UK banks strive to bolster balance sheets | European clearinghouses plan to merge | Analysis: Regulatory changes could hit bond liquidity
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15 March 2013
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UK lawmakers call on regulator to focus on prop trading
Britain's Parliamentary Commission on Banking Standards is encouraging the Prudential Regulation Authority to discourage -- but not ban -- proprietary trading at deposit-taking banks. "The immediate risk to UK banking standards from proprietary trading may be limited," commission Chairman Andrew Tyrie said. "However, effective regulatory oversight will be particularly important for the future. At a time when banks are under less intense scrutiny, proprietary trading could re-emerge as a greater risk." Reuters (14 Mar.), The Wall Street Journal/Dow Jones Newswires (14 Mar.)
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Transformational Journeys: Modern Business Planning
Harvard Business Review explores why CFO's and their finance organizations must adapt to the changing landscape of their markets and how big data, organizational collaboration, and new cloud-based planning and analysis technologies are driving successful change.
Click here to access the report.

Industry News
UK banks strive to bolster balance sheets
Lloyds Banking Group, Royal Bank of Scotland and other British banks are working to increase their balance sheets amid capital-shortfall concerns from regulators. In November, the Bank of England's Financial Policy Committee warned of a possible £60 billion shortfall. The committee is poised to meet and publish another statement about the issue this month. Bloomberg (13 Mar.)
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European clearinghouses plan to merge
EuroCCP and European Multilateral Clearing Facility have announced a merger amid dwindling volume. The move is intended to ramp up competition with other European clearinghouses. "The new [central counterparty] will lead the way in encouraging greater competition between all cash-equity clearinghouses while driving down costs," said EuroCCP CEO Diana Chan, who will remain chief of the merged company. Reuters (14 Mar.), The Trade News (U.K.) (14 Mar.), Bloomberg (14 Mar.), Financial Times (tiered subscription model) (14 Mar.)
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Analysis: Regulatory changes could hit bond liquidity
Individual investors continue to put money in bonds despite a rally in equities. However, bond investors could face a liquidity issue should the situation change, Richard Barley writes. Basel III rules have caused dealers to significantly pare back bond inventory, so if retail investors start exiting en masse, it is unclear who will emerge to buy those bonds. The Wall Street Journal (14 Mar.)
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Regulatory Roundup
EU's tougher rules for OTC derivatives begin today
Starting today, EU banks and other firms that deal in over-the-counter derivatives will have to report more information to trade repositories, including the value of contracts and related collateral. "The complexity of these new obligations, and the short timeframe" mean "many firms just aren't ready for [the] deadline", Crispian Lord of PricewaterhouseCoopers wrote in an e-mail. Bloomberg (14 Mar.)
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ECB reportedly plans to expand supervision staff
The European Central Bank's new role as a banking watchdog will prompt the hiring of 800 or more people for its supervision staff, sources say. The number, recommended by an internal report, is a "starting point", one source said. The Telegraph (London) (tiered subscription model) (14 Mar.), The Wall Street Journal (14 Mar.)
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Kuroda is confirmed to head Bank of Japan
Haruhiko Kuroda, an advocate of bold monetary easing, has been confirmed by parliament as governor of the Bank of Japan. He is expected to act swiftly after taking office Wednesday to implement measures to eliminate deflation and reach 2% inflation within two years. The Japan Times/Kyodo News (15 Mar.), The New York Times (tiered subscription model) (14 Mar.), Bloomberg (15 Mar.)
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Editorial: Regulatory critics gain ground
Stefan Ingves, chairman of the Basel Committee on Banking Supervision, indicates that regulators might be gaining a better understanding of how regulation, intended to prevent crises, contributed to the financial crisis. Recent announcements from the Basel Committee signal a change in the regulatory tide, but officials have a long way to go, according to this editorial. The Wall Street Journal (15 Mar.)
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Spotlight on China
China will relax requirements to invest abroad
The China Securities Regulatory Commission says it will eliminate capital requirements and some other prerequisites for funds and brokerages seeking eligibility for the Qualified Domestic Institutional Investor programme. The move is aimed at "promoting QDII development and market reforms, and creating a more relaxed and fair regulatory environment for fund management firms and securities companies", according to the CSRC. Reuters (14 Mar.)
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GFMA News
GFMA webinar: "Global LEI Developments and Deadlines" -- 8am Eastern on THURSDAY
GFMA will host a webinar to help financial-market participants prepare for the critical implementation of a global legal-entity identifier. Recently, there have been important developments from the US Commodity Futures Trading Commission, global regulators and the LEI Regulatory Oversight Committee. Further, important deadlines under the CFTC's reporting and record-keeping rule for swaps are quickly approaching. Participate in this timely webinar to receive expert summary and analysis of the latest regulatory developments and initiatives.
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AFME News
Early-bird registration is open: AFME 6th Annual European Post-Trade Conference
Registration is open for AFME's 6th Annual European Post-Trade Conference, scheduled on 23 May at the Lancaster London hotel. This event brings together eminent speakers from across the industry, including senior operations executives and key regulators, and offers insights into crucial developments in the post-trade space and their impact on the industry.

Register to secure your place.
  • Early-bird member rate (available until 11 April): £299
  • Early-bird nonmember rate: (available until 11 April): £609
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SmartQuote
Adventure is not outside man; it is within."
-- George Eliot,
British writer
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