SIFMA is supportive of a consolidated audit trail surveillance system but has urged the Securities and Exchange Commission to drop the collection and use of personally identifiable information. As the system is currently designed, it would hold a great deal of sensitive PII needed to accomplish the goals of CAT, to which approximately 3,000 people would have access, presenting a tempting target for hackers and no clear plan to secure, says SIFMA President and CEO Kenneth E. Bentsen, Jr. SIFMA suggests the SEC would be better served by collecting less initial data and requesting additional data as needed. Read SIFMA's testimony on CAT implementation and cybersecurity protocols.
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If the top 12 banks improved their technology architecture, they could save up to $400 million a year and reduce the "derivatives-confirmation cycle from 28 to 7 days," according to a report from McKinsey & Co. The report notes that much of the savings could be achieved by "eliminating duplication, reducing programming time, and downsizing the infrastructure for applications and data centers."
Contract prices shot up more than 20% hours after Cboe Global Markets opened trading of bitcoin futures, triggering circuit breakers that temporarily shut down trading to manage volatility. Dealers say they were handling bigger volumes than expected.
A survey by Depository Trust & Clearing Corp. finds 15% of respondents see financial technology as a "significant source of risk" to financial stability. Cyberrisk is cited as the leading source of risk by 36% of respondents.
Quantitative Investment Management and Teza Capital Management, up 68% and more than 50% this year, respectively, have leveraged machine learning to become top-performing hedge funds, but struggles faced by The Voleon Group, up about 4.5% this year through October, show the strategy's difficulty. Finding an approach to machine learning that works with complex data presented by financial markets is challenging, experts say.
More commodity firms and traders, including BP, ABN AMRO, Mercuria Energy Group, Natixis and Trafigura, are adopting blockchain technology to increase efficiency, changing the way they do business. "Once you've established blockchain and it's working, you will see faster changes, because then the transformation of the value chain becomes an option," said Rabobank analyst Harry Smit.
The Federal Reserve has proposed changing annual stress tests to provide banks more information on how their portfolios might fare during market shocks. "This enhanced transparency will bolster the credibility of our stress tests and help the public better evaluate the results," said Randal Quarles, vice chairman for supervision.
The Federal Reserve has confirmed it will launch three market benchmarks to replace the US dollar London Interbank Offered Rate. The Secured Overnight Financing Rate, the Triparty General Collateral Rate and the Broad General Collateral Rate will launch during the second quarter.
The Basel Committee on Banking Supervision's latest revisions to the Basel III capital framework have met doubts from bankers, who say the changes do not help them accurately reassess capital requirements and depend excessively on national regulators' calculations. The committee's impact study on the operational-risk framework suggests capital requirements will fall by 30% on average, but independent projections show a wide variety that depends on the bank, ranging from a decrease of 66% to an increase of 222%.
Industry participants worry they will not be ready to implement the Securities and Exchange Commission's Rule 22e-4, which requires investment companies to assign assets to one of four liquidity buckets, by December 2018. "It comes down to data as the real pain point, in terms of figuring out the nitty-gritty details of what buckets what positions should be in," said Matt Grinnell of Fidessa.
As the industry continues to evolve, today's innovation is presenting new ways for firms to understand and interact with their customers, businesses, and the capital markets. Join SIFMA for the 45th annual Operations Conference and Exhibition on May 7-10, 2018, to explore key developments in the Consolidated Audit Trail (CAT), Data Protection, Cybersecurity, Operational Risk Management, Regulatory Priorities, Emerging Technologies including Distributed Ledger Technology, and more!
Developments in fintech are driving new efficiencies, enabling firms to streamline their operations, redefine their processes and transform the customer experience through innovation. According to PwC's 2017 Fintech Report, 82% of firms in the industry expect to increase fintech partnerships in the next three to five years to innovate and integrate emerging technology into a production system or process. A panel of experts at The Capital Markets Conference discussed the leaps in operational processes and what's next for blockchain, artificial intelligence and more.