For vendors in the market data connectivity business, the Securities and Exchange Commission’s initiative to modernize the public feeds of US equities data is an enticing business proposition. The regulator has finalized a rule that is part of its efforts to, as it says, modernize market structure. The “infrastructure rule” creates a system in which—instead of two securities information processors (Sips) pumping out bid/ask quotes, consolidated from US trading venues to consumers—a decentralized

Interdealer brokers say they may continue to show US dollar Libor swap prices even after regulators have called for screens to go dark in October.

Under the SOFR First initiative, which is promoting a move to the secured overnight financing rate, brokers are being asked to switch off US dollar Libor swap screens altogether after October 22. But two brokers plan to defy those demands, citing transparency requirements and still-current licensing agreements for these feeds.

“Our role is not to

Over-collateralisation of European Union banks’ exchange-traded derivatives (ETD) liabilities at end-2020 was the highest since the previous March, European Banking Authority (EBA) data shows – a sign of how margin requirements can ramp up despite ostensibly benign market conditions.

As of the end of last year, security posted by lenders in ETD transactions was 23.3% in excess of their liability, compared with 12% at end-September and 17.4% at end-June.

(Bloomberg) -- As Europe rewrites the rules of investing to protect the planet from climate change, asset managers say they’re seeing differences in how those edicts are being interpreted.

Since March, money managers in Europe have had to adapt to the Sustainable Finance Disclosure Regulation. Designed to fight greenwashing by forcing a uniform set of reporting standards, SFDR is more ambitious than anything agreed elsewhere in the world.

But a Bloomberg survey of some 20 major European banks and asset managers suggests the regulation leaves too much room for guess work. That means that despite vast piles of cash moving into environmental, social and governance investing, efforts to steer capital away from carbon emitters may ultimately fall short.

Baard Bringedal, chief investment officer at Storebrand Asset Management, says managers still have to deal with “many uncertainties and blind spots” when trying to allocate cash. “As an anti-greenwashing...

WASHINGTON (AP) — The president of the Federal Reserve Bank of Boston added his voice Monday to a growing number of people, inside and outside the Fed, who say the central bank should soon begin to dial back its extraordinary aid for an economy that is strongly recovering from the pandemic recession.

Eric Rosengren said in an interview with The Associated Press that the central bank should announce in September that it will begin reducing its $120 billion in purchases of Treasury and mortgage bonds “this fall.” The bond buying, which the Fed initiated after the coronavirus erupted in March of last year, has been intended to lower longer-term interest rates and encourage borrowing and spending.

Rosengren also echoed some of the Fed’s recent critics by arguing that the bond purchases are no longer helping to create jobs but are instead mostly helping drive up the prices of interest-rate sensitive goods such as homes and cars. Home prices are rising at the fastest...

The U.S. Treasury set the stage for reduced government debt issuance in coming months, even as it kept its upcoming quarterly auction of long-term securities at a record size.

The Treasury, in a

By Anish Puuar May 6, 2021, The Trade

With the Financial Conduct Authority (FCA) poised to scrap MiFID II’s so-called RTS 27 and 28 reports, the UK has an opportunity to set Europe’s gold standard for best execution monitoring. Replacing the MiFID II reports with a standardised set of broker routing metrics, similar to those recently introduced by the US Securities and Exchange Commission (SEC), could be a good place to start.

It’s no secret that the RTS 27 and 28 reports are unloved by European market participants. The FCA’s April 28 consultation paper said they “have not achieved their policy goal of enhancing investor protection or improving information on execution quality and order routing” and are barely used by the industry.full article

By Pedro Goncalves May 7, 2021, Investment Week The Financial Conduct Authority (FCA) proposed changes to the MiFID II reporting rules could see asset managers save up to £6.7m in compliance costs a year, research suggests.

Asset managers in the UK are set for a softening of the MiFID II ban on using dealing commissions to fund research ahead of EU counterparts with fixed income research the most likely beneficiary, according to a report by Bloomberg Intelligence.full article

By Thomas Helm May 6, 2021, Practice Insight from IFLR With the Sustainable Finance Disclosure Regulation (SFDR), the EU taxonomy, the election of Joe Biden, the European Green Recovery and a furious investor appetite for ESG products, the green transition is well and truly underway. However, the corresponding rush for ESG data, especially the data necessary for compliance with EU green regulations, has led asset managers to prioritize ESG concerns over SME investment, according to sources.

