Basel to standardize capital output floor | Fed minutes hint at asset reduction | Opinion: Changes to Labor's fiduciary rule must be driven by new information
May 26, 2017
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Basel to standardize capital output floor
The Basel Committee on Banking Supervision will set an aggregate floor on banks' internal regulatory capital models, instead of individual floors for certain risks, Secretary General William Coen says. This decision aims to allow banks more flexibility in modeling risks for each portfolio, although the final floor calibration has yet to be agreed and might be a source of contention.
Reuters (5/25),  Risk (subscription required) (5/25) 
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Industry Watch
Fed minutes hint at asset reduction
The Federal Open Market Committee has outlined a plan to reduce the Federal Reserve's $4.5 trillion balance sheet, including gradual tapering of mortgage-backed securities. JPMorgan Chase economist Michael Feroli says the process could start as early as September.
Reuters (5/25),  Financial Times (tiered subscription model) (5/25) 
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Opinion: Changes to Labor's fiduciary rule must be driven by new information
Labor Secretary R. Alexander Acosta cited the Administrative Procedure Act, which says that changes must be driven by new information, when he announced that the fiduciary rule would take effect June 9. "[T]he worry is that another delay without new information could invite lawsuits claiming that the agency is acting arbitrarily and thwart revisions," according to this opinion piece.
The Wall Street Journal (tiered subscription model) (5/24) 
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Hedge funds turn to Treasurys
Hedge funds are betting on US Treasurys as global volatility rises. The shift means bonds are coming back into favor.
Bloomberg Professional Services (5/24) 
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Wells Fargo fills rivals' signing-bonus void
Wells Fargo Advisors is increasing spending on signing bonuses to attract veteran brokers, while UBS, Merrill Lynch and Morgan Stanley are cutting recruitment budgets. Wells Fargo's adviser head count dropped 3% in the first quarter.
InvestmentNews (tiered subscription model) (5/25),  The Wall Street Journal (tiered subscription model) (5/25) 
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Outlook brightens for Chinese bond market
The addition of Chinese bonds to Bloomberg indexes and the planned addition by Citigroup bode well for China's bond market. Foreign ownership of Chinese bonds fell last year.
Bloomberg Professional Services (5/24) 
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Retirement Security
Researchers explore ways to boost Social Security funds
Social Security check
(William Thomas Cain/Getty Images)
Social Security faces an increasing burden as the baby boom generation enters retirement, prompting the Center for Retirement Research at Boston College to explore ways the program could bolster its funds, other than by cutting benefits or raising taxes. Researchers say that although investing in equities as well as bonds carries a degree of risk, it could improve the health of the trust fund.
BenefitsPro (5/24) 
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Technology in the Financial Industry
Algorithms drive BlackRock's ad campaign
BlackRock is using algorithms to maximize the effectiveness of its advertising campaigns, determining which of its exchange-traded funds to advertise based on sentiment analysis of social media messages. One hurdle the strategy presents is balancing targeted advertising with client privacy.
The Wall Street Journal (tiered subscription model) (5/25) 
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Single bitcoin worth nearly double an ounce of gold
A single bitcoin is priced at about $2,450, nearly twice as much as an ounce of gold, as the cryptocurrency frenzy continues. The situation is prompting concerns about a possible bitcoin bubble.
Bloomberg (5/25) 
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Editor's Note
SmartBrief will not publish Monday
In observance of Memorial Day in the US, SmartBrief will not publish Monday. Publication will resume Tuesday.
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The real fountain of youth is hidden in the imagination you draw upon to face everyday challenges.
Sophia Loren,
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