February 17, 2012

News on the capital markets, securities and financial industry

§  Commentary: America needs a smarter approach to regulation
The U.S. has many absurd regulations, but some of the most outrageous are not self-evidently ridiculous. Rules that sound reasonable can sometimes prove harmful because they are implemented without any cost-benefit analysis, according to The Economist. For example, the Dodd-Frank Act's aim was noble, but it has become overly complex. America needs a simpler, smarter approach to regulating the financial-services sector. The Economist (subscription required) (2/18) ????

§  Bank reports LIBOR manipulation by traders and brokers
Canada's Competition Bureau said a bank reported that traders and brokers manipulated the London Interbank Offered Rate, which affects loans worldwide. Although the regulator didn't identify the bank, sources said UBS was the "cooperating party." The Wall Street Journal (2/17) ????

§  LIBOR probe highlights links between voice brokers and traders
The investigation into the London Interbank Offered Rate is shining a light on the relationship between voice brokers and traders as well as the global nature of trading. Financial Times (tiered subscription model) (2/16) ????

§  Fitch raises concerns about CMBS-servicer fees
Some loan servicers are increasingly collecting fees from property owners who face or are in default, a practice that Fitch Ratings says could hurt commercial-mortgage bondholders. "Fitch's concern is not so much the size of any fee that a borrower pays, but the philosophy of the fee itself," Fitch analysts said. "Special servicers have a fiduciary duty to the trust and bondholders. Any fee charged to a borrower implicitly puts that fiduciary duty at risk." The Wall Street Journal/Dow Jones Newswires (2/16) ????

§  Other News

·         LME reportedly receives bids from multiple companies
Financial Times (tiered subscription model) (2/16) ????

§  U.S. senators voice concerns about effects of Volcker rule
A bipartisan group of six senators sent a letter to U.S. regulators warning that the Volcker rule could hinder market liquidity and restrict banks' market-making ability. "The proposed rule, as drafted, could adversely affect Main Street businesses by reducing market liquidity and increasing the cost of capital," the lawmakers wrote. "There is evidence that this is already beginning to occur." SIFMA offered several ideas to multiple federal regulators on how to better implement the Volcker rule, all in compliance with Congressional intent but without damaging the liquidity and resiliency of U.S. capital markets. Bloomberg (2/16) ????

§  Opinion: Regulators are incapable of executing Volcker rule
Paul Volcker, former chairman of the Federal Reserve, has pushed to keep Wall Street trading beyond the "taxpayer safety net," a sound idea, according to this Wall Street Journal opinion piece. "But as we noted last fall, the draft rule with its hundreds of questions and thousands of ambiguities demonstrates that regulators are not capable of executing a full Volcker." The Wall Street Journal (2/17) ????

§  State AGs vow to continue mortgage securitizations inquiry
New York Attorney General Eric Schneiderman and his counterpart in Delaware, Beau Biden, said officials will continue to look into possible misconduct in mortgage securitizations. The comments come after a settlement with large banks regarding foreclosure issues. "We are all committed to pursuing real investigations for all the areas that we are still able to investigate, specifically and most importantly on the securitization side," Biden said. "You're going to see a real effort on our part and the New York attorney general to pursue the securitization pieces of this to wherever it takes us." Bloomberg (2/16) ????

§  House panel moves to alter Dodd-Frank's push-out rule
The House Financial Services Committee approved by voice vote a measure to let banks keep equity and commodity derivatives in units insured by the federal government. The legislation would remove part of the push-out rule from the Dodd-Frank Act. SIFMA has questioned unintended consequences of the push-out rule. "We are also concerned that clients will migrate their swap contracts to other entities which are not subject to prudential regulation by federal regulators," according to a letter by Kenneth Bentsen Jr., executive vice president for public policy at SIFMA. "As a result, systemic risk may be increased instead of reduced." Read the SIFMA letter. Bloomberg Businessweek (2/16) ????

§  Regulators are poised to increase derivatives-sales trigger
Companies that sell a certain amount of derivatives will be subject to tough rules as officials overhaul regulations for the market. Regulators are considering raising the threshold for how much a company can sell before it faces stricter rules. The move comes as the Commodity Futures Trading Commission is set to vote on how to determine which firms will be designated as swaps dealers. Bloomberg (2/16), Financial Times (tiered subscription model) (2/16) ????

§  Industry has until Feb. 24 to submit fiduciary information
The Employee Benefits Security Administration at the Department of Labor has set a Feb. 24 deadline for submitting information on possible conflicts of interest facing brokers who offer advice on individual retirement accounts. The submissions will be included in the EBSA's assessment of the department's reproposed fiduciary rule. The Labor Department is striving to move forward quickly despite concerns from trade groups, including SIFMA. AdvisorOne.com (2/16) ????

§  Other News

·         FINRA fines firms for violating municipal securities rules
The Bond Buyer (special access for readers of SIFMA SmartBrief) (2/17) ????

·         SEC asks BNY Mellon to improve financial disclosures
Reuters (2/16) ????

·         SEC raises threshold for levying performance-based fees
InvestmentNews (free registration) (2/16) ????

·         White House wants FHFA to approve loan write-downs
The Wall Street Journal/Developments blog (2/16) ????

§  Register today for the SIFMA IAS IT Audit Training Seminar
Please join the SIFMA Internal Auditors Society on Feb. 29 for our IT Audit Training Seminar. This full-day seminar features several timely IT Audit topics presented by a variety of industry experts. Topics for the seminar include cloud computing, effective CAATs/data analysis and hot topics in IT risk and security. Participants will receive 8 CPE credits upon completion. Click here for more information on topics, speakers, and registration. ????

§  The Securities Lending Section (SLS) is hosting an Educational Seminar on Automated Trading
Please join the SIFMA Securities Lending Section for an Educational Seminar on Automated Trading on Thursday March 8 at the SIFMA Conference Center in downtown Manhattan. The seminar will review development plans focused on Automated Trading in Securities Lending. Senior Management from SunGard, EquiLend and Quadriserv will speak about their current and future offerings that serve the Securities Lending Market. A networking reception will be held immediately following the seminar where you can discuss current issues with industry colleagues. Click here for more information and to register. ????

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