One unfortunate and unintended consequence of a data-driven green transition is that a number of SMEs have been locked out of green investment.full article

By Jon Yarker April 30, 2021, Money Marketing As a journalist covering financial advice, I like to think I have a solid understanding of what advisers do and don’t like. In fact, here’s a brief list.

Likes: Building a business. Advising clients. Financial education. Launching podcasts. And, increasingly it seems, driving Teslas.full article

By Huw Jones May 10, 2021, Reuters Britain’s finance watchdog wants banks to speed up a shift to new interest rate benchmarks that replace the Libor rate which is being scrapped after December.The London Interbank Offered Rate or Libor, once dubbed the world’s most important number, will be replaced at the end of December with “risk free” rates compiled by central banks.full article

By Huw Jones May 10, 2021, Reuters The meltdown at Archegos Capital Management that triggered big losses at several banks highlighted the need to review rules on posting margin or cash against derivatives trades, the head of a global markets regulator said on Monday.

Archegos was highly exposed to ViacomCBS Inc, whose shares plunged in March, leaving the hedge fund facing a massive margin call from its prime broker banks. Archegos was unable to meet the call to secure equity swap trades the banks had partly financed.full article

By Steve Johnson May 10, 2021, Financial Times BlackRock has hit back at suggestions from the Bank for International Settlements that bond exchange traded funds might have short-changed market makers during the March 2020 market sell-off.

The BIS paper suggested that large price dislocations opened up last year between bond ETFs and the prices of their underlying securities because ETF managers deliberately handed authorised participants baskets of low-quality bonds. This would have discouraged underlying trading and jammed the arbitrage mechanism designed to bring the share price of an ETF back into line with its net asset value.full article

By Joe Parsons May 7, 2021, The Trade When the UK and EU announced their last-minute post-Brexit agreement and there was little to no mention of financial services, the eventual divergence on trading regulation was inevitable. 

Early signs of the UK’s split from EU regulations came last year when the UK Treasury confirmed it would not implement the Settlement Discipline Regime (SDR), set out under the Central Securities Depository Regulation (CSDR).full article

By Karen Brettell May 6, 2021, Reuters A group of banks and investors overseeing the shift of trillions of dollars to the new benchmark US interest rate SOFR on Thursday published a list of indicators that it wants to see progress in so it can recommend a forward-looking SOFR rate.

Investors are facing a year-end deadline to stop basing new loans and trades on Libor, the London Interbank Offered Rate, which is being phased out due to concerns about the amount of derivatives using the rate, which in many cases is based on assumptions about their borrowing costs and not actual trades.full article

By Gary Silverman and James Politi May 6, 2021, Financial Times The US Federal Reserve has warned that existing measures of hedge fund leverage “may not be capturing important risks”, pointing to the collapse of Archegos Capital as an example of hidden vulnerabilities in the global financial system.

The US central bank’s semi-annual report on financial stability found that some asset valuations are “elevated relative to historical norms” and “may be vulnerable to significant declines should risk appetite fall.”full article

By Bob Pisani May 6, 2021, CNBC New Securities and Exchange Commission Chairman Gary Gensler will testify before the House Financial Services Committee on Thursday. 

It’s the third House hearing focused on GameStop, but Gensler’s first appearance as chairman before the committee.full article

By Robert Mackenzie Smith May 6, 2021, Risk In the US Treasury market, it’s not quite business as usual any more. The world’s most important debt market is witnessing instability, as buyers periodically fail to show up. This has led some traders at primary dealers to question whether the overall structural demand is enough to meet the avalanche of supply.The amount of debt being issued by the US Department of the Treasury has increased by 50% across the curve and almost doubled on some tenors in 2021. This is prompting volatility at debt auctions, as the market struggles to find a clearing price.full article

By Huw Jones May 5, 2021, Reuters Britain will scrap a rule inherited from the European Union that aimed to open the listed derivatives market to more competition, saying it was not appropriate for Britain to implement it alone.

Britain had championed the “open access” rule that allows buyers and sellers of derivatives listed on exchanges across the EU to choose where they clear their contracts, rather than be locked into using a clearer owned by the exchange.full article

By Oliver Wade May 5, 2021, Global Investor Group The European Commission underlined that “no decision” has been made on changes that may be proposed to amend the impending Central Securities Depositories Regulation (CSDR).

Mairead McGuinness, commissioner of financial services, financial stability and capital markets union at the European Commission, said in a letter: “At this point in time, no decision has been made on the changes that may be proposed as part of the Commission proposