News
Proxy Advisers’ Influence on Say-on-Pay: Additional Data and Insights
Two new studies examine the influence proxy advisory services like ISS and Glass-Lewis have on the outcomes of proposals made to shareholders in firms’ annual proxies, particularly say-on-pay votes, which became mandatory for most public companies in 2011.
FSOC Taps a Novel Power to Tame Money Funds
“Both the President’s Working Group on Financial Markets and the Financial Stability Oversight Council have consistently called for the SEC to pursue additional reforms to address structural vulnerabilities in [money market funds], including unanimous recommendations in the [FSOC’s] 2011 and 2012 annual reports. The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the Council both the responsibility and the authority to take action to address risks to financial stability if an agency fails to do so. (emphasis added) Accordingly, I would like the [FSOC] to consider taking a series of steps to address this challenge.”
Global Derivatives Reforms. Getting it Right the First Time.
“[G]lobal interconnections within the swap markets require cross-border regulatory cooperation and harmonization, as no one national regulator is equipped with the resources necessary to regulate comprehensively every participant in its local market nor every market in which its local institutions participate. At the same time, these global interconnections increase the potential for conflicting national implementation of regulatory reform to have adverse effects on the markets and market participants, especially if applied extraterritorially.”
FSOC to Take the Lead on Money Market Fund Reforms
In light of the Securities and Exchange Commission’s inability to bring money market fund reforms to a vote, Treasury Secretary Timothy Geithner has announced that the Financial Stability Oversight Council will take the matter in hand. Specifically, Geithner announced in a September 27, 2012 letter that the FSOC will propose its own set of options for further money fund reform, which will be open for public comment.
More Securities Lending Could Be a Shot in the Arm for European ETFs
With 1,304 funds and €215 billion assets under management, Exchange Traded Funds (ETFs) listed in Europe are a major element of the European fund management industry. However, some feel that European ETFs are hindered by a lack of liquidity as compared to their counterparts in the US ETF market, and that European ETFs could be even more robust if they followed the US model of employing greater levels of securities finance and collateral management.
Should Other Countries Take the Volcker Rule Plunge First?
Rep. Peter King (R-NY), a member of the House Financial Services Committee, will soon introduce a bill to suspend enforcement of the Volker Rule until the Treasury Department can certify that other countries have adopted and are abiding by similar statutory restrictions on on proprietary trading and sponsoring hedge funds by financial institutions. The U.S. Financial Services Global Viability Act specifically targets the United Kingdom, France, Germany, Switzerland, Japan, Brazil, China, Canada, and Mexico as jurisdictions of concern.
UK Chancellor of the Exchequer Voices Concerns Over Volcker Rules
George Osborne, the UK’s Chancellor of the Exchequer, voiced concernsabout the potential negative effects the proposed Volker Rule provisions may have on the liquidity of global funding markets and particularly non-US sovereign debt markets. Osborne communicated these concerns via a January 23, 2012 letter to Fed Chairman Ben Bernanke.
Hedge Funds: “We’re not Shadow Banks”
In a May 16, 2012 letter to the European Commission, the Managed Fund Association (MFA), an association of hedge funds and managed future firms, shot back at the FSB’s April 2011 greenpaper/background note on shadow banking. In its response, MFA argues that it was a mistake to include hedge funds as part of the shadow banking system as the FSB has defined it.
GAO Wants Greater Transparency from the FSOC
In a recently concluded study, the US Government Accountability Office (GAO) says, among other things, that Financial Stability Oversight Council (FSOC) and Office of Financial Research (OFR) could benefit from more transparency.
SEC Chief Sees Reg Reform and Consumer Protection as One Goal
Despite the legislation’s two-part name, “The Wall Street Reform and Consumer Protection Act,” SEC Chairman Mary L. Schapiro understands financial regulatory reform and consumer protection to be one thing, not two separate goals. In her October 26, 2012 remarks at George Washington University, Chairman Schapiro states that she sees Dodd-Frank, though still a work in a progress, as founded on some very simple guiding principles that benefit all market participants in the long run and are the basis for both sound regulation and consumer protection. According to Schapiro, these principles are: