Week InReview | NOTABLE QUOTABLES | (Mar 18) Fed's Dudley Says Banks Have Ultimate Responsibility for Risk: Federal Reserve Bank of New York President William Dudley, in welcoming remarks prepared for a bank supervision conference hosted by the New York Fed, said "The ultimate responsibility for risk identification and risk management remains with the supervised institution" and that "supervision can reduce the chance that a financial firm fails, but it can never provide a guarantee against failure." According to Dudley, "The Federal Reserve's role is to ensure that the institution has the necessary strong processes in place to achieve this objective."
Friday, March 18, 2016
Let's recap
In case you missed it . . .
Market risk indicator for EU securities
ESMA holds at highest level
(Mar 17) According to the latest risk report from the European Markets and Securities Authority, the overall market risk indicator for European securities markets held at "very high" - the highest level - with a stable outlook, while the regulator keeps liquidity and contagion risk at "high" with a stable outlook. The market risk indicator rose to "very high" in September 2015, responding to "mounting risks posed by excessive asset valuations" in the EU and "weakening growth outlook in emerging markets, and commodity market volatility." According to ESMA chair Steven Maijoor, "this analysis has been borne out by subsequent market developments and justifies its maintenance at very high."
Asset managers, algo trading will get more attention
Says Treasury counselor
(Mar 16) Treasury Counselor Antonio Weiss said the risks posed by asset managers' use of leverage, primarily in non-registered funds, will receive heightened attention from regulators and policymakers. Regulators are also examining the interconnection between markets. Increased capital across the banking system, more stable funding profiles, forward-looking steps by regulators to rein in risky lending practices contributed to stability of U.S. economy, Weiss said while a guest speaker at the U.S. Chamber of Commerce Capital Markets Summit. 
SEC should move on liquidity risk rule
SEC official says
(Mar 14) The Securities and Exchange Commission should push ahead on a liquidity risk management rule despite strong industry opposition, according to comments made by SEC Division of Investment Management Director David Grim at an industry conference. In September, the SEC proposed to require mutual funds and exchange-traded funds to create liquidity risk management programs. Under the programs, funds would have to classify and periodically review the liquidity risk of their fund products. The proposal would require companies to consider a fund's activity, trading volume, bid/ask spreads, volatility, structure and relationship to other funds. Companies would also have to determine the minimum percentage of their funds that would have to be held in cash-or assets that could be turned into cash within three days-in order to not significantly affect the value of the fund.
Binge reading disorder
Hand-curated, chosen with love
Should I Buy Diamonds, Wine or Picasso?

Fund managers lose out from benchmarking: Benchmarked funds are captive buyers of securities
- Financial Times (subscription required)

How to Taste Wine and Make It Look Like You Know What You're Doing

It's a little too quiet: Traders wary of calm as volatility bets jump
- Bloomberg Businessweek

Hard Truths For Investors to Wrap Their Heads Around