The Group of 30, a consortium of former financiers, central bankers, academics and government officials, has published a report that calls for urgent changes to the Treasury market and that makes recommendations to help the market avoid shocks that could disrupt worldwide financial stability. "No financial system could have withstood the shock of the pandemic without exceptional actions by the [Federal Reserve]," former Treasury Secretary Timothy Geithner says. "But making the Treasury market more resilient would reduce the damage to the financial system caused by future shocks, whatever the source, and reduce the need for exceptional action by the Fed in crisis."
Some New York-based financial firms considered relocating their offices to the suburbs during the coronavirus pandemic lockdowns, but the city's reopening has led them to ramp up return-to-office plans at their original hubs.
The shift to a T+1 settlement cycle will bring a host of changes to financial firms' operations and, despite some challenges, will provide significant benefits, writes Uday Singh, head of professional services at Broadridge Financial Solutions. Singh recommends firms examine their organizational preparedness for the shift, and assess how it will affect their technology infrastructure and operational processing, as well as revenue streams.
Swaps desks have shifted to the Secured Overnight Financing Rate for most interdealer trades. The move should cause a flurry of activity and should create enough activity to establish a forward-looking term rate, a critical milestone in the transition to SOFR. This "is a huge deal," says Thomas Pluta, global head of linear rates trading at JPMorgan Chase. "We've been surprised at how slow the uptake in SOFR derivatives has been to this point, so this is exactly what the market needs."
According to a Northern Trust survey of 300 global asset-management firms, 98% of firms are using data science or are planning to optimize investment processes in the next two years through use of data science. "This survey shows asset managers are aware of the need to implement a digital operating model that enables efficient and safe growth but at the same time are rightly focused on the imperative to spend scarce capital wisely," says Paul Fahey, Northern Trust head of investment data science.
Chicago-based futures trading platform provider Trading Technologies has put some development projects, including its Echo Chamber market data platform, on hold until it secures a buyer. Sources say that the sale of TT, which is partly owned by The FSB Companies, is likely to happen soon.
The Financial Industry Regulatory Authority might extend a temporary rule beyond December that relieves firms of a need to conduct branch office inspections. The rule was passed last year in light of the pandemic, but CEO Robert Cook said at the SIFMA Compliance & Legal Virtual Forum: "What I'd like to see happen here is that we would extend [the relief] into next year and that we would step back and look at that [supervision] rule holistically and think about whether it could use some updating to accommodate a thoughtful, risk-based approach to when in-person exams would be necessary." Cook's statement was welcomed by Ira Hammerman, SIFMA executive vice president and general counsel, who said, "We stand ready to help with that."
The Financial Industry Regulatory Authority is planning a series of targeted examinations, focusing on special-purpose acquisition companies, compliance with options account openings and possibly the relationship between financial-services firms and social media influencers, CEO Robert Cook said at the SIFMA Compliance & Legal Virtual Forum. Cook also said FINRA's sweeps of a trend toward zero commissions are ongoing, adding, "As new products and fee arrangements evolve, we look at compliance with our rules on communications with the public, which require that there be clear, not misleading, communications about any product or service offered."
The UK Treasury is proposing to drop pre-trade quote publication rules for over-the-counter derivatives traded outside of electronic order book venues. Market participants say the rules failed to increase competition as planned because the data was of limited use.
National financial regulators in the EU quadrupled the value of sanctions and penalties imposed for violations of the revised Markets in Financial Instruments Directive in 2020, compared to 2019, according to a report from the European Securities and Markets Authority. Last year national regulators initiated 613 actions for MiFID violations with a total value of €8.4 million, ESMA said.
Join us this October in Miami for live expert-led discussions plus access to the exhibit hall and networking. Hear industry and regulatory leaders from Morgan Stanley, Citi, Goldman Sachs, New York Fed, DTCC and more on the next wave of innovation and operational resiliency in the capital markets. Sessions include: Transformation and Innovation in a Post-Pandemic Era; Leadership Perspectives; Industry Settlement Cycle; Digital Assets: Embracing the Present with a View Towards the Future; Regulatory Priorities. Register today. Virtual option also available.
In 2020, the securities industry raised $2.7 trillion of capital for businesses through corporate debt and equity-issuance activity, a 60.4% increase from the prior year. This represents 73% of funding for economic activity in the US, in terms of equity and debt financing of nonfinancial corporations. Find more facts in SIFMA's indispensable Capital Markets Fact Book, an annual publication with downloadable data tables on the capital markets, investor participation, savings and investment, and securities industry. The Fact Book amasses data from dozens of sources into a single, easily accessible reference tool to analyze key industry statistics.