Change Overview and Rationale - Center for the Study of Financial Market Evolution (CSFME)

B of E Issues Consultation on Systemic Risk Buffer for Ring-Fenced Banks

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

On January 29, 2016, the Bank of England (B of E) issued a consultation paper laying out its proposed framework for the systemic risk buffer (SRB) to be applied to ring-fenced banks and large building societies holding more than £25 billion of retail and small and medium enterprise deposits. The proposals are intended to provide clarity to banks on how much capital they will be required to reserve in connection with the activities of their “ring-fenced” arms.

OFR Report Highlights Unintended Consequences of Swaps CCPs

by David Schwartz J.D. CPA | Wednesday, January 27, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

On January 27, 2016, the Office of Financial Research (OFR), an arm of the Treasury Department created under the Dodd-Frank Act, issued its fourth annual report to Congress. The report highlights the results of OFR research, risks to financial markets, and OFR priorities for the coming year. Notable among its findings, the report suggests that reforms mandating central counterparties in the formerly OTC swaps market could unintentionally increase systemic risk in the long run rather than reducing it.

US and EC Agree on a Common Approach to Trans-Atlantic CCPs

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

In a joint statement issued on February 10, 2016, the European Commission (EC) and the U.S. Commodity Futures Trading Commission (CFTC) announced agreement on a common approach regarding requirements for central clearing counterparties (CCPs). The agreement is the result of a multi-year analysis of differences between the CFTC and EU regulatory requirements. The accord commits the EC and CFTC to base regulations on international rather than parochial principles, and for both the CFTC and the European Commission Services to work together, along with counterparts across the global regulatory community, to develop further these principles and further harmonize the standards to which internationally active CCPs are held.

FINRA and SEC to Focus on Advisor Fees

by David Schwartz J.D. CPA | Tuesday, January 19, 2016 | All, Change Overview and Rationale, Disclosure Regimes, Formal Regulatory Remedies

Both FINRA and the Securities and Exchange Commission have indicated a renewed interest in the fees charged by investment advisors. In a May 2016 notice, FINRA announced a mutual fund fee waiver sweep intended to gather information regarding whether advisors had mechanisms in place to ensure that mutual fund investors are receiving promised fee waivers and reimbursements. The SEC’s investor advocate Rick A. Fleming announced in his annual report to Congress published on June 30 that improved disclosure of fees and expenses charged by financial advisers is a top priority for his office in the new fiscal year.

Pushback on SEC Liquidity Proposals

by David Schwartz J.D. CPA | Monday, January 18, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

The Securities and Exchange Commission’s September 2015 rule proposals addressing mutual fund liquidity issues have not been received with great enthusiasm by the fund industry. Some major players have made it quite clear in their comment letters that they feel the SEC has missed the mark with this proposal.

OCC Report Highlights Lingering Risks and Supervisory Priorities

by David Schwartz J.D. CPA | Tuesday, December 29, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

Strategic, underwriting, cybersecurity, compliance, and interest rate risks lead the Office of the Comptroller of the Currency’s (OCC) supervisory concerns in its Semiannual Risk Perspective for Fall 2015. Released December 17, 2015, the report “addresses key issues facing banks, focusing on those that pose threats to the safety and soundness of banks and their compliance with applicable laws and regulations.” The report notes among its conclusions that the risks associated with underwriting and cybersecurity are increasing, and while strategic, compliance, and interest rate risks remain stable, they too remain supervisory priorities for 2016.

Lawmakers Fail to Stop the DOL’s New Fiduciary Standard from Moving Forward

by David Schwartz J.D. CPA | Monday, December 21, 2015 | All, Change Overview and Rationale, Formal Regulatory Remedies

Foes of the DOL’s proposed fiduciary rule suffered a setback last week when the House of Representatives passed an omnibus spending bill omitting any measures that would have stalled, hindered, or killed the proposal. On the table during budget negotiations were riders and amendments to the bill that would have defunded the proposal, required a new comment period, or proposed an alternative standard altogether. The new standard’s proponents, including the DOL, SEC, and the Obama administration say that the rule proposal which would require brokers to put their clients’ interests ahead of their own in 401(k) and individual retirement accounts is vital to protecting workers saving for retirement from high-fee products that erode their savings.

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.

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.

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...

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Change Overview and Rationale