Week InReview | Liquidity rules for asset managers could be improved. Asset management 'front and center' for SEC. Banks, asset managers point finger at clearinghouses. IOSCO's continuity 'sound practices.'
Friday, April 10, 2015
Size doesn't matter, says IMF
But liquidity rules for asset managers could be improved
(Apr. 8) In the International Monetary Fund's 'Global Financial Stability Report' a chapter on asset managers says that when it comes to threats asset managers could pose to the global system, the largest companies aren't necessarily the most dangerous; the investment focus appears to be relatively more important than size when gauging systemic risk. While the U.S. mutual fund industry's regulation regime is based primarily on disclosure, the IMF proposed enhancing liquidity rules, the definition of liquid assets, investment restrictions, and reporting and disclosure rules. And not enough is known about the use of leverage and derivatives, according to Gaston Gelos, chief of the IMF division that worked on the chapter.
Market structure, asset management 'front & center'
SEC Investor Advisory Committee lists top priorities this year
(Apr. 9) 'Front and center" SEC priorities this year are in the areas of market structure, asset management and agency's "disclosure effectiveness initiative," Chair Mary Jo White said in remarks at meeting of SEC Investor Advisory Committee
  • "I expect activity in those areas"
  • SEC staff also finishing internal review of definition of "accredited investors"
  • On tick size pilot, SEC has until May 6 to take action
  • White reiterates expectation that commission will discuss advancing rules to impose uniform fiduciary duty on broker-dealers and investment advisers under Section 913 of Dodd-Frank and to require a program of 3rd party examinations of investment advisers to increase agency's exam coverage
  • Also reiterates that SEC will advance remaining Title VII and executive compensation rules under Dodd-Frank, including Section 956 rulemaking to be done with other regulators
  • On JOBS Act, adoption of final crowdfunding rules is SEC's "last major rulemaking to complete, which is also a priority for 2015," White says.
Fed digs into clearinghouse risks
Trying to shed light on $700 swaps market
(Apr. 10) Big lenders and asset managers say clearinghouses pose their own threats. Among the concerns raised: relying on clearinghouses shifts risk to just a handful of entities, and the collapse of one could lead to uncapped losses for banks. Swaps trading -- when it was largely unregulated -- amplified the meltdown seven years ago and prompted a $182 billion U.S. rescue of AIG. Recent government scrutiny comes as more derivatives trades than ever are guaranteed at central clearinghouses.
'Sound practices' identified
IOSCO report on continuity planning by intermediaries
(Apr. 8) The International Organization of Securities Commissions identified several "sound practices" in a report for market intermediaries to consider when creating a business continuity and recovery plan. IOSCO said in the report that such a plan should be flexible and "tailored to the size and needs" of an intermediary. and that 'not every sound practice will be appropriate or equally effective for all market intermediaries. Comments on the report are due by June 6.
Investors' Reads
A little something to take our minds off all of the above
  • Wall Street Executives from the Financial Crisis of 2008: Where Are They Now? (Vanity Fair)
  • Everything Is Broken (Medium) 
  • A Multimillion-Dollar Markup on a Modigliani (NYT)