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March 12, 2013
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News on the capital markets, securities and financial industry

  Morning Bell 
  • SIFMA and other groups address "too big to fail" claims
    SIFMA and other groups representing major banks refuted assertions from officials that large financial institutions receive a "taxpayer subsidy" as they rejected claims that they are "too big to fail." "Flawed arguments regarding subsidies to large banking companies are at best out of date, and their use to call for draconian structural limits on the financial industry is out of step with the diverse financial needs of the 21st century U.S. economy," according to the groups. Read SIFMA's statement on the issue. Bloomberg (3/11), Financial Times (tiered subscription model) (3/11) LinkedInFacebookTwitterEmail this Story
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  Industry News 
  • Banks must improve FX risk management, New York Fed says
    Jeanmarie Davis, head of financial market infrastructure at the Federal Reserve Bank of New York, said that banks need to improve their risk management of foreign exchange trading. "We will monitor the progress of implementation of the guidance and we want to see an improvement in the industry's ability to identify, measure and monitor the duration of the risks, and then take steps to eliminate or mitigate the risk," Davis says. (subscription required) (3/11) LinkedInFacebookTwitterEmail this Story
  • Banks ramped up municipal exposure in Q4 of last year
    Banks in the U.S. increased their exposure to municipal bonds by more than 20% in the fourth quarter of 2012 on both cost and fair-value basis as compared to the fourth quarter of 2011, according to Thomson Reuters Bank Insight data. "The combination of regulation and lackluster loan demand has prompted greater investment in high-quality bonds and municipals are a beneficiary of the trend," said Anthony Valeri of LPL Financial. The Bond Buyer (free content) (3/11) LinkedInFacebookTwitterEmail this Story
  • Mortgage-bond provisions prompt rating agency concerns
    As the residential mortgage-backed securities market begins to recover, banks looking to issue more mortgage-backed bonds want to include more restrictions in the documentation that assures the security of the underlying loans. Credit rating agencies remain concerned with the practice, with Moody's Investors Service and Fitch Ratings citing concerns that the restrictions might shield lenders and issuers from their legal liabilities. Moody's also said that the issue could keep some of the securities from getting top ratings. The Wall Street Journal/Developments blog (3/11) LinkedInFacebookTwitterEmail this Story
  • Citi plans global revamp to focus on growth markets
    Citigroup CEO Mike Corbat, as part of a global overhaul, plans to shift resources from underperforming nations to countries where the bank is expanding. "These days, all banks have finite resources," said Jim Cowles, chief for Europe, the Middle East and Africa. "At Citi, we have prioritized countries we operate in, balancing where opportunities lie and where we are best positioned. We are focusing on what we do well and what our clients' needs are in each of our countries." International Financing Review (free content) (3/9) LinkedInFacebookTwitterEmail this Story
  Washington Roundup 
  • MSRB proposes changes to its suitability rule
    The Municipal Securities Rulemaking Board proposed changes to Rule G-19 in order to make it more similar to the Financial Industry Regulatory Authority's Rule 2111. While SIFMA is still reviewing the proposal before the May 6 comment deadline, Managing Director David Cohen said that in general SIFMA supports the harmonization of the two rules. "Regulatory harmonization on this and other muni issues as appropriate is key to effective business practices and efficient compliance," he said. The Bond Buyer (special access for readers of SIFMA SmartBrief) (3/11) LinkedInFacebookTwitterEmail this Story
  • SEC nominee White emphasizes need to understand HFT
    In testimony prepared for a confirmation hearing, Mary Jo White, nominated to head the Securities and Exchange Commission, highlights a need to better understand high-frequency trading, as well as a need for strict enforcement. "There must be a sense of urgency brought to addressing these issues to understand their impact on investors and the quality of our markets so that the appropriate regulatory responses can be made," White says in reference to HFT. She also says an aggressive enforcement policy "is not only the right thing to do, but it also will serve to deter the sharp and unlawful practices of others." Bloomberg (3/11), Reuters (3/11), The Washington Post (3/11) LinkedInFacebookTwitterEmail this Story
  • FINRA's bonus proposal gains support of big brokerages
    The four biggest retail brokerages are all supporting the Financial Industry Regulatory Authority's new plan to mandate that brokerages disclose to clients any "enhanced compensation" they pay to brokers. The comment period for the rule ended last week, although it must be approved by the Securities and Exchange Commission before it can become law. The Wall Street Journal (3/11) LinkedInFacebookTwitterEmail this Story
  SIFMA News 
  • SIFMA AMG Clearings Conference -- April 18 -- New York City
    As the swaps industry transitions to a cleared environment, asset managers must prepare to operate in a new ecosystem. Some managers are already clearing, while others are in the midst of preparations. Join SIFMA's Asset Management Group (AMG) for an in-depth discussion, "Putting the Clear in Central Clearing: An Overview of Transition Clearing for Asset Managers." Designed specifically for the buy-side, this intensive half day program will feature insights from Category 1 and 2 Entities who have already or are just about to transition, as well as specific discussions on counterparty risk associated with selecting futures commission merchants (FCMs). CLE credits are available. LinkedInFacebookTwitterEmail this Story
  • Next Week: More Than 300 Speakers & 65 Panels: SIFMA C&L Society Annual Seminar -- Phoenix
    Bharara, Ketchum, and O'Malia are just a few of the names on the program for SIFMA's Compliance & Legal Society Annual Seminar on March 17-20 in Phoenix, AZ. This year's program has more than 300 speakers and 65 sessions for financial industry legal and compliance professionals, creating the premier forum to discuss the issues and share expertise and insights into critical topics for varied interests. Don't miss your opportunity to engage with leading industry experts, discuss the latest regulatory developments and industry trends. LinkedInFacebookTwitterEmail this Story
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We are all worms. But I do believe that I am a glow-worm."
--Winston Churchill,
British prime minister

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