January 20, 2022
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SIFMA SmartBrief Operations & Technology
News on the capital markets for operations and technology professionals
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Top Story
Securities and Exchange Commission Chair Gary Gensler said he wants to find a way to more directly regulate cryptocurrency exchanges. Gensler said the SEC's other regulatory priorities this year include more thorough disclosure by hedge funds and private equity funds, improved transparency about executive compensation and reforms to the Treasury market.
Full Story: CNBC (1/19),  Bloomberg (1/19),  The Wall Street Journal (1/19) 
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Top tips for Phase 6 of UMR compliance
Impacting an estimated 700 firms, implementing phase 6 of Uncleared Margin Rules will bring the broadest test of preparation for Initial Margin calculation workflows. With just months to go, our Hiroshi Tanase discusses lessons learnt from phase 5 and how to avoid a last-minute rush for phase 6. Read blog now.
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Operations Update
The biggest US banks have worked to raise worker wages in 2021 and forecast further growth of compensation expenses for the coming year. "We are seeing certainly fierce competition in the war for talent, and that's playing out in wage inflation," said Emily Portney, chief financial officer for Bank of New York Mellon.
Full Story: Reuters (1/19) 
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Charles Schwab CEO Walt Bettinger says the financial services industry needs to work on offering clients a more personalized service, noting their expectations are increasingly "formed by the experiences they have at Uber, DoorDash or Amazon." In a wide-ranging interview, Bettinger also discusses the challenges of integrating with the recently acquired TD Ameritrade, the "new normal" regime of remote working and the likelihood of Schwab venturing into cryptocurrencies.
Full Story: BNN Bloomberg (Canada) (1/19) 
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Citigroup CEO Jane Fraser outlined changes to the bank's massive restructuring, which includes revamping institutional operations, combining the consumer and wealth-management businesses and establishing a new holding unit for franchises it is winding down. Citigroup reported net income of $3.17 billion for the fourth quarter, short of analysts' predictions, as trading revenue declined more than expected.
Full Story: The Trade (UK) (1/17),  Bloomberg (1/14) 
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Research from recruitment firm Morgan McKinley shows job vacancies are up 40% in London's financial-services sector since late 2019, immediately before the coronavirus crisis began. As competition to attract talent intensifies among employers, the research also notes that London workers changing jobs in the fourth quarter last year were likely to see a 19% wage increase, on average.
Full Story: Financial News (UK) (tiered subscription model) (1/17),  INews (UK) (1/17) 
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Register Now: Operations Conference & Exhibition, May 16-19
SIFMA Ops gathers operations, technology and regulatory leaders from across the securities industry. Join us this May in Phoenix, AZ to discuss the Accelerated Settlement Cycle, Cybersecurity, Corporate Actions Modernization, Digital Assets, Regulatory Initiatives, and more! Early bird rate available.
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Technology Update
Banks will continue to fight to secure enough talent in 2022 because of the high demand for employees with math and coding skills and the increase in early retirements, says Royal Bank of Canada CEO Dave McKay. "We've never faced more competition for talent, and particularly acute in the engineering, AI, data, mathematics and coding space," McKay said.
Full Story: BNN Bloomberg (Canada) (1/12) 
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JPMorgan Chase Chair and CEO Jamie Dimon said at an earnings call that the bank will significantly increase its technology spending in 2022 to $12 billion. Dimon said that within the technology and the fintech space there is "a lot of competition." Jeremy Barnum, JPMorgan's chief financial officer, added that the bank was in a "moment of acceleration" of investment spending.
Full Story: The Block (1/16),  Financial Times (subscription required) (1/14),  Financial News (UK) (tiered subscription model) (1/17) 
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Phase II of a test by the Bank for International Settlements, the Swiss National Bank and SIX indicates that a wholesale central bank digital currency can be successfully integrated into the current banking system. "We have demonstrated that innovation can be harnessed to preserve the best elements of the current financial system, including settlement in central bank money, while also potentially unlocking new benefits," says BIS Innovation Hub's Benoit Coeure.
Full Story: Global Investor (subscription required) (1/13),  Bank for International Settlements (1/13),  CoinDesk (UK) (1/13),  Securities Finance Times (1/13) 
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Regulatory and Legislative Update
Robert Cook, CEO of the Financial Industry Regulatory Authority, says FINRA may enhance rules on digital asset sale disclosures by requiring broker-dealers to make it clear to investors that the digital assets they purchase may not be subject to regulation. Speaking at the SIFMA webinar on FINRA's 2022 priorities, Cook also said it may also be time to update the current rules on opening options accounts.
Full Story: Reuters (1/19),  Financial Planning (1/19) 
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Bank of International Settlements General Manager Agustin Carstens has spoken out against theories that the future of money could be decentralized and based on blockchain technology, saying, "There is a large gulf between vision and reality." While he acknowledged that "[d]ecentralization can be a noble goal," Carstens pointed out a number of misconceptions surrounding it and practical obstacles to its adoption.
Full Story: BNN Bloomberg (Canada) (1/18),  CoinDesk (UK) (1/18) 
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The UK's Financial Conduct Authority has announced a consultation into possible monopolies held by exchanges over market data, limitations of access they may impose and the fees that are commonly charged for access. There are concerns over these issues, as well as the small number of entities that act as gatekeepers, with SIFMA pointing out in a comment letter that "[e]ach exchange is a monopoly source of its own depth-of-book data, and broker-dealers rely on that complete set of market data to achieve best execution for their customers ... for which exchanges charge excessive fees."
Full Story: ETF Stream (London) (1/18) 
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SIFMA News
Now in its 49th year, SIFMA Ops gathers operations, technology, and regulatory leaders from across the securities industry to discuss the most critical priorities. With the industry continuing to evolve in response to risk, tech, policy, and regulatory changes, join us at this must-attend event in Phoenix, AZ, to discuss Accelerating the Settlement Cycle to T+1, Regulatory Priorities and Initiatives, Operations Leadership, DLT, Cybersecurity and BCP, Corporate Actions Modernization, and more! Early bird rates available.
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Our 2022 Capital Markets Outlook highlights market performance, critical policy issues and resources for effective and resilient markets. US capital markets are the strongest and largest in the world, continuing to be among the deepest, most liquid and most efficient. They provide more than 70% of funding for economic activity in terms of equity and debt financing of nonfinancial corporations. On behalf of our members, in this report, we explain why markets matter, delve into market performance across multiple asset classes and describe industry viewpoints on several critical policy matters.
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I don't tear down. I prefer to build up.
Andre Leon Talley,
fashion journalist, magazine editor
1948-2022
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