Federal Reserve Chair Janet Yellen is scheduled to deliver remarks on financial stability at the central bank's annual economic symposium in Jackson Hole, Wyo., on Aug. 25. She joins European Central Bank President Mario Draghi, who is not expected to discuss any shift in policy but could shed light on ECB views on inflation risk.
A requirement that dealers post initial margin for noncleared swaps has increased costs, but few are seeing capital benefits as updated models go unapproved, executives say. "My understanding is that no one has been able to model it properly and get the model approved by the regulators -- and no one is getting capital relief yet from the initial margin," said derivatives expert Jon Gregory.
Prudential Financial is preparing a plea to the Financial Stability Oversight Council to remove its designation as a systemically important financial institution. The move coincides with the Treasury Department's review of the designation process.
Amending the structure of the London Interbank Offered Rate, which is due for termination in 2021, might be simpler and cheaper than replacing it with an interest-rate benchmark that has yet to be established, Bloomberg columnist Mark Gilbert writes. He suggests adjusting Libor to embrace data from real-time transactions, such as bond-clearing prices, credit default swaps and commercial paper.
The Federal Reserve is asking banks to back off from depending on advanced machine learning to assess contagion risk, saying the result could be misleading. "If you apply machine learning to assess model risk, this algorithm is itself a model and you have to prove that it works," said Nikolai Kukharkin of UBS.
Steven Peikin and William Hinman, both lawyers appointed to senior positions at the Securities and Exchange Commission, have ties to and holdings in major corporations that could pose conflicts of interest, according to government documents. "Steve and Bill are subject to and complying with all applicable ethics laws, rules, and regulations, and both are working with the agency's ethics counsel as needed," SEC spokeswoman Judith Burns said.
The $19.8 trillion Treasury market plays a critical role in the financial system, making regulators' slow response to anomalies troubling, writes Antonio Weiss, a former Treasury Department official. Increased high-frequency trading in the secondary market warrants additional oversight to ensure financial stability, he writes.
Brokers have been forced to move 10.2 million accounts and $900 billion in assets from commission-based brokerage models to fee-based advisory accounts since the Department of Labor's fiduciary rule went into effect June 9, according to a Deloitte & Touche study commissioned by SIFMA. The move to advisory accounts will cost investors more money, the study found. Read the study.
The biggest worry for advisors today is managing market volatility, a survey by Eaton Vance found. Seventy-two percent of the advisors polled said the biggest source of market volatility for the remainder of 2017 will be the US political climate.
Amid concerns that over-investment in passive index-tracking could cause market dysfunction, Hiromichi Mizuno of Japan's Government Pension Investment Fund, the world's largest pension manager, is preparing to move more money to active managers. "So far it looks like the market system's working pretty well," countered Vanguard founder Jack Bogle. "When [passive] gets to 50% I might want to think about it a little more but I just don't see that the problem is even on the horizon."
SIFMA's C&L Annual Seminar is the premier event for compliance and legal professionals working in the financial services industry. 2018 is the 50th Anniversary of the Annual Seminar, and it has remained a constant voice through times of change -- convening industry leaders and regulators for three days of information sharing, collaboration and networking. Join us on March 18-21 at Grande Lakes in Orlando, Florida to hear from the industry's biggest names on topical issues critical to their job functions. With more than 65 CLE eligible break-out sessions, there is truly something for everyone. Registration opens on Sept. 27.
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