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 ...
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Eaton Vance Scores Huge Victory on Non-Transparent ETFs

The Gateway Opens for Exchange Traded Managed Funds

Friday, November 14, 2014

On November 6, 2014, the Securities and Exchange Commission granted Eaton Vance’s request to launch an "exchange traded managed fund" (ETMF), a new kind of exchange traded fund. Only a week before, the SEC provisionally denied similar requests for ETMFs from Blackrock and Precidian Investments.

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Benchmarking data called into question

FX fines undermine validity of bank-provided financial rates

Wednesday, November 12, 2014

Convenience and low cost have always been the prime motives for customers to use bank-provided benchmarks in their portfolio analytics. That user model, shaken by the Libor scandal, now seems upside down after US, UK and Swiss regulators fined 5 major banks more than US$3 billion for rigging FX rates in London.  Going forward, bottom-up benchmarks based on customer reported activity may displace the banks' own rate reporting. 
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Global OTC Working Group Updates the G20

OTC Derivatives Regulators Group Issues Report on Cross-Border OTC Regulation

Tuesday, November 11, 2014

The G20's meeting in Brisbane begins tomorrow, and international working groups have been burning the midnight oil to have their progress reports ready in time.  One such group, the OTC Derivatives Regulator Group (ODRG), issued a report on November 7 that provides an update to the G20 Leaders regarding the ODRG’s continuing effort to identify and resolve cross-border issues associated with the implementation of the G20 OTC derivatives reform agenda. The report reflects how ...
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Shadow Banking: Less is More.

Is Deregulation the Most Effective Way to Deal with Shadow Banking?

Wednesday, October 29, 2014

These heightened capital requirements for licensed banks may trigger even more regulatory arbitrage than was observed in the recent past, thereby inducing a large migration of banking activities towards the shadow banking system. The higher solvency of the licensed banking system may then be more than offset by such growth in shadow banking, ultimately increasing the aggregate exposure of the money-like liabilities issued by both the formal and shadow banking sectors to shocks on loans. It ...
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AIG Fights for $308M in Economic Substance Claim

Thursday, October 23, 2014

In 2009, American International Group (AIG) sued the IRS to recover approximately $306 million in denied tax credits. After negotiating a tortuous litigation process, the dispute has surfaced again in court. On October 17, 2014, AIG argued before the Second Circuit Court of Appeals that six transactions it entered into from 1993 to 1997 were part of a bona fide spread banking activity and that it should recoup millions in foreign tax credits denied by the IRS relating to the transactions. ...
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FSB Proposes New Framework for Haircuts on Non-Centrally Cleared Securities Financing Transactions

Thursday, October 16, 2014

The Financial Stability Board has published a new “Regulatory Framework for Haircuts on Non-centrally Cleared Securities Financing Transactions.”  The new framework addresses certain shadow banking risks relating to securities financing transactions by limiting the build-up of excessive leverage outside the banking system and reducing the procyclicality of that leverage.

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ESMA Proposes Mandatory Clearing for FX Non-Deliverable Forwards

Thursday, October 16, 2014

The European Securities and Markets Authority is seeking input on its plans for mandatory central counterparty clearing of foreign exchange non-deliverable forwards (FXNDF). FXNDFs are cash-settled foreign exchange forward contracts that cannot result in physical delivery of the designated currencies at maturity. FXNDFs allow hedging of currencies where government regulations restrict foreign access to local currency or the parties wish to compensate for risk without a physical exchange of ...
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List of Open Consultations and Rule Proposals

Thursday, October 09, 2014

With the November 15 and 16 G20 Summit in Brisbane fast approaching, policy makers and regulators in the US and the UK have been hard at work.  Not to be outdone, IOSCO, ESMA, and BIS have also been busy.  Eager to demonstrate progress on financial re-regulation and reform, there has been a flurry of consultation papers and rule proposals at all levels over the past quarter.  The following is a list, current as of October 9, 2014, of some of the more noteworthy proposals and ...
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What’s in a Name? Would a Derivative by Any Other Name Smell As Sweet?

Wednesday, October 08, 2014

The different approaches to the interpretation of MiFID I across Member States mean that there is no commonly-adopted application of the definition of derivative or derivative contract in the EU for some asset classes. Whilst this issue has in the past been noted as a concern since the implementation of MiFID, the practical consequences have come to the forefront with the implementation of the European Markets Infrastructure Regulation (EMIR). What exactly is a derivative? ...
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