Banks are adding risk managers focused on nonfinancial risk related to technology and third-party management because such risk is getting more regulatory scrutiny. "The next big financial crisis is going to be some combination of nonfinancial risk," said Jason Forrester of Credit Suisse.
S&P Global Ratings, Moody's Investors Service and Fitch Ratings are considering whether a sharp rise in the bitcoin futures market could cause them to downgrade credit ratings of banks that clear bitcoin futures or that are members of a central counterparty exposed to bitcoin futures contracts.
Bloomberg has created the Gender-Equality Index to measure corporate efforts across sectors in adopting best practices for treatment of employees. The index covers 104 companies that participated in a voluntary survey.
The credit default swaps market is drawing scrutiny again as firms scramble to clean up contracts connected with a default by Hovnanian Enterprises, Mary Childs writes. "Maybe that's the punishment for practicing this vocation: CDS users are damned to endlessly edit contracts and launch updated protocols, an eternal loophole Whac-A-Mole," she writes.
Goldman Sachs has brought to NYSE Arca an exchange-traded fund designed to highlight companies with public-change initiatives, such as environmental projects. The Goldman Sachs JUST US Large Cap Equity ETF aims for performance similar to that of JUST Capital's US Large Cap Diversified Index.
The use of artificial intelligence in finance won't be restricted to the industry itself but is bound to eventually be employed by regulators as well, according to Giles Spungin, HSBC's global head of operational risk and regulatory compliance analytics. Assessing risk will be the focus, as suggested by the Bank of England's trial of an AI tool that analyzes transaction data quality as it pertains to the Sonia overnight rate.
Industry participants are debating who should oversee a data library for unique product identifiers. Responses to a Financial Stability Board consultation are split on whether incumbent market participants or a neutral body should control the derivatives data.
A lot is left to do by banks looking to digitize trade and finance units, according to the International Chamber of Commerce. The ICC report "Global Trade: Securing Future Growth" indicates that most financial institutions have yet to fully implement digital technology.
Research shows proprietary- and high-frequency-trading firms have not weakened US commodity futures markets, said Commodity Futures Trading Commission Chairman J. Christopher Giancarlo. Price fluctuations are caused by increased market volatility and other factors, rather than HFT activity, Giancarlo said.
A draft European Commission investment-firm regulation that is expected to be finalised by April might be difficult to "employ effectively in the way it is articulated", the commission's Hannes Huhtaniemi said. Huhtaniemi said the commission is aware of industry concerns and a need to address them.
Mary Schapiro, former chairwoman of the Securities and Exchange Commission, says it is time to revisit the Dodd-Frank Act with an eye toward unintended consequences. "When you do that massive a bill that quickly, there are going to be things that you just don't get right," Schapiro says.