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April 17, 2012
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  Credit Markets 
  • Balance-sheet repair is crucial, BIS official says
    Claudio Borio, deputy chief economist at the Bank for International Settlements, said balance sheets must be repaired to better handle downturns. "Balance-sheet repair lays the groundwork for a self-sustaining recovery," Borio said. "Traditional monetary and fiscal policies need reconsideration. The key point is that room for policy maneuvering is greatly constrained." The Wall Street Journal/Dow Jones Newswires (4/11) LinkedInFacebookTwitterEmail this Story
  • BlackRock plans to launch bond-trading platform
    BlackRock plans to open its Aladdin Trading Network this year, a platform on which the largest money managers could bypass Wall Street and trade bonds with one another directly. BlackRock says it's a way to save investors money, but investment bankers worry it will hurt their revenues, which are already getting squeezed by a lukewarm economy and looming regulations. The Wall Street Journal (4/12), Financial Times (tiered subscription model) (4/12) LinkedInFacebookTwitterEmail this Story
  • Latest risk to financial stability: Dearth of safe assets
    The International Monetary Fund has expressed its concern the world's financial stability is at stake because of the "scramble" for a shrinking supply of safe assets, which could result in "more short-term volatility jumps, herding behavior and runs on sovereign debt." The reduction in the number of nations whose sovereign debt is considered safe could cause $9 trillion, about 16% of the total, to be removed from the pool of safe assets by 2016. The Guardian (London) (4/11) LinkedInFacebookTwitterEmail this Story
  • Fund manager develops strategy for minimizing counterparty risk
    Scottish Widows Investment Partnership aims to reduce counterparty risk in the over-the-counter derivatives market as regulatory change looms. "We have bolstered a number of areas related to how we trade OTC derivatives," said Investment Director Terence Nahar. "These include revising our process on monitoring exposures across the counterparties we deal with, reviewing the dealing capabilities of the firms we have trading relationships with and ensuring we can deliver consistent best execution to our clients across both bilateral and centrally cleared instruments." The Trade News (U.K.) (4/13) LinkedInFacebookTwitterEmail this Story
  • Other News
  Regulatory and Accounting Issues 
  • EBF: Regulatory differences may cause diverging RWA numbers
    The divergence in risk-weighted asset figures reported by Europe's banks might be the result of the different approaches taken by individual national financial regulators, according to a review by the European Banking Federation. Over the past year analysts, regulators and bankers have pointed out these discrepancies, warning the conflicting numbers might indicate the process is vulnerable to manipulation. (subscription required) (4/10) LinkedInFacebookTwitterEmail this Story
  • European banks might face capital surcharge
    European officials are discussing a capital surcharge for the largest banks. One lawmaker suggested a core-capital levy of 10%, but a compromise could halve that amount. A surcharge "could be introduced from 2015, thereby providing member states with more flexibility while ensuring the smooth functioning of the internal market," according to a document drafted by Denmark, which holds the EU's rotating presidency. Bloomberg (4/16) LinkedInFacebookTwitterEmail this Story
  • Markets confronted with $7 trillion collateral shock, experts warn
    The combined impact of new liquidity rules, mandatory clearing of standardized derivatives and emerging global margin standards could drastically increase requirements for collateral by traders, market participants warn. This "collateral shock" could total $7 trillion, they say. (subscription required) (4/11) LinkedInFacebookTwitterEmail this Story
  • Banks meet with Fed regarding plan to limit credit exposure
    Chief financial officers from several major Wall Street banks recently met with Daniel Tarullo, governor of the Federal Reserve, to discuss a central bank plan to restrict the banks' exposure to governments and individual companies. The banks say the plan would significantly reduce their credit commitments. The restrictions on single counterparties are mandated by the Dodd-Frank Act. Financial Times (tiered subscription model) (4/15), Fox Business/Dow Jones Newswires (4/15) LinkedInFacebookTwitterEmail this Story
  • Big banks have work to do to meet Basel III, survey finds
    If Basel III capital rules for banks had been implemented in June, the biggest global banks would have needed more than €485 billion in additional core reserves. The Basel Committee on Banking Supervision surveyed 212 banks about their preparedness for Basel III, which is scheduled to be phased in during the next several years. The lenders also would have needed €1.76 trillion in assets that are easy to sell to meet liquidity requirements. Bloomberg (4/12), Financial Times (tiered subscription model) (4/12), The Wall Street Journal (4/12) LinkedInFacebookTwitterEmail this Story
  • Regulators publish report on market-infrastructure principles
    The Federal Reserve, Securities and Exchange Commission and the Commodity Futures Trading Commission have released a report covering principles for financial-market infrastructures. The report is intended to strengthen risk management for central counterparties and payment systems. The report also outlines standards for securities-settlement systems, trade repositories and central securities depositories. Bloomberg (4/16) LinkedInFacebookTwitterEmail this Story
  • Other News
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People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year."
--Peter Drucker
Austrian-American writer and management consultant

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