Week InReview | Mutual Funds Face Rules to Prevent Investor Runs | FSB publishes recent reports to G-20 finance ministers, central bank governors | CFTC: critical entity rules encompass IOSCO principles | Let's Recap (ICYMI) | Binge Reading Disorder
Friday, September 25, 2015
Let's recap
In case you missed it
SEC votes 5-0 to propose "swing pricing" rule
Investors could face cashout costs during fund runs
(Sep 22) The Securities and Exchange Commission voted 5-0 to propose a "swing pricing" rule that would allow funds to adjust their net asset value to account for the costs of providing liquidity. If a fund adjusts its NAV, investors could receive less than the fund's actual closing price upon redeeming their shares during a run. The proposal also requires mutual funds and exchange-traded funds to create liquidity risk management programs, under which they would have to classify and periodically review the liquidity risk of their fund products. Swing pricing and liquidity risk management represent the second of five measures outlined by Chair Mary Jo White in December to improve agency oversight of the asset management industry. Public comments will be accepted for the proposal for 90 days after it appears in the Federal Register.
FSB reports to G20 finance ministers, central bank governors
Holds plenary meeting in London Sept. 25
(Sep 22) Before their meeting in Ankara, Turkey on Sept. 4-5, the Financial Stability Board sent three reports to the G20 Finance Ministers and Central Bank Governors on corporate funding structures, addressing data gaps, and foreign currency exposure data. 
  • The report on corporate funding structures "highlights the growth of non-financial corporate debt in many countries over the past 15 years, including an acceleration in emerging markets since the financial crisis."
  • The report on data gaps "notes significant progress over the six years in addressing the data gaps identified following the financial crisis, with data increasingly being used to support financial stability analysis and macro-policy decision making."
  • On the report on foreign currency exposures, the FSB says: "The main objective of this ongoing work is to set the stage for improved assessments of cross-border risks."
The FSB will hold a plenary meeting in London on Sept. 25. The regulator will issue a news release after the meeting. No press conference will be held.
CFTC's critical entity rules
Encompassing IOSCO principles
(Sep 18) Commodity Futures Trading Commission regulations for "systemically important" clearinghouses encompass all standards separately created for such entities by the International Organization of Securities Commissions, CFTC staff said in a rule interpretation. This means that such entities must follow additional principles set forth by IOSCO in 2012. The international principles for clearinghouses state that such central counterparties should cover credit exposure through a margin system that is risk-based and reviewed regularly. Other principles address quality of collateral, default management, general business and operational risk management and access. In its interpretive memo, CFTC staff highlighted agency rules related to SIDCOs' (systemically important derivatives clearing organizations) relationships with their custodian banks, exchange-of-value settlement services, link arrangements and central bank services.
Binge reading disorder
Hand-curated, chosen with love
  • The best (and worst) ways to spot a liar (BBC)
  • A historian thinks he's pinpointed the oldest known use of the f-word (Quartz)
  • Get smarter instantly by following these seven people on Twitter (Bloomberg)
  • 18 maps that will change how you see the world (Buzzfeed)
  • Why we can't get over ourselves: exposing the reasons we fail to understand the minds of others (Nautilus)
Transparency.
Inclusiveness.
Consensus.