Morning Bell

• Opinion: Calif. municipalities right to reject eminent-domain plan
  Politicians in San Bernardino County in California and two of its cities rejected a plan to use eminent domain to seize troubled mortgages. The decision should be applauded, according to this opinion piece, and policymakers in Washington, D.C., should take note. Learn more at SIFMA's Eminent Domain Resource Center. The Wall Street Journal (1/25)     

Industry News

• Ahead of LEI May 1 implementation, some need more prep time
  If asset managers don't have legal-entity identifiers by May 1, they may see bank counterparties shut down their access to derivatives trading to avoid potential enforcement action by the Commodity Futures Trading Commission. Getting the LEIs has proved difficult so far, stymied by technical glitches. International Financing Review (free content) (1/26)     

• Questions remain about CoCo bonds, experts say
  Experts are warning that the mechanism behind contingent-capital instruments continues to prompt questions, but investor appetite is growing. "What would be easiest, globally, is if we had one type of security and if everybody knew how it was structured, how it was going to trade and who was going to buy it," said Thomas Humphreys, a partner at Morrison & Foerster. Risk.net (subscription required) (1/25)     

• BATS says it miscalculated error estimate
  BATS Global Markets revised down an estimate of processing more than 400,000 trades in error over four years. The company says only 12,000 trades violated the best-quoted price, and the total damage was less than $17,000. Financial Times (tiered subscription model) (1/25), The Wall Street Journal (1/25)     

• UBS chairman reportedly calls for industrywide Libor settlement
  Reuters (1/25)     

Washington Roundup

• SEC targets weak trading controls, Khuzami says
  The Securities and Exchange Commission is "very focused" on ensuring that exchanges and traders that experience system or programming failure suffer consequences, Enforcement Director Robert Khuzami says. "You are going to see a variety of cases in this area," said Khuzami, who is poised to leave the agency soon. "It may not be an intent-based violation, but the consequences are real and harmful in terms of investor losses and market impact." Bloomberg Businessweek (1/25)     

• Basel Committee prepares to reveal capital-modelling results
  The Basel Committee on Banking Supervision's study of risk-weighted assets will reveal large differences in how banks compute capital requirements, sources say. The results could lead to stricter rules to unify such assets. Risk.net (subscription required) (1/25)     

• Derivatives margin standards remain up in the air
  With large issues unresolved on collateral requirements for derivatives, a joint group of the International Organization of Securities Commissions and the Basel Committee on Banking Supervision might be going back to the drawing board. A fresh proposal reportedly would include a phase-in period to ease a possible collateral crunch as a response to concerns that an immediate collateral increase would strangle the fragile economic recovery. Risk.net (subscription required) (1/25)     

• Money fund managers look for exemptions
  Fidelity Investments, Charles Schwab and Vanguard Group are no longer fighting regulators' efforts to rework rules. Instead they have regrouped around gaining exemptions for retail-oriented funds. According to industry studies, prime institutional funds faced the investor run in 2008 that sparked the need for regulation, and the managers are campaigning for regulators to focus new rules on those funds only. Bloomberg (1/28)     

• Editorial: Regulators must quantify rules changes
  As the Dodd-Frank Act stands, regulators must consider but not calculate the effect their new rules will have, and that sets the bar too low, write Bloomberg's editors. Regulators should be forced to project with as much specificity as possible the costs and benefits of new rules they write. Bloomberg (1/27)     

• Rep. Braley, D-Iowa, considers Senate run
  The Des Moines Register (Iowa) (tiered subscription model) (1/27)     

• Several Republicans weigh run for Georgia Senate seat
  The Washington Post/The Associated Press (1/25)     

Operations Update

• Electronic trading once again depends on people
  Slower trading volume means floor traders have been seeing their importance rise as their ability to execute trades in thinner markets adds value to computer programs. With less automatic matching, electronic traders are sending orders they once handled themselves to their counterparts on the trading floor to trade otherwise unmovable shares. The Wall Street Journal (1/29)     

Are you prepared for the Invisible Opportunity? Read our new white paper, "Women and Wealth: The Invisible Opportunity" to learn more about engaging women investors and earning their trust. First Clearing, LLC is a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. This material is for broker-dealer and financial professional use only. First Clearing does not provide services to the general public. 1112-04385

Hot Topics

Top five news stories selected by SIFMA SmartBrief readers in the past week.

• Post-trade tensions in securities are expected to mount (The Trade News (U.K.))

• SEC bars Egan-Jones from rating certain bonds (Bloomberg)

• Obama taps former federal prosecutor to lead SEC (The New York Times (tiered subscription model))

• Mapping the economy as Obama begins his second term (SmartBrief/SmartBlog on Finance)

• Banks continue to move toward electronic bond trading systems (The Economist (tiered subscription model))

• Results based on number of times each story was clicked by readers.

SIFMA News

• Spring events are here!
  SIFMA has a spring lineup of conferences for every financial services professional. There is still time to register for this week's new FINRA Communications Rule Seminar, which brings together leading industry experts to explore changes to FINRA's communication rules, which become effective Feb. 4. Stay compliant by registering for SIFMA's Anti-Money Laundering and Financial Crimes Conference, which will feature exclusive presentations from newly appointed Jennifer Shasky Calvery, director of FinCEN, and Adam Szubin, director of OFAC. The West Coast SIFMA Social Media Seminar will use illuminating discussions from the 2011 and 2012 seminars in New York as a launching pad and bring together experts across multiple fields to further explore the increasingly important issues our industry faces in light of the rapidly changing and growing tools of social media.     

• SIFMA welcomes 7 new members to the association
  SIFMA brings together and represents the shared interests of hundreds of securities firms, banks, asset managers and key industry partners. SIFMA is pleased to welcome our newest Full Members to the Association: Dorn & Company, Inc., Electronic Transaction Clearing, Inc., Latour Trading LLC, Neuberger Berman LLC, and Symetra Investment Services, Inc. SIFMA's Board of Directors also welcomes our newest Associate Members, Build America Mutual Assurance Company and DIVER by Lumesis, Inc. SIFMA members have discounted access to SIFMA Events and to special online content, services and advocacy. Is your firm part of SIFMA? Check out our Member Directory to find out. Not a member? Find out how to join.     

• Check out the handy SIFMA Dashboard

• Early-bird rates end Feb.1 -- register now for SIFMA C&L Society Annual Seminar

SmartQuote

If fate means you to lose, give him a good fight anyhow." --William McFee, British-American writer