FSOC Focused on Asset Management and Reaching a Broader Audience

Tuesday, November 17, 2015

During their most recent meeting, the Financial Stability Oversight Council revealed that the asset management sector remains an area of concern to the super-regulator. According to minutes of the November 2, 2015 meeting,  the FSOC has identified six categories of potential risk arising from the asset management sector and is conducting ongoing analyses with an eye toward more regulation.  Treasury Secretary and Chairman of the FSOC, Jack Lew, indicated that updates on the Council's analysis of these risk areas and perhaps regulatory recommendations could be expected early in 2016.  In addition, members of the Council have taken to the press to head off legislative interference.             

Basel Tightens the Reins on Internal Risk Modeling by Banks

Wednesday, November 04, 2015

In a November 2, 2015 speech in Madrid,  Stefan Ingves, Chairman of the Basel Committee and Governor of Sveriges Riksbank,  announced that the Basel Committee on Banking Supervision will revisit internal risk modeling by banks. According to Mr. Ingves, "ample evidence has accumulated to suggest that the current role of internal models in the regulatory framework does not strike the right balance between simplicity, comparability and risk sensitivity."  While "the use of internally modelled approaches was a defining feature of Basel II," the Basel Committee expects to revisit this reliance on internal modeling and, perhaps, broadly eliminate it for some risk categories.


DTCC Studies the Risks of Interconnectedness

Thursday, October 29, 2015

The financial crisis made clear that interconnectedness and complexity have the potential to magnify localized shocks and amplify and transmit them to the greater financial system.  Understanding the risks posed by our ever more interconnected global financial system is crucial to managing those risks.  To that end, DTCC has published a whitepaper providing an overview of the subject, surveying a selection of interconnectedness studies conducted thus far, and highlighting regulatory measures designed to address interconnectedness risks. Among other things, DTCC concludes that “firms must do more than monitor and mitigate these risks – they also need to focus on building resiliency so they can detect potential systemic shocks before they strike or recover from them as quickly as possible.”

FINRA Will Repeat Liquidity Stress Tests in 2016

Tuesday, October 20, 2015

In a preview of FINRA's 2016 letter on regulatory priorities and emerging risks, FINRA's CEO, Richard Ketchum   said that FINRA’s focus in the upcoming year will be on three key issues: outsourcing, cyber risk and liquidity concerns. Ketcham also said that FINRA will repeat “some version” of its liquidity stress tests in 2016, further indicating that these stress tests will be an ongoing focus of FINRA.  

B of E Explores Accepting Equities as Collateral

Thursday, October 15, 2015

In a speech in July before at the Money Markets Liaison Committee in London, Chris Salmon, Executive Director, Markets, Bank of England hinted that the Bank of England was exploring means by which it could accept equities as collateral for its market operations.


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