In a November 22, 2013 address before the Americans for Financial Reform and Economic Policy Institute Conference, Federal Reserve Board Governor Daniel K. Tarullo outlined a potential regulatory initiative to limit short-term wholesale funding risks.
The Economist reports that Mediobanca, an Italian investment bank formed in 1946 assist in the reconstruction of Italian industry, has commenced a planned sell-off of $2.2 billion in equity holdings as part of an effort to refocus the firm on its core mission of providing medium-term financing in the Italian sector. Mediobanca’s sales of these shares as part of its unwinding of webs of cross-shareholdings and pacts among big shareholders, as well as the privatization of Fincantieri and Poste Itliane, have released large volumes of shares on to the markets, allowing institutional and other investors to add them to their portfolios. This sudden flow of Italian equities in to the hands of new investors has, it seems, increased participation in corporate governance.
In the hands of new investors, these equities that were previously locked up in voting trusts or held by the government seem to have fueled a renewed interest in participation in the governance of Italian firms.
In a May 29, 2014 white paper, Blackrock responded strongly to the Financial Stability Oversight Council’s (FSOC) 2014 Annual Report which raised concerns about asset managers and securities lending. In particular, Blackrock’s paper takes issue with FSOC’s assertion that indemnity provided to lending clients by asset managers acting as securities lending agents created extra risk because asset managers do not face the same capital and liquidity requirements as their bank counterparts.
The Staff of the Federal Reserve Bank of New York has published a “A Primer on the GCF Repo® Service,” the overall goal of which is to to quantify to what extent dealers pursue various strategies trading GCF Repo.
On March 28, 2014, the International Corporate Governance Network (ICGN), an investor-led organization of governance professionals interested in international corporate governance practices, published its a proposed draft revision to its Global Governance Principles.
The US Financial Stability Oversight Council has published its 2014 Annual Report which highlights, among other things, the activities of the Council, significant financial market and regulatory developments, an assessment of those developments on the stability of the financial system, and potential emerging threats to the financial stability of the United States.
On November 12 2014, the UK’s Financial Conduct Authority issued Final Notices collectively imposing record fines totaling $1.7 billion on five global banking firms for alleged rigging of the FX market. The FCA found that the banks engaged in widespread conduct that put the banks’ interests ahead of those of their clients and other market participants.
The September 2013 Office of Financial Research (OFR) report entitled “Asset Management and Financial Stability” attempts to present a critical analysis of how asset management firms and the activities in which they engage can introduce vulnerabilities that could pose, amplify, or transmit threats to financial stability.
U.S. District Court Judge Naomi Reice Buchwald has ruled against a group of plaintiffs seeking to use the Sherman Antitrust Act to punish rate-setting banks for manipulating LIBOR. Although some of the defendant banks on the London Interbank Offered Rate panel have admitted colluding to fix the LIBOR rate, Judge Buchwald held that the harm caused by this collusion was not a result of anti-trust activities prohibited by the Sherman Act.
In a strong defense of the stability and safety of the asset management industry, Investment Company Institute President and CEO Paul Schott Stevens told the Mutual Fund and Investment Management Conference that not only are asset managers and the funds that they offer not sources of risk to the overall financial system, but some misguided efforts to regulate them as such may do vastly more harm than good.