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."
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.
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.
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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.
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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.
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.
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.
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.
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.
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.
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.
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."