G-20 renews commitment to Basel III | New breed of MBS comes to market | Deutsche Bank, Goldman take different approaches to settlement
March 21, 2017
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G-20 renews commitment to Basel III
The Group of 20 leading economies has stressed its commitment to the Basel III capital framework despite the US administration's known preference for a loosening of regulations. The announcement has eased concerns that the US might be more forceful in opposing Basel III, thus provoking a possible conflict with European regulators.
Reuters (3/18),  Bloomberg (3/18),  Politico Pro (subscription required) (3/18),  Reuters (3/19) 
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New breed of MBS comes to market
Angel Oak Capital Advisors has unveiled its first rated securitization of nonagency residential mortgages, which Fitch Ratings and DBRS have rated AAA. The release represents a fresh breed of mortgage-backed securities, which differ significantly from predecessors because underlying loans are fully underwritten and documented, with substantial down payments required.
CNBC (3/20) 
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Deutsche Bank, Goldman take different approaches to settlement
Deutsche Bank is offering attractively priced loans to help investors buy soured mortgages to meet the terms of the lender's $7.2 billion mortgage settlement with the US government, sources said. Goldman Sachs Group, however, is seeking to meet the obligation by purchasing soured mortgages to modify them.
The Wall Street Journal (tiered subscription model) (3/17) 
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Regulatory change dampens appeal of prime, muni funds
Changes to rules governing money market mutual funds have touched off a flight to government funds as prime and municipal funds implement fees for redemptions during economic shocks. Data show investors tend to use the same fund family, even when shifting into government funds.
Liberty Street Economics (Federal Reserve Bank of New York) (3/20) 
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Bloomberg Insights
Compliance increasingly relies on data management
Regulators are increasingly requiring financial institutions to affirm the reliability of risk models, valuation and pricing. The requirement puts data management front and center.
Bloomberg for Enterprise (3/15) 
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Data remain sticking point in MiFID II rollout
Data are critical for firms to implement Europe's revised Markets in Financial Instruments Directive. Some are calling for the European Securities and Markets Authority and national competent authorities to make source data available as market participants prepare for a January deadline.
Bloomberg for Enterprise (3/20) 
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Currency strategies fall short
Currency traders have had a rough 2017, despite the energy President Donald Trump's election has given the stock market. A lack of clarity on Trump's policies has hurt the US dollar.
Bloomberg Professional (3/20) 
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Trading Trends
Proliferation dulls edge of quant trading
Reliable algorithmic-trading strategies are getting harder to maintain as more traders access advanced quant techniques, according to research by Bank of America. The volume of code required to stay ahead is expanding.
Bloomberg (3/20) 
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Report: HFT has changed Wall Street forever
Since the financial crisis, high-frequency trading has helped connect buyers and sellers, and total US volumes "are more than double what they were in the pre-crisis, largely pre-HFT years," according to a Credit Suisse report. Despite new and proposed regulations, the report says HFT will remain a driving force.
Barron's (free content) (3/16),  MarketWatch (3/17) 
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Hedge fund shutdowns accelerated last year
Hedge funds closed in 2016 at the fastest rate since 2008, according to data from Hedge Fund Research. Fund liquidations totaled 1,057 last year, the biggest number since 2008 when 1,471 hedge funds shut down.
Pensions & Investments (free access for SmartBrief readers) (3/17) 
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Operational Efficiencies
Analysis: Technology is changing markets
Automated trade technology is fundamentally altering markets in five distinct ways, such as leading to "flash crashes" and odd correlations.
Financial Times (tiered subscription model) (3/17) 
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Giancarlo: Blockchain could help run derivatives data repositories
Blockchain technology could solve the challenges that confront creating global repositories for derivatives data, said J. Christopher Giancarlo of the Commodity Futures Trading Commission. Piecing together the data to allow regulators to see companies' risk exposure is "an almost herculean task," but a distributed-ledger approach could make the long-sought-after goal a reality, he said at a conference in Washington, DC.
MLex (subscription required) (3/17) 
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ECB watches as banks move to cloud technology
A European Central Bank official has said it is closely monitoring the use of cloud technology, which banks are adopting increasingly in their efforts to cut operational costs. The official said the ECB does not object to outsourcing in principle, but a balance must be found between cost-cutting opportunities and risks.
Bloomberg (3/19) 
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Regulatory Review
ECB calls for major push to resolve unpaid loans
The European Central Bank has issued guidelines on non-performing loans and called on banks to make concerted efforts to reduce them. A statement on its website says banks with large NPL volumes are required to submit "ambitious and realistic" plans on how they will comply with the guidelines.
Reuters (3/20),  Politico Pro (subscription required) (3/20) 
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Proposed US fintech bank-charter rules made public
The Office of the Comptroller of the Currency has released draft rules for a new kind of bank charter for financial-technology companies. The draft supplement to the regulator's licensing manual states that firms granted the fintech charters must comply with all the requirements that apply to conventional banks.
The National Law Journal (free content) (3/16) 
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Research & Analysis
Book chronicles Libor scandal
Disgraced UBS and Citigroup trader Tom Hayes became the face of the scandal involving manipulation of the London Interbank Offered Rate. The book "The Spider Network" tells the story of the scandal.
The Wall Street Journal (tiered subscription model) (3/17) 
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Economic recovery ready for higher gear
Economic models predict low risk of recession in developed economies, as the US and other advanced economies appear poised for expansion after a slow-growth recovery.
Financial Times (tiered subscription model) (3/19) 
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