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

ESMA Issues a Q&A on UCITS and ETF’s, But Sec Lending Questions Remain

by David Schwartz J.D. CPA | Thursday, December 19, 2013 | All, Formal Regulatory Remedies

Based on the European Securities and Markets Authority’s (ESMA’s) UCITS guidelines, which became effective in February, it was initially feared that asset managers would be required to return all revenues from securities lending to investors. Responding to these and other concerns about its UCITS and ETF guidance, ESMA issued a “frequently asked questions” document on April 12. These new answers, however, did not answer fully the concerns raised about securities lending, and left serious gaps in how the new guidelines are to be applied.

Are Money Market Funds the Banking System’s Achilles Heel?

by David Schwartz J.D. CPA | Thursday, December 19, 2013 | All, Change Overview and Rationale

The systematic effect of money market funds on the wider financial system is a topic of hot debate, with finance ministers, regulators, and standard setting bodies all over the globe weighing in. The New York Federal Reserve Bank is the latest to do so, asking “does money market fund intermediation make the banking system inherently unstable?”

New Multi-Agency Volker Rules Receive Mixed Reactions

by David Schwartz J.D. CPA | Thursday, December 12, 2013 | All, Formal Regulatory Remedies

On December 10, 2013, five federal agencies issued final rules developed jointly to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”). The final Volker Rules prohibit FDIC insured depository institutions and companies affiliated with insured depository institutions from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account.

Global Bank Supervisors Call for Uniform Derivatives Contract Language

by David Schwartz J.D. CPA | Tuesday, November 26, 2013 | All, Procedural Changes

In a joint letter issued on November 5th, the FDIC, Bank of England, German Federal Financial Supervisory Authority, and Swiss Financial Market Supervisory Authority requested that the International Swaps and Derivatives Association adopt language in derivatives contracts to delay the early termination of those instruments in the event of the resolution of a global systemically important financial institution.

Specifically, the four resolution authorities are concerned with the cascading effects these derivatives contract termination rights and other remedies may have in the event of the insolvency of a major global counterparty.

FSB Launches Second Phase of Its Securities Lending and Repo Study

by David Schwartz J.D. CPA | Tuesday, November 19, 2013 | All, Change Overview and Rationale

On November 5, 2013, the Financial Stability Board (FSB) launched the second stage of its two-stage quantitative impact study on the proposed regulatory framework for securities financing transactions. As you may recall, on August 29, 2013, the FSB published the results of the first stage of its look into securities finance.

UK Appeals Court Green Lights Two Important LIBOR-Related Cases

by David Schwartz J.D. CPA | Monday, November 18, 2013 | All

On November 8, 2013, a three-judge panel of the UK Court of Appeals handed down a much awaited ruling in two LIBOR-related cases. The ruling allows plaintiffs in two cases involving interest rate swap transactions referencing LIBOR to amend their claims to allege that the defendant banks made implied representations that their participation in setting the LIBOR rate was honest.

A Resilient UK Financial Sector Requires a Global Focus

by David Schwartz J.D. CPA | Wednesday, October 30, 2013 | All, Change Overview and Rationale, Formal Regulatory Remedies

R]eforms of domestic banking are far from sufficient for a global hub like London. Now is the time for a greater focus on what’s needed for resilient international banking and robust global markets.

Finadium: Collateralized Commercial Paper an “Elegant” Alternative to Repo

by David Schwartz J.D. CPA | Thursday, October 24, 2013 | All, Change Overview and Rationale

Is collateralized commercial paper (CCP) the the new “killer app” for liquidity? Finadium, a leading specialist research and advisory firm in the securities and investments industry, has published a a research report, “Collateralized Commercial Paper: Regulatory Arbitrage or Elegant Solution?” exploring whether innovative forms of CCP may at least in the short term take the place of repo.

In With the New: Federal Reserve and OCC Issue Final Risk-Based and Leverage Capital Rules

by David Schwartz J.D. CPA | Tuesday, October 22, 2013 | All, Change Overview and Rationale, Formal Regulatory Remedies

The Office of the Comptroller of the Currency (OCC) and Board of Governors of the Federal Reserve System (Fed) published final rules in the Federal Register on October 11, 2013 revising risk-based and leverage capital requirements for banking organizations and replacing existing interim rules.

BIS Issues Final Margin Requirements for Non-centrally Cleared Derivatives

by David Schwartz J.D. CPA | Saturday, October 19, 2013 | All, Change Overview and Rationale, Formal Regulatory Remedies

The Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO) have published their final framework for margin requirements for non-centrally cleared derivatives. The document sets forth globally agreed standards for all financial firms and systemically important non-financial entities that engage in non-centrally cleared derivatives.

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