Prime brokerage units at banks including Credit Suisse and Nomura are tightening financing requirements for hedge funds and family offices after the collapse of Archegos Capital Management, a move that could fundamentally alter a basic facet of the banking industry. "There is a need to scrutinize the reasons why the banks enabled the fund to leverage up to such an extent," European Central Bank board member Isabel Schnabel says. "It is a warning signal that there are considerable systemic risks that need to be better regulated."
BlackRock's net income rose to $1.2 billion in the first quarter, amounting to $7.77 per share, beating analyst expectations. The firm's total assets increased to a record $9 trillion, up from $6.47 trillion a year ago.
Asset managers are poised to pick up the pace of innovation, having embraced technology to survive the coronavirus pandemic, according to a report from Apex Group. It is clear asset managers must "increase the digital enablement of their processes not only to maintain operations, but also to better meet client needs," the report states.
Gary Gensler has been sworn in by the Senate as chair of the Securities and Exchange Commission. "As Chair, every day I will be animated by our mission: protecting investors, facilitating capital formation, and promoting fair, orderly, and efficient markets," according to a statement from Gensler. "It is that mission that has helped make American capital markets the most robust in the world."
The Basel Committee on Banking Supervision will take a close look at the circumstances surrounding the collapse of Archegos Capital Management. Secretary General Carolyn Rogers said the committee will likely raise scrutiny of total return swaps and structured products. "A case like this with losses of this magnitude at multiple global banks, all traced back to a single client or a single transaction, will always be something that gets discussed at the Basel Committee table," Rogers said.
The House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets meets today to discuss proposed legislation that would tackle the issue of transitioning "tough legacy" contracts away from Libor, without having to resort to a synthetic US dollar Libor as an interim step. Chris Killian, a SIFMA managing director, says the legislation could resolve "trillions of dollars of instruments that have question marks" and has also backed the proposal's stated recommendation of switching solely to the Secured Overnight Financing Rate, which he says would be welcomed by contract administrators.
The UK Financial Conduct Authority is in discussions with the Securities and Exchange Commission and the Commodity Futures Trading Commission to seek a stronger trading relationship. The FCA wants permanent access to US securities and derivatives markets for UK firms, freedom for UK trading platforms to operate in the US and access for UK swap dealers.
When the time comes to reduce support for the economy, the Federal Reserve will start scaling back bond buying "well before" the time it considers raising interest rates, said Chair Jerome Powell. The central bank has promised to continue buying $120 billion a month of government-issued and government-backed securities until the economy is closer to full recovery.
Join SIFMA and the SIFMA C&L Society on April 22, from 1 to 2:15 p.m. ET, to hear from industry experts on how communication tools like Teams, Zoom, and Slack are shaping a "work from anywhere" future in financial services; the use, retention, and supervision of collaboration platforms; and more!
In the latest in SIFMA's podcast series, SIFMA President and CEO Kenneth E. Bentsen, Jr. is joined by Chris Killian, SIFMA managing director, securitization and credit, to talk about the need for federal legislation in the transition away from Libor. SIFMA is supportive of federal legislation aligned with recommendations from the Alternative Reference Rates Committee, or ARRC, to address situations where contracts cannot be easily transitioned away from Libor due to legal or regulatory reasons. Listen for more on this important issue.