Week InReview | Risk management lags in SEC's FINRA oversight, says GAO | IOSCO: Don't rely on credit rating agencies to measure risk | U.S., EU rift on derivatives clearing rules continues | Low interest rates breeding financial risk, say EU regulators | Binge Reading Disorder
Friday, May 8, 2015
Risk management lagging in SEC's FINRA oversight
GAO wants appropriate framework for self-regulator
(Apr. 30) The Securities and Exchange Commission is still lagging in creating an appropriate risk-management framework for the Financial Industry Regulatory Authority, the Government Accountability Office said in a report. The SEC should create specific performance goals for FINRA oversight and formally document its procedures for implementing them, the GAO said in report GAO-15-376. The agency also needs to better assess internal risks related to FINRA oversight, it said.
Don't rely on CRAs to measure risk
IOSCO tells intermediaries
(May 7) Larger capital markets intermediaries should establish independent credit assessment functions and avoid exposure to credit risks that they cannot independently assess, the International Organization of Securities Commissions proposed as  est practices for the industry. In a consultation report, IOSCO said regulators could consider the best practices when conducting oversight of larger market intermediaries. IOSCO will issue a final report based on comments received by July 8 about the proposal.
U.S., EU rift on derivatives clearing rules
Seek mid-year deal to resolve split
(May 7) European Union and U.S. regulators said they will seek a deal by the summer to resolve a split over regulation of clearinghouses that handle derivative contracts. Jonathan Hill, the EU's financial-services chief, and Timothy Massad, chairman of the U.S. Commodity Futures Trading Commission, said that a deal would ensure that "market participants can operate cross border in a global marketplace."
Low interest rates breeding financial risk
No change in substance but more intense, say EU regulators
(May 5) Risks to financial stability in Europe have "intensified" in an environment of persistently low interest rates, EU bank, insurance and market regulators say in joint report, and "financial system risks have not changed in substance, but have intensified further." ESMA Chairman Stephen Maijoor said in an eMailed statement that "the recovery is not yet sustained and is exposed to risks related to broad macroeconomic conditions, in particular the low interest environment and resulting search-for-yield behaviour." European Securities and Markets Authority, European Banking Authority and European Insurance and Occupational Pensions Authority published the joint report.
Binge Reading Disorder
Antidote for all of the above
  • There's an Uber for Everything Now (WSJ)
  • 7 Important Life Lessons Everyone Learns the Hard Way (Marc and Angel Hack Life)
  • The ESG Takeover: is environmental, social and governance investing actually serious business for Europe's largest investors? (Chief Investment Officer)
  • Ten Questions That Ben Bernanke Needs to Learn How to Not Answer (Medium)
  • May 1, 1975: The Day Wall Street Changed (Moneybeat)