Week InReview | IMF tells U.S. to finish rules on insurers, mutual funds | Global asset managers may need to work harder for their money | Will startup set to enter $421 trillion market for interest-rate derivatives succeed? | OFR issues June/July financial markets monitor | Binge reading disorder
Friday, July 10, 2015
IMF to U.S.
Finish rules on insurers, mutual funds
(Jul 7) The U.S. (specifically, the Financial Stability Oversight Council) needs to follow through on promises to impose tougher rules on non-bank financial companies, such as mutual funds and insurers, that are increasingly posing a risk to the financial system, the International Monetary Fund said in a report on the U.S. financial system. Non-banks "appear to be taking on higher credit and duration risk, and concern remains about the relative opacity of the leverage and other risks embedded in securities lending and cash reinvestment," according to the assessment, which the IMF conducts every five years.
World's asset managers may need to work harder
Record profits are on shaky ground
(Jul 7) Global asset managers' profits revisited peak levels in 2014, and assets under management rose to a third consecutive record, at $74 trillion. But that growth came largely from rising global asset values. At the same time, a continued shift into lower-cost products, such as exchange-traded funds (ETFs), pinched net revenue growth, and the amount of net new assets flowing into the firms barely budged, according to Boston Consulting Group's global asset management report. Rising asset values didn't lift the profits of all asset managers. About 20 percent saw profits fall in absolute terms, the report says. If the market takes a big hit, those players - the report doesn't name names - are in for a very rough year.
Startup set to enter $421 trillion derivatives market
Will it succeed?
(Jul 7) A startup company will soon discover whether its idea for breaking into the $421 trillion market for interest-rate derivatives can succeed. Global Markets Exchange Group International LLP will offer futures contracts that mimic interest-rate swaps on August 7th. The company's product, the IRS Constant Maturity Future, tracks an index of interest-rate swaps. Unlike rival contracts, there is no need to buy new futures as the old ones expire. That makes it simpler for investors to take bets on interest rates. GMEX's contract will be listed on Eurex, which will also clear the trades. Electronic trading will take place on GMEX's own platform.
OFR's Financial Markets Monitor for June/July
Themes and developments in financial markets
(Jul 8) The Office of Financial Research released its Financial Markets Monitor for June and July. The monitor says developments in Greece, a sharp equity market correction in China, and Puerto Rico's announcement of a potential debt restructuring have driven risk sentiment in financial markets. The key market focus has been the negotiations between Greece and its official creditors to secure needed government financing. Uncertainty increased significantly in late June, when the Greek government broke off negotiations, called a referendum on the official creditors' proposal, established capital controls, and missed a payment to the International Monetary Fund. To date, there have been only moderate spillovers to other euro area periphery markets and safe-haven assets. Developments remain fluid; a more disorderly outcome in Greece than market participants expect may test the stability of broader euro area markets.
Binge reading disorder
Hand-curated, chosen with love
  • Who, What, Where, When, Weird: How oddball items came to dominate the news business, and became normal in the process. (Pacific Standard)
  • Traders' hormones may destabilize financial markets (Science Daily)
  • Old before your time? People age at wildly different rates, study confirms. (The Guardian)
  • No One Is Safe: $300 Gadget Steals Encryption Keys out of the Air, and It's Nearly Unstoppable (BGR)
  • The Root of Our Problems: Why People Screw Up (Motley Fool)
Transparency.
Inclusiveness.
Consensus.