Appetite grows for Libor alternative SOFR | US bank could re-enter Chinese interest-rate swaps market | Dell revisits option for IPO
September 24, 2018
SIFMA SmartBrief
News on the capital markets
Morning Bell
Central banks unprepared for next downturn, BIS warns
Central bankers will be unable to head off another crisis in financial markets because they have exhausted the twin policy responses of quantitative easing and interest-rate reduction, says Claudio Borio, head of the Monetary and Economic Department at the Bank for International Settlements. Fallout is inevitable from turmoil in emerging markets, Borio says, and public anger about globalization has made a response difficult.
Bloomberg (tiered subscription model) (9/24) 
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Outlook 2018: What can investors expect?
With a new Federal Reserve chairman in office, a Republican Congress at the helm and the future of free trade agreements and healthcare up in the air, what can investors expect in 2018? Nomura Chief US Economist takes a look at some of the uncertainties around US policy that could impact markets, and offers an outlook on where inflation and interest rates are headed in 2018.
Industry News
Appetite grows for Libor alternative SOFR
Entities including government agencies, global institutions, banks and municipalities have issued more than $9 billion in debt tied to the Secured Overnight Financing Rate during the past two months, indicating increased adoption since the Libor alternative launched nearly six months ago. However, market participants say SOFR has progress to make, and concerns have been raised about volatility.
Bloomberg (tiered subscription model) (9/24) 
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US bank could re-enter Chinese interest-rate swaps market
The Commodity Futures Trading Commission's three-year exemption from registration as a derivatives clearing organization given to Shanghai Clearing House could prompt Bank of America Merrill Lynch to reappear in the Chinese market for interest-rate swaps.
Risk (subscription required) (9/23) 
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Dell revisits option for IPO
Dell Technologies is again considering an initial public offering, sources say. The company, which decided to forgo an IPO earlier this year, is changing its approach after a $21.7 billion offer to buy back tracking stock ran into opposition from activist investor Carl Icahn, Canyon Capital Advisors and Elliott Management.
Reuters (9/23) 
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Buyer Beware: Bank Loans
Investors have rushed into bank loans, hoping their adjustable coupons will protect them against rising rates. With credit assets looking expensive and the US in the late states of the credit cycle, we think now is a bad time to bet big on bank loans.
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Washington Roundup
Investors wary of more rate increases by Fed
Market participants expect a series of Federal Reserve interest-rate increases running into 2019, prompting concerns about the impact a tightening cycle might have on yields.
Financial Times (subscription required) (9/24) 
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LCH-Japan Securities Clearing swaps basis drops after Giancarlo speech
A drop in the basis between yen interest-rate swaps cleared at LCH and at Japan Securities Clearing to 4.13 basis points from 7.63 basis points is attributed to a Sept. 4 speech by Commodity Futures Trading Commission Chairman J. Christopher Giancarlo. Giancarlo indicated US clients would be allowed to clear swaps at non-US central counterparties that have "comparable, comprehensive supervision and regulation."
Risk (subscription required) (9/23) 
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SEC chairman says timing of Reg BI unknown
There's no deadline for completion of the Securities and Exchange Commission's proposed rule governing investment advice, Chairman Jay Clayton says. "It's not this month, probably not next month," he says of Regulation Best Interest.
InvestmentNews (tiered subscription model) (9/21) 
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China to cut trade barriers in response to US tariffs
Premier Li Keqiang says China will cut nontariff barriers to trade faced by foreign firms in response to US tariffs on an additional $200 billion in Chinese goods. His comments come as Asian manufacturers shift production from China amid fears US President Donald Trump will levy duties on a further $267 billion in Chinese imports.
City A.M. (London) (9/23) 
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SEC looks to ease accredited-investor limits
The Securities and Exchange Commission is considering changes to accredited-investor limits that could let more small investors take a stake in tech startups. However, a study by The Wall Street Journal shows the number of US households invested in private companies is already 10 times what it was when the SEC adjusted accredited-investor rules in the 1980s.
The Wall Street Journal (tiered subscription model) (9/23) 
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Lawmaker plans 3 bills on blockchain development
Rep. Tom Emmer, R-Minn., co-chairman of the Congressional Blockchain Caucus, says he will introduce three bills that call on the US to "prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth." The bills urge regulatory clarity and government support for the blockchain industry.
Bitcoin Magazine (9/22),  CoinDesk (UK) (9/23) 
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Asset Management Report
Operations Update
One Week Away! Kudlow, Cook, Schwab & More to Keynote SIFMA's Annual Meeting
SIFMA's Annual Meeting gathers the most influential voices shaping today's capital markets for candid one-on-one conversations, expert panel discussions and eight in-depth breakout sessions. View the full program and register today to join us Oct. 1-2 at the Mandarin Oriental, Washington D.C.
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State of the Capital Markets: A Snapshot
US capital markets are where investors, small and large, put capital to work to drive innovation, economic growth and job creation. Our markets have long funded the best ideas and enterprises, enabling businesses to grow, governments to invest in infrastructure, and individuals to save for retirement and education. While the US already had an extensive financial services' regulatory structure built up over a century, post-crisis regulations significantly added to the number of regulations. In this market snapshot, we review key market developments, statistics and the industry's commitment to smart regulation.
SIFMA (9/21) 
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