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October 9, 2012
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News on the capital markets, securities and financial industry

  Morning Bell 
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  Industry News 
  • Global default rate on high-yield debt rises, Moody's says
    Moody's Investors Service said the global default rate on speculative-grade debt increased to 3% in September. Though the rate climbed only 0.1 percentage point, it reached its highest level in nearly two years. Still, the rate was less than the historical average of 4.8%, based on data dating to 1983. Bloomberg Businessweek (10/8) LinkedInFacebookTwitterEmail this Story
  • Study finds high-frequency trading is vital to market makers
    Research from the Stockholm University School of Business indicates that reining in high-frequency trading, as the Markets in Financial Instruments Directive II would do, would harm market makers. High-frequency trading provides liquidity and stabilizes markets, the report says. MiFID II is on track to be implemented beginning in 2014. The Trade News (U.K.) (10/8) LinkedInFacebookTwitterEmail this Story
  • Smaller core group of banks is setting Libor
    A smaller group of banks, including Bank of America, Lloyds Banking Group and Citigroup, is setting the London Interbank Offered Rate after the benchmark was manipulated. "You have a core group setting the rate, and that's a major concern," said Bret Barker of TCW Group. "It's going to be very tough to fix that and very tough to replace Libor." Bloomberg (10/8) LinkedInFacebookTwitterEmail this Story
  • Other News
  Washington Roundup 
  • FINRA's attempts to become adviser SRO questioned
    Daniel Gallagher, a member of the Securities and Exchange Commission, raised questions about whether the Financial Industry Regulatory Authority should be attempting to become the self-regulatory organization for investment advisers. "Is FINRA becoming a 'deputy SEC'?" Gallagher asked at a SIFMA conference. "With all of the issues facing the broker-dealer industry it was created to oversee, should FINRA be seeking to branch out into entirely new fields of responsibility, such as regulating investment advisors? Is 'mission creep' affecting FINRA's ability to perform its core duties?" AdvisorOne (10/8) LinkedInFacebookTwitterEmail this Story
  • SEC's Berman raises concerns about "kill switch" model
    Regulators, market participants and other experts are debating the idea of implementing a "kill switch" in an effort to contain technical glitches and other issues. However, the Securities and Exchange Commission is leery of implementing a blanket rule. "This is not going to address the little blips that come up," said Gregg Berman of the SEC. "We are all realizing that the one-size-fits-all rule was questionable." International Financial Law Review online (10/8) LinkedInFacebookTwitterEmail this Story
  • FINRA scrutinizes non-traded REITs
    A number of "red flags" have been raised in the past two years over non-traded real estate investment trusts and how they're sold, says Susan Axelrod, executive vice president of member regulation sales practices at the Financial Industry Regulatory Authority, which is looking into the situation. "In several instances, FINRA examiners have found that firms selling these products failed to conduct reasonable diligence before selling a product and failed to make a determination that the product was suitable for investors," Axelrod said at SIFMA's Complex Products Forum. InvestmentNews (free registration) (10/7) LinkedInFacebookTwitterEmail this Story
  • Some nations are expected to miss Basel III deadline
    Although progress is being made on Basel III implementation, a January deadline likely will be missed by some nations, including the U.S. and some in the EU, according to a report by the Basel Committee on Banking Supervision. Lawmakers are particularly challenged by requirements to triple core capital at banks. Bloomberg (10/8), Reuters (10/8) LinkedInFacebookTwitterEmail this Story
  • Analysis: Obama likely will choose familiar name for Fed chair
    Ben Bernanke's term as chairman of the Federal Reserve expires in January 2014, but the candidate to fill the next term needs to be decided soon after the swearing in of the president in January 2013. The Washington Post looks at whom President Barack Obama might choose if he retains the White House. Among the possibilities are Bernanke himself, former Treasury Secretary Larry Summers, current Treasury Secretary Timothy Geithner and Fed Vice Chairwoman Janet Yellen. The Washington Post (10/8) LinkedInFacebookTwitterEmail this Story
  SIFMA News 
  • SIFMA Cybersecurity Symposium Highlights now available!
    SIFMA, Sidley Austin LLP, and IBM partnered to bring together leading industry professionals, law enforcement officials, federal regulators, and other experts to address crucial cybersecurity issues. During the half-day Cybersecurity Symposium, Suzanne E. Spaulding, Deputy Under Secretary, National Protection and Programs Directorate, U.S. Department of Homeland Security emphasized government's efforts to collaborate with the industry to make policies that are effective and efficient. Panels provided insight into the challenges posed by the evolving cybersecurity landscape and how firms can prepare for the coming changes in the regulatory environment and further protect their systems and data. LinkedInFacebookTwitterEmail this Story
  • Diversity & Inclusion Conference -- Oct. 25 -- New York City
    SIFMA is proud to present the 2012 Diversity Conference on Oct. 25 at the SIFMA Conference Center in New York City. This year's conference, "What's Next: Taking Inclusion to the Next Level in the Securities Industry," will include new regulatory information on Dodd-Frank Section 342 as well as diversity best practices from SIFMA member firms. Speakers include: Karen Sumberg, Executive Vice President, Center for Talent and Innovation; Damon Phillips, Professor, Columbia Business School; Carla Harris, Managing Director, Emerging Managers Program, Morgan Stanley; and many more. We invite all levels of business professionals to this momentous event! LinkedInFacebookTwitterEmail this Story
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If it's very painful for you to criticize your friends -- you're safe in doing it. But if you take the slightest pleasure in it, that's the time to hold your tongue."
--Alice Duer Miller,
American writer and poet

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