Week InReview | Is high-speed trading partly to blame for market volatility? | G7 leaders stick to FSB's deadline for TBTF banks | SEC officials call for new transfer agent rules | Reports of IFRS death in U.S. are premature | Binge Reading Disorder
Friday, June 12, 2015
High-speed trading partly to blame for market volatility?
OFR director says it's possible
(Jun 8) Changes in markets structure, such as high-frequency trading and algorithmic trading, "may be at work in the sharp movements in prices we observe from time to time," Richard Berner, director of the U.S. Office of Financial Research said at a Brookings Institution conference in Washington. Two notable concerns stood out in Berner's talk. First was a concern about liquidity in bond markets evaporating rapidly for reasons they don't yet "sufficiently understand." Another major concern are the bond mutual funds and ETFs that have mushroomed since the 2008 crisis and are stuffed full of illiquid assets or assets which might become illiquid in a financial panic.
G7 leaders stick to FSB's deadline for TBTF banks
Shadow banking regulation & oversight remain an issue
(Jun 8) Group of Seven leaders remain committed to the completion of proposed global rules to tackle the issue of too-big-to-fail banks by November. "We remain committed to finalizing the proposed common international standard on total loss absorbing capacity for global systemically important banks by November, following the completion of rigorous and comprehensive impact assessments," the leaders said in a statement. The Financial Stability Board issued its proposal on TLAC in November 2014 with the plan to complete the rules by the G-20 summit later this year. Leaders also want to strengthen "regulation and oversight of the shadow-banking sector, appropriate to the systemic risk posed."
SEC officials call for new transfer agent rules
All four commissioners in agreement
(Jun 11) The Securities and Exchange Commission hasn't significantly revised transfer agent rules in almost 30 years, during which there have been "sweeping changes" in the securities industry and transfer agency activities, commissioners Luis Aguilar and Daniel Gallagher said in an eMail statement. Commissioners Michael Piwowar and Kara Stein then issued a statement saying they agreed that the issue of transfer agent regulation is pressing and timely. A transfer agent is a trust company, bank or similar financial institution assigned to maintain records of investors and account balances and transactions. To date, the industry has been lightly regulated, despite its critical role. New rules would safeguard investor assets, require transfer agents to have clear written agreements with their corporate clients, impose disaster recovery standards, and be designed to manage conflicts and prevent fraud.
Reports of IFRS death in U.S. are premature
SEC chief accountant says global standards possible
(Jun 5) Securities and Exchange Commission Chief Accountant James Schnurr said comments a year ago by a former SEC chairman about the demise of international accounting rules for domestic use by U.S. public companies may have been premature. Instead, Schnurr voiced some optimism about achieving substantial convergence of international financial reporting standards, or IFRS, with U.S. generally accepted accounting principles to get to one set of high-quality accounting standards for global use. He also stressed the need for the Financial Accounting Standards Board and the International Accounting Standards Board to continue to work together after the release of jointly-written standards to strive for consistent application of principles and to make improvements that might mesh, even if the rules have differences.
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