Formal Regulatory Remedies - Center for the Study of Financial Market Evolution (CSFME)

Treasury Department Assesses Liquidity in Fixed Income Markets

by David Schwartz J.D. CPA | Thursday, May 26, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

On May 5, 2016, the Department of the Treasury kicked off a series of blog posts on the fixed income market intended to “share our perspective on the available data, discuss key structural and cyclical trends, and reiterate our policy priorities.” The posts are authored by a team of seasoned Treasury officials: James Clark, Deputy Assistant Secretary for Federal Finance; Chris Cameron, financial mathematician; and Gabriel Mann, policy advisor in the Office of Debt Management at the U.S. Treasury Department.

FSB Review Concludes that Taming of Shadow Banking is Far From Complete

by David Schwartz J.D. CPA | Wednesday, May 25, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

According to a peer review published the by Financial Stability Board (FSB) on May 25, 2016, regulation of shadow banking remains at an early stage, and much progress remains to be made. According to the report, notwithstanding the progress made, “more work is needed to ensure that jurisdictions can comprehensively assess and respond to potential shadow banking risks posed by non-bank financial entities, and support FSB risk assessments and policy discussion.”

Transfer Agent Regulation Poised to Step Into the 21st Century

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

On December 22, 2015, the Securities and Exchange Commission left a present in all our stockings with its publication of a 208-page advanced notice of proposed rule making and concept release on the regulation of transfer agents. Modernizing the aging rules for transfer agents has been rumored for awhile, but no doubt fell behind other priorities related to the financial crisis and Dodd-Frank mandates. Commissioner Luis Aguilar and now former Commissioner Daniel Gallagher have both been fairly vocal about the need for new transfer agency rules. Both would have preferred an actual rule proposal, but apparently will have to settle for an advanced notice/concept release at this stage.

Basel Chair Calls for More Research into Bank Risk Models

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

In his December 2, 2016 keynote speech at the second Conference on Banking Development, Stability and Sustainability, Basel Committee Chairman Stefan Ingves invited the financial industry and academics to help better calibrate capital and liquidity standards. As the Committee finalizes Basel III, Ingves said that he welcomes research and rigorous analysis of how the Committee should think about the capital benefits of allowing banks to use internally modeled approaches to calibrate appropriate capital floors.

BIS Publishes Survey on Integration of Regulatory Capital and Liquidity Instruments

by David Schwartz J.D. CPA | Sunday, May 15, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

In March 2016, the Bank for International Settlements (BIS) published a paper reviewing the current knowledge and empirical data on the effects of new bank capital and liquidity requirements. This literature review is comprised of three essays surveying the current body of research and empirical studies on liquidity and its interaction with capital and on other supervisory requirements.

FSOC Asks for Enhanced and Regular Data Collection for Securities Lending

by David Schwartz J.D. CPA | Wednesday, April 20, 2016 | All, Change Overview and Rationale, Formal Regulatory Remedies

In their April 16, 2016 report, Review of Asset Management Products and Activities, the Financial Stability Oversight Council (FSOC) requested that regulators make coordinated and permanent efforts to collect more data on securities lending. Noting that that current data collections do not provide regulators and policy makers with enough information to even know the size of the market for securities lending, the FSOC urged enhanced and regular data collection and reporting, as we all as interagency data sharing regarding securities lending activities.

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.

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Formal Regulatory Remedies