October 14, 2021
SmartBrief on Risk and Compliance
Managing Risk in Today's MarketsSIGN UP ⋅   SHARE
Top Stories
Securities and Exchange Commission Enforcement Director Gurbir Grewal said at an industry event that, in some cases, firms that wish to settle civil enforcement actions will be required to admit wrongdoing. The move marks a return to an Obama-era policy that the SEC had largely abandoned during the Trump administration.
Full Story: The Wall Street Journal (10/13) 
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Federal Reserve Vice Chairman for Supervision Randal Quarles vacated his position as the nation's highest-ranking supervisor of major banks earlier this week with the official expiration of his title, the Fed said in a statement. At the same time he will cease to be chairman of the central bank's supervisory committee.
Full Story: BNN Bloomberg (Canada) (10/12),  Reuters (10/12) 
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Banks will likely need to cooperate with tech firms and regulators to create the infrastructure needed to stay competitive in offering digital assets, executives told a Sibos webinar. Panelists noted that traditional banks will have to implement institutional cultural change in order to keep up with the pace of digital and blockchain innovation.
Full Story: Global Investor (subscription required) (10/13) 
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Bloomberg Insights
With the economy emerging from the pandemic slowdown, Goldman Sachs is concentrating its efforts on technology deals with a particular focus on synthetic biology, quantum computing, augmented reality, and artificial intelligence, according to the firm's investment banking co-head Dan Dees. "We're doubling down on everything in technology right now," he said.
Full Story: BNN Bloomberg (Canada) (10/13) 
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London Metal Exchange CEO Matt Chamberlain defended his move to hybrid pricing on LME's open-outcry trading floor in a speech at the exchange's annual dinner, noting that it would be up to the Ring dealers as to whether the floor would survive. Chamberlain said that "we appreciate that Cat 1 business models may need to adapt and that this of course represents a significant challenge."
Full Story: BNN Bloomberg (Canada) (10/13) 
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Trading Trends
The credit-sensitive Bloomberg Short Term Bank Yield Index is quickly being embraced for business lending products such as loans and revolving credit lines, as well as futures and swaps related to those products, according to Umesh Gajria, head of index linked products at Bloomberg. "BSBY is one of the many solutions that we provide, and we are looking at it in a broader context to help clients in all areas- not just the loan market," he said.
Full Story: Practice Insight (10/13) 
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Intercontinental Exchange is integrating its ESG Reference Data service with GoldenSource to allow investors to access ESG metrics quickly. "Detailed and highly-curated ESG content is becoming an ever more critical data type for financial services firms throughout their investment decision-making process, as well as for satisfying reporting and disclosure requirements," says ICE Data Services head of sustainable finance Anthony Belcher.
Full Story: The Trade (UK) (10/12) 
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Deutsche Bank is considering expanding its existing precious metals trading desk in order to resume trading base metals, sources say. Deutsche Bank had withdrawn from the commodities trading business in 2013.
Full Story: BNN Bloomberg (Canada) (10/12) 
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Operational Efficiencies
While JPMorgan Chase has posted an outstanding third-quarter earnings report, Chief Financial Officer Jeremy Barnum says rising costs are likely to be a challenge in 2022. JPMorgan is investing heavily in performance wages and technology to compete with fintechs, and CEO Jamie Dimon says the bank "will spend whatever we have to spend to compete with all these folks in our space."
Full Story: Financial Times (subscription required) (10/13),  BNN Bloomberg (Canada) (10/13) 
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A new bank-wide team has been formed by UBS Group Chief Executive Ralph Hamers to boost the use of artificial intelligence and data analytics in the bank's operations. The launch of the AI team is part of an initiative by Hamers to use digital technology to cut costs and improve the bank's ability to attract wealthy clients.
Full Story: Bloomberg (10/12) 
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Regulatory Review
The Labor Department has proposed a rule change that would give retirement savings plans freedom to invest in funds based on environmental, social and governance criteria. The move has been welcomed by asset-management firms and some industry groups.
Full Story: The New York Times (10/13),  Financial Times (subscription required) (10/13),  PlanSponsor (10/13),  Barron's (tiered subscription model) (10/13) 
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Securities and Exchange Commission Chairman Gary Gensler wants to examine firms' current digital engagement practices and establish a differentiation between a psychological nudge and investment advice. "Even if certain practices might not meet the current definition of recommendation, I believe they raise a question as to whether there are some appropriate investor protection guardrails to consider, beyond simply the application of antifraud rules," Gensler said.
Full Story: ThinkAdvisor (free registration) (10/12) 
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