OFR Annual Report Warns of Lingering Threats to Financial Stability

Wednesday, December 17, 2014

In its most recent Annual Report, the Office of Financial Research (OFR) warns that despite the strengthening global financial system, threats to financial stability still remain, and it is no time for complacency.  Formed in 2010 as a part of the Treasury Department under a mandate in the Dodd-Frank Act, the OFR is charged with improving the quality of financial data available to policymakers and to facilitate more robust and sophisticated analysis of the financial system.  As part of its mission, in an annual report to Congress, the OFR analyzes potential threats to U.S. financial stability, documents significant progress in meeting the mission of the Office, and reports on key research findings.  This year’s document reports that, though the financial system has continued to recover and strengthen, and threats to financial stability are presently moderate, several financial stability risks have increased.  The three most important are excessive ...

Tarullo: Liquidity Regulation Today and Tomorrow

Who Will Be Swept Up in the Next Round of Liquidity Rules?

Thursday, December 11, 2014

The financial crisis of 2007-08 was a crisis of liquidity. Facing deep uncertainty about the condition of counterparties and the value of collateral assets, investors refused to offer new short-term lending or even to roll over existing repos and similar extensions of credit. As a result, many funding markets ground to a halt.  The role liquidity, or rather the sudden lack of liquidity, played in the most recent crisis is unlike that experienced in the savings and loan crisis or the Latin American debt crisis of the 1980s.  Consequently, regulators and policy-makers have found the regulation of liquidity to be a new frontier, and one that remains the focus of keen interest to the Federal Reserve.  Recently, Fed Board Governor Daniel K. Tarullo outlined his thoughts on both the importance of liquidity regulation, and the direction he sees it heading.

FCA Fines Five Banks $1.7 Billion for FX Failings

Announces Industry-wide Remediation Programme

Thursday, December 04, 2014

On November 12 2014, the UK’s Financial Conduct Authority issued Final Notices collectively imposing record fines totaling $1.7 billion on five global banking firms for alleged rigging of the FX market. The FCA found that the banks engaged in widespread conduct that put the banks’ interests ahead of those of their clients and other market participants.

G20 Brisbane Meeting Promises Focus on Resilient Financial System

Expanding the Financial Sector's Role in Building a Stronger and More Sustainable Global Economy

Wednesday, November 26, 2014

With the conclusion of their November 15 and 16 meeting in Brisbane, the G20 has published their official communiqué outlining the group’s progress, plans, and areas of focus. Financial regulatory reform remains the central focus of G20 activities. However, with the slow global recovery and disappointing job growth, the G20 announced that they expect to emphasize expanding the financial sector's role in building a stronger and more sustainable global economy. The overall thrust of the G20’s Brisbane communiqué is that critical work remains to build a stronger, more resilient financial system. Over the next year, the group intends to continue to finalize the various elements of its policy framework that remain open, fully implement financial regulatory reforms already agreed upon, and be vigilant for new risks and unexpected consequences.

FSB Moves for More Transparency in Repo and Securities Lending Markets

Proposals for Standards and Processes for Global Securities Financing Data Collection and Aggregation

Wednesday, November 19, 2014

On November 13, the Financial Stability Board published a consultation report that sets forth proposed standards and processes for global securities financing and data collection and aggregation. Previously, the FSB recommended that national/regional authorities collect appropriate data on securities financing markets to help the FSB better assess ongoing financial stability. These latest proposals are intended to provide guidance on what kinds of data on repo, securities lending, and margin lending should be collected, how they should be collected, and in what format. Mark Carney, Chairman of the FSB, characterized the proposed standards as "an important step to ensure that authorities fully understand trends and risks in one of the core funding markets for wide range of market participants. The global data collection and aggregation based on the FSB standards and processes will help transform securities financing markets into more transparent and resilient sources of ...
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