The Vatican has released a position paper that continues Pope Francis' criticism of the global economic system, calling credit default swaps "a ticking time bomb." "The spread of such a kind of contract without proper limits has encouraged the growth of a finance of chance and of gambling on the failure of others, which is unacceptable from the ethical point of view," the Vatican says.
A sell-off in corporate bonds has led to the third-worst 100-day returns since 2000 for US corporate debt, according to JPMorgan Chase data. However, JPMorgan strategists say results at year-end will not be as poor as those of the past 100 days because demand from pension funds and foreign investors for long-dated notes remains strong.
Changes in US tax law are leading to sales of corporate bonds by some of the biggest recent buyers. Cash-rich companies that had indulged in the market are now paring their bond holdings, according to Bank of America strategists.
Ten EU countries have proposed a financial transactions tax that could produce an estimated €19.6 billion in annual revenue, with derivatives accounting for more than half of that revenue that can be collected after Brexit. If a hard Brexit were to occur, collection would be a "more tricky enforcement issue," according to documents.
Lawyers are in the limelight due to their prominent role working for private equity firms and investment banks providing extensive documentation for European leveraged loans. At issue are aggressively structured deals and the ability of private equity firms to exert influence by selecting and paying for banks' lawyers.
The five regulators that oversee the Volcker rule could propose changes as soon as next week, sources say. Changes are expected to include elimination of a requirement that firms document hedges and related market positions.
The House is expected to vote today on Senate-approved legislation that would roll back certain Dodd-Frank Act regulations, reducing the number of banks subject to stress tests to 12. Small banks would see lower capital requirements and shorter required financial reports.
The Basel Committee on Banking Supervision's Fundamental Review of the Trading Book and other risk regulations are prompting banks to change their model of risk management, says Vinod Bhaskaran, global head of derivatives, risk and regulation at Finastra. "The banks that are ahead of the curve are utilizing the budget allocated for these regulations not just to achieve compliance but also to transform and streamline the bank and its operating model," he says.
The Federal Reserve will ask for public comment on whether it should revise guidance for living wills for major US banks and foreign-based banks that do business in the US, Vice Chairman for Supervision Randal Quarles said. The move is part of an initiative to improve cooperation among US and foreign regulators in the event an international bank fails, he said.
The IACPM thanks all of its members, sponsors and the many speakers who participated in the 2018 Annual Spring Conference in Amsterdam last week. They contributed to a very successful and informative meeting. Conference presentations will be posted to the IACPM website and all conference participants will receive an email containing the link to the presentations. For questions, please contact Juliane Littman at email@example.com.
The greatest of faults, I should say, is to be conscious of none.
Thomas Carlyle, philosopher and historian
The IACPM is an industry association established to further the practice of credit exposure management by providing an active forum for its member institutions to exchange ideas on topics of common interest. Learn more at