Basel: Cryptoassets threaten banks, financial stability | Nearly all US G-SIBs cut risk scores in Q4 | Experts: Bond-market mispricing not caused by collusion
 
March 14, 2019
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Basel: Cryptoassets threaten banks, financial stability
Exposure to cryptoassets exposes banks to risk and threatens global financial stability, the Basel Committee on Banking Supervision says. The committee urges banks to conduct "comprehensive analysis" of cryptoasset risk, saying cryptoassets "do not reliably provide the standard functions of money and are unsafe to rely on as a medium of exchange or store of value."
Reuters (3/13),  Financial Times (subscription required) (3/13),  ISF (subscription required) (3/13) 
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Nearly all US G-SIBs cut risk scores in Q4
Seven of the eight global systemically important banks in the US decreased systemic-risk scores by an average of 17 basis points during the fourth quarter, after slashing derivatives and trading assets. All eight will keep their existing capital buffer in 2020.
Risk (subscription required) (3/12) 
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Experts: Bond-market mispricing not caused by collusion
Mispricing of European public-sector bonds stems from the opaque nature of the over-the-counter market, rather than collusion, researchers and sell-side consultants say. Regulators had hoped bond trading would become more transparent and would move to exchanges after the revised Markets in Financial Instruments Directive took effect.
Practice Insight (3/14) 
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Mobile Device Usage is a Threat to Data Security
74% of global IT leaders reported a data breach due to a mobile security issue. Discover how cybersecurity is shifting to meet the needs of a mobile world, and why it's critical to not fall behind. Learn how to protect your organization from mobile threats in The Convergence of InfoSec & Mobile.
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Bloomberg Insights
EU agrees on post-Brexit clearing rules
EU lawmakers and governments have agreed on rules on how non-EU firms can operate in the single market and serve EU clients after Brexit. Under the rules, foreign systemic clearinghouses are subject to oversight by the EU and national regulators.
Bloomberg (tiered subscription model) (3/14) 
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LNG supply soon may be more than adequate
A mild winter in Europe, rising production in Australia and three upcoming projects to be commissioned in the US are among the reasons liquefied natural gas soon may face a global glut in supply.
Bloomberg Professional Services (3/7) 
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Gender balance likely a factor when choosing ECB head
Governments are expected to consider gender balance when selecting the next president of the European Central Bank. The commitment could widen access for female candidates.
Bloomberg (tiered subscription model) (3/13) 
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Trading Trends
Sponsors continue shutting down ETFs
A steady stream of closures of exchange-traded funds continues this month with nine ETFs shutting down and two scheduled to cease trading. Meanwhile, notable new entrants in the marketplace include the lowest-fee US ETF from JPMorgan Chase.
ETF (3/11),  Bloomberg (tiered subscription model) (3/11) 
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US G-SIBs cut derivatives notionals in Q4
The eight US global systemically important banks cut $24.3 trillion of derivatives notionals during the fourth quarter, bringing the total notionals reported to $196.3 trillion.
Risk (subscription required) (3/13) 
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Operational Efficiencies
Technology seen as central to company strategy
Technology strategy discussions have reached the board level, due to the importance of technology for firms to remain competitive and the potential for business models to be disrupted by technology. "It is imperative for board members to understand these disruptive changes as they relate to technology, guide the organization to go beyond traditional IT conversations, and leverage technology to grow the business," said Scott Bonham, a board member at Magna, Scotiabank and Loblaw Companies.
Harvard Law School (3/11) 
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JPMorgan merges banking teams focused on startups
JPMorgan Chase is bringing together its emerging growth and middle-market technology banking teams to meet the needs of startups that have the potential for rapid growth. The technology and disruptive commerce industry group will focus on food, health and wellness, semiconductors, software, and lifestyle and pet products.
Reuters (3/11) 
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Australian exchange to offer free blockchain trial
The Australian Securities Exchange is inducing banks to switch away from using connections via SWIFT and AMQP to its blockchain system by offering it free for three years starting in the first half of 2021.
Risk (subscription required) (3/12) 
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Regulatory Review
OCC: Wells Fargo's reform efforts are a failure
Wells Fargo has failed to reform its risk controls and governance three years after problems with the bank's sales practices were revealed, according to the Office of the Comptroller of the Currency. The bank's efforts are disappointing, the OCC said.
Financial Times (subscription required) (3/12),  Bloomberg (tiered subscription model) (3/12) 
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Regulators leave derivatives question unanswered
A statement by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions that relieves derivatives market participants of some regulatory burdens for counterparty relationships of less than €50 million is welcomed by the industry but leaves a question unanswered. The statement says entities must take precautions when transactions "approach the threshold" but does not explain what that means.
Practice Insight (3/13) 
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US regulator: Volcker impact on foreign banks has limits
Application of the Volcker rule to foreign banks operating in the US should exempt activities that have no implications for the US financial system, says Jelena McWilliams, chairwoman of the Federal Deposit Insurance Corp. "The Volcker rule's extraterritorial reach should not prohibit activities that are clearly not governed by US rules," she says.
MLex (subscription required) (3/15) 
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US, Singapore announce derivatives trading recognition agreement
Monetary Authority of Singapore Managing Director Ravi Menon told a conference that the regulator and the Commodity Futures Trading Commission have come to a mutual recognition agreement for certain US and Singapore derivatives trading venues. Menon said the cross-border agreement will "provide US and Singapore market participants access to deeper pools of liquidity."
Regulation Asia (3/14),  The Business Times (Singapore) (free content) (3/13),  Futures & Options World (subscription required) (3/13) 
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