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

IOSCO Wants Feedback on Money Market Reforms

by David Schwartz J.D. CPA | Sunday, August 19, 2012 | All, Formal Regulatory Remedies

At the request of the Financial Stability Board, IOSCO has published a consultation paper on the potential regulatory reforms of money market funds. The purpose of the consultation paper is to share with market participants IOSCO’s preliminary analysis regarding the possible risks money market funds may pose to systemic stability, as well as possible policy options to address these risks. IOSCO is actively seeking feedback on this preliminary work, and commenters have the opportunity to shape IOSCO’s ultimate recommendations to the FSB.

EU OTC Derivatives Reforms Have Major Pension Players Worried

by David Schwartz J.D. CPA | Wednesday, August 15, 2012 | All, Formal Regulatory Remedies

In their joint response to the European Securities and Markets Authority (ESMA) draft technical standards for the regulation on OTC derivatives, the Dutch Pension Federation, APG, MN, PGGM, Shell and Syntrus Achmea Asset Management, major players in the Dutch pension industry, were highly critical of the proposals, and said they could do more harm than good. They note that the proposals have a high probability of increasing costs for pension funds and their administrators, costs that will ultimately be borne by pension beneficiaries. While ESMA has said that the proposals aim to reduce risks via the use of central clearing and risk mitigation techniques and increase confidence with respect to margins, the joint response from the Pension Federation says that they are not convinced that the increase of the confidence level with regard to the margin will automatically lead to more safety.

Momentum Builds But No Consensus on Money Fund Reforms

by David Schwartz J.D. CPA | Sunday, July 29, 2012 | All, Formal Regulatory Remedies

The need for further regulations governing money market funds was once again hotly debated at Senate Banking Committee hearings last week. At the hearings, Treasury Secretary Timothy Geithner reiterated his concerns that the 2010 money market reforms enacted by the SEC just do not go far enough, and doubled down on his commitment to see the SEC enact further measures, saying: “My own judgment is that the SEC needs to go further. They can go further. And we should get on with the business of letting them expose to the world, to the markets, a set of options that the world can comment on.” Senator Corker added that he believed that the Financial Stability Oversight Council (FSOC) could act if the SEC fails to move forward with further money market fund reforms.

Basel and IOSCO Float Margin Requirements for Non-centrally-cleared Derivatives

by David Schwartz J.D. CPA | Tuesday, July 24, 2012 | All, Change Overview and Rationale, Formal Regulatory Remedies

The Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) jointly have published a consultative paper on margin requirements for non-centrally-cleared derivatives. The paper presents the initial policy proposals emerging from the Basel Committee and IOSCO joint Working Group on Margining Requirements.

Is Money Market Fund Reform Just Regulatory Overkill?

by David Schwartz J.D. CPA | Sunday, July 22, 2012 | All, Change Overview and Rationale, Formal Regulatory Remedies

Already subject to a comprehensive regulatory regime, amendments in 2010 to the rules governing money market funds tightened regulation even further to make money funds more resilient to certain short-term market risks, and to provide greater protections for investors in a money market fund threatening to “break the buck.” More recently, however, Federal Reserve officials and some members of the Financial Stability Oversight Council have said money market funds are subject to runs, a source of systemic risk, and part of a shadow banking system that sorely needs even more regulation. In response, Melanie L. Fein, former senior legal counsel to the Board of Governors of the Federal Reserve System has published a paper describing why further changes to the money market regulatory regime are unwarranted overkill.

Effective Dates for OTC Derivatives Regulations on the Horizon

by David Schwartz J.D. CPA | Friday, July 20, 2012 | All, Formal Regulatory Remedies

Following the approval on July 11 by the Commodity Futures Trading Commission of the definitional rules for “swaps” and other derivatives products, and defining the “end user exemption,” the compliance dates for many of the CFTC’s implementing rules for the regulation of derivatives under the Dodd-Frank Act are becoming clearer.

CFTC Finalizes Swaps “End-User” Exemption

by David Schwartz J.D. CPA | Sunday, July 15, 2012 | All, Disclosure Regimes, Formal Regulatory Remedies

On July 11, the CFTC approved its much awaited final rule implementing the end-user exception from mandatory clearing of swaps. The new ruleslay out parameters of the end-user exception by (1) defining the term “hedging or mitigating commercial risk” and (2) establishing certain reporting requirements for end-users electing to make use of the end-user exception. In addition, these new rules finalize the definition of “swaps” and trigger compliance requirements under several major CFTC swap market regulations.

EU to Provide Hedging Exemption for OTC Derivatives

by David Schwartz J.D. CPA | Thursday, July 12, 2012 | All, Formal Regulatory Remedies

In his July 4 address before the Europlace Financial Forum, European Securities and Markets Authority (ESMA) chair, Steven Maijoor, announced that ESMA would be proposing standards implementing regulation of OTC derivatives, central counterparties and trade repositories (EMIR) by September 30. Maijoor said that these implementation standards will include an end-user exemption similar to the one expected to be in place under the Dodd-Frank Act.

UK’s Ring-Fenced Banks get OK to offer Hedge Services

by David Schwartz J.D. CPA | Tuesday, June 26, 2012 | All, Formal Regulatory Remedies

The UK’s Treasury has published a white paper setting out how the government intends to implement the recommendations of the Independent Commission on Banking (the Vickers Report). The paper offers further detail on plans to separate retail and investment banking through a “ring fencing” and increase competition in the UK banking sector. Further, the paper sets out proposals to make banks more resilient, as well as making them simpler to resolve in the event of failure.

Fed Goes “All In” on Basel III Standards, But Prefers a Phased Approach

by David Schwartz J.D. CPA | Sunday, June 24, 2012 | All, Formal Regulatory Remedies

The Board of Governors of the Federal Reserve System voted on June 7 to approve proposed rules intended to implement the regulatory capital standards promulgated under “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems.” These proposals are also intended to harmonize the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 with Basel III requirements. These proposals are a comprehensive set of three capital requirements that, if approved, would be applicable to all insured banks and thrifts, savings and loan holding companies, and bank holding companies with consolidated assets over $500 million.

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Formal Regulatory Remedies