions account for just under 90% of global assets under management in MMFs.

FSB Finalizes Standards and Processes for Global Securities Financing Data Collection and Aggregation

by David Schwartz J.D. CPA | Thursday, November 19, 2015 | All, Disclosure Regimes, Procedural Changes, ROSE

On November 18, 2015, the Financial Stability Board (FSB) published its final Standards and Processes for Global Securities Financing Data Collection and Aggregation. The final standards are based on the FSB’s previous November 2014 consultation paper and define the data elements for securities lending, repo, and margin lending that national and regional authorities will be asked to report in aggregate to the FSB.

The standards build on the November 2014 consultation paper, including public comments, as well the policy recommendations from the FSB’s August 2013 report Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos, in particular its recommendations to improve transparency of securities financing markets. T

Fed Remains Concerned About Firesale Risks

by David Schwartz J.D. CPA | Thursday, November 19, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

In a January 30, 2015 address, Federal Reserve Board Governor Daniel K. Tarullo once again voiced the Fed’s concerns about the systemic risk posed by potential firesales in the asset management industry. Tarullo indicated that as regulators implement reforms under the Basel and FSB proposals and frameworks, they should take into account the “system-wide demands on liquidity during stress periods and correlated risks among asset managers that could exacerbate liquidity, redemption and fire-sale pressures.”

FSOC Focused on Asset Management and Reaching a Broader Audience

by David Schwartz J.D. CPA | Monday, November 16, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

During their most recent meeting, the Financial Stability Oversight Council revealed that the asset management sector remains an area of concern to the super-regulator. According to minutes of the November 2, 2015 meeting, the FSOC has identified six categories of potential risk arising from the asset management sector and is conducting ongoing analyses with an eye toward more regulation.

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