PIMCO exec: Rising inflation diminishes bond attraction | Sell-off hits corporate bonds as returns decline | Cunningham to be NYSE's first female president
May 22, 2018
SIFMA SmartBrief
News on the capital markets
Morning Bell
Cook: FINRA to have role in SEC best-interest rule oversight
Examinations by the Financial Industry Regulatory Authority will look at compliance if the Securities and Exchange Commission adopts a best-interest rule for broker-dealers, FINRA President and CEO Robert Cook says. "That said, it's not our rule, so exactly what the rule means and how it gets overseen is something we'll be working closely with the SEC on just as we do for other rules that we monitor for compliance," he says.
ThinkAdvisor (free registration) (5/21),  InvestmentNews (tiered subscription model) (5/21) 
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Complimentary Initial Margin Guide
Regardless of when you come into scope, preparation for initial margin should start now. Use triResolve's guide to discover if/when you're in scope, which counterparties you'll need to exchange IM with, how to calculate IM and how to ensure the process is operationally efficient. Download here.
Industry News
PIMCO exec: Rising inflation diminishes bond attraction
PIMCO executive Mihir Worah has told delegates at the Fixed Income Market Structure Seminar hosted by SIFMA that bonds have been a reliable hedge against volatility in the past nine years of low inflation, but now that the balance of risk is changing, their effectiveness as a hedge against stocks is waning. A number of advisors and planners have commented they are trimming their long positions in bonds.
ThinkAdvisor (free registration) (5/21) 
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Sell-off hits corporate bonds as returns decline
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.
BloombergQuint (India) (5/21) 
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Cunningham to be NYSE's first female president
Cunningham to be NYSE's first female president
Cunningham (Jewel Samad/AFP/Getty Images)
Stacey Cunningham will replace Thomas Farley as president of the New York Stock Exchange on Friday, a spokeswoman said. Cunningham, who serves as chief operating officer, will be the exchange's first female president.
Reuters (5/22),  The Wall Street Journal (tiered subscription model) (5/21),  Financial Times (subscription required) (5/22) 
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Sony subsidiary to pay $1.9B for 60.2% stake in EMI
Sony subsidiary to pay $1.9B for 60.2% stake in EMI
(David Becker/Getty Images)
Sony says subsidiary Sony Corporation of America has agreed to pay $1.9 billion for a 60.2% stake in EMI Music Publishing held by a consortium led by Abu Dhabi's Mubadala Investment. Sony also expects to pay $400 million to other entities with interests in EMI, giving Sony an indirect equity interest of approximately 90% if the transaction is finalized.
CNBC (5/21) 
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Interpreting Flows and Positioning Data
A low interest rate environment has resulted in more dollars chasing fewer returns, making market sentiment and positioning even more important. In a sea of information, finding and analyzing the right data can help optimize outcomes. Percentile ranking is one way that our Instinct Knowledge team summarizes data from over 5,000 clients worldwide, helping inform your decision-making.
Watch our Trader Insights video for the full story.
Washington Roundup
States bring wave of enforcement actions against ICOs
The North American Securities Administrators Association has completed a sweep of enforcement actions directed at initial coin offerings and other cryptocurrency transactions. "Operation Cryptosweep" included 35 ongoing or completed enforcement actions, as well as investigations and inquiries, the association says.
ThinkAdvisor (free registration) (5/21),  InvestmentNews (tiered subscription model) (5/21) 
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Asset Management Report
Hedge funds reduce net-long position on Brent as price rises
Data show hedge funds' net-long position on Brent crude -- which rose above $80 per barrel, a level not reached since 2014 -- declined for the fifth straight week for the week ended May 15. Meanwhile, hedge funds' net-long position for West Texas Intermediate crude experienced its biggest drop in six weeks as WTI and Brent are both up 18% so far in 2018.
BloombergQuint (India) (5/21) 
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Operations Update
Regions differ on expectations of AI adoption
A Northern Trust survey of the Asia-Pacific region reveals widespread expectations that use of artificial intelligence will become standard practice throughout the financial industry within five years. This contrasts with attitudes in Europe, where a SimCorp survey finds only 15% of investment chiefs at buy-side firms consider AI deployment a priority for 2018.
Global Investor (subscription required) (5/21) 
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Global update
China, US reportedly form draft deal to lift ZTE ban
Chinese and US negotiators have agreed on an outline of a compromise under which the US lifts a ban on domestic companies' sales to Chinese telecommunication firm ZTE, sources say. As an alternative, ZTE reportedly must revamp management and might have to pay large fines.
MarketWatch (5/22) 
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TOMORROW: Municipal Analyst Seminar on Updated Governmental Accounting Rules, May 23
SIFMA has partnered with the Municipal Analysts Group of New York (MAGNY) and GASB to provide an educational seminar, May 23 in NYC, on the rules updated for 2018 that state and local governments follow when accounting for and reporting their finances. Sessions include: the basics from the perspective of the financial statement analyst; how the accounting standards affect the information that analysts receive; and significant new changes to government financial reports.
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SIFMA Insights: RPA, Not Your Science Fiction Movie Robots
Robotics process automation (RPA) can be an improvement over more basic technologies but is not as advanced as artificial intelligence or machine learning. Indeed, RPA is making fintech solutions attainable for firms of all sizes and in a timely manner. Inside this note from SIFMA Insights, we analyze what RPA is and what it is not, and identify opportunities for RPA in financial services. With results from an anonymous survey of our members, this report was published as we gathered in Phoenix for SIFMA's 45th annual Operations Conference & Exhibition.
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