Yellen to speak at Jackson Hole economic symposium | Capital benefits slow to come from margin rules | Prudential seeks SIFI absolution
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August 18, 2017
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Yellen to speak at Jackson Hole economic symposium
Yellen to speak at Jackson Hole economic symposium
Yellen (Mark Wilson/Getty Images)
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.
Bloomberg (8/17),  The Wall Street Journal (tiered subscription model) (8/17) 
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Industry News
Capital benefits slow to come from margin rules
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.
Risk (subscription required) (8/17) 
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Prudential seeks SIFI absolution
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.
Bloomberg (8/17) 
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Commentary: Libor should be amended, not scrapped
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.
Bloomberg Businessweek (tiered subscription model) (8/17) 
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Washington Roundup
Fed concerned about AI risk models
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.
Risk (subscription required) (8/17) 
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2 SEC lawyers face possible conflicts of interest
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.
Reuters (8/17) 
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Commentary: Regulators must address Treasury market issues
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.
Bloomberg View (8/17) 
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Wealth Management Report
Study: Fiduciary rule costing investors money
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.
BenefitsPro (8/16) 
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Survey shows advisors' top concern is market volatility
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.
PlanAdviser online (8/16) 
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Global Update
Mizuno warns market efficiency damaged by passive index-tracking popularity
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."
The Wall Street Journal (tiered subscription model) (8/17) 
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SIFMA News
C&L Annual Seminar: Mark Your Calendar to Join Us in Orlando -- March 18-21
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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SIFMA newsletters provide critical updates, expert research and meaningful insights on an array of capital markets issues. Stay informed with our flagship SIFMA Dashboard and Washington Weekly publications. Or choose targeted subscriptions to stay up-to-date on specific areas of interest, including our Asset Management Update, Derivatives Watch, Muni comMUNIcations, Private Client Today, Rates Update, Regional Firms Newsletter, Retirement & Savings Review, SIFMA Securitization Group (SSG) Update, STATE-news and more. Global publications include the GFMA LEI Update and GFMA Weekly. Subscribe today.
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