ISM Non-Manufacturing Index data released | March Employment Situation data released | Mortgage rates drop for 2nd straight week
April 3, 2020
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SIFMA SmartBrief
News on the capital markets
Morning Bell
The Market Information Data Analytics System, an interim database from the Securities and Exchange Commission used for monitoring swings in trading, has fallen short in providing accurate and timely data and has even broken down during trading surges, SEC documents indicate. A system that was to be installed last year is not expected to be operational until 2022. Meanwhile, market data has gotten more expensive, according to a study by SIFMA.
Full Story: The Wall Street Journal (tiered subscription model) (4/2) 
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Happening Today
Industry News
Mortgage rates have declined for the second consecutive week, while the coronavirus pandemic has led to dwindling applications and rocketing unemployment. The rate for a 30-year mortgage has averaged 3.33% this week, down from 3.5% last week, according to Freddie Mac.
Full Story: Bloomberg (tiered subscription model) (4/2) 
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Ratings agencies are facing scrutiny as they issue downgrades in record numbers. Investors are concerned the situation could spread alarm and repeat disruption seen during the financial crisis.
Full Story: Financial Times (subscription required) (4/2) 
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Investment-grade issuers secured a record $260.7 billion from debt markets during March, Bank of America analysts say, despite the coronavirus pandemic. The analysts expect activity to continue this month, with companies issuing $150 billion to $200 billion in debt.
Full Story: MarketWatch (4/1) 
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Washington Roundup
Federal Housing Finance Agency Director Mark Calabria says Fannie Mae and Freddie Mac could require additional federal funds if the economy stays locked down beyond 12 weeks.
Full Story: Financial Times (subscription required) (4/3) 
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The compliance date for the Securities and Exchange Commission's Regulation Best Interest and the Customer Relationship Summary form will remain June 30, SEC Chairman Jay Clayton said. Firms that are concerned about meeting filing deadlines because of the coronavirus outbreak "should engage with us," Clayton said.
Full Story: ThinkAdvisor (free registration) (4/2),  WealthManagement (4/2),  Financial Advisor online (4/2),  InvestmentNews (tiered subscription model) (4/2) 
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Banks want clearer guidance on how far they can go in following the Federal Reserve's advice that banks make "safe and sound" use of liquidity buffers for the liquidity coverage ratio.
Full Story: Risk (subscription required) (4/3) 
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Global Update
The Financial Stability Board, acting in its role as coordinator for the Group of 20, has requested that governments review coronavirus restrictions so crucial employees at financial firms can work on-site, rather than remotely. The FSB also says the deadline for shifting away from Libor has not changed, quashing speculation the deadline might be extended.
Full Story: Reuters (4/2) 
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Japanese banks and businesses disagree on two competing benchmark rates as a replacement for Libor, and Japan's regulators have not shown a preference for either one. Instead, a committee of banks, brokers and businesses will make a recommendation.
Full Story: Reuters (4/2) 
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Asset Management Report
Two nontransparent exchange-traded funds began trading in the US on Thursday and may test the market's appetite for actively managed ETF products. ETF analyst Eric Balchunas says "a lot of advisers just aren't looking at stock picking" amid the current volatility, although JPMorgan Chase analysts say mutual fund strategies could ultimately place as much as $7.2 trillion with such funds.
Full Story: Bloomberg (tiered subscription model) (4/2) 
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Operations Update
Murray Pozmanter, head of clearing agency services and global operations and client services at Depository Trust & Clearing Corp., explains how DTCC provides stability for the financial system. (See SIFMA Insights for more on DTCC's important role.)
Full Story: Depository Trust & Clearing Corp. (4/1) 
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Data of the Day
10M
Initial unemployment claims exceeded 6.6 million last week as businesses closed because of the coronavirus pandemic, adding to 3.3 million the previous week, according to the Labor Department. The US had never experienced this volume of layoffs in such a short period.
Full Story: The Associated Press (4/2) 
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SIFMA News
Financial services is a critical infrastructure sector. Through SIFMA, the industry has a robust infrastructure for dealing with incidents that can interrupt business and market functions. SIFMA's Business Continuity Planning (BCP) team continues to closely monitor the novel coronavirus (COVID-19) and its impact on our industry and the markets. The team's collection of guidance and resources for the industry, including updates from regulators, is available at sifma.org/bcp.
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In light of recent market dislocations, SIFMA Research is tracking daily market metrics across equities, listed options and various fixed income and securitized products markets. Additionally, we show trends for 1Q 2020.
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The capital markets perform a vital function, matching capital to ideas so those ideas can flourish into successful enterprises, creating millions of jobs and fueling economic growth. SIFMA exists to advocate that America's capital markets operate effectively and efficiently, to the benefit of all market participants. Visit SIFMA's website to learn more.
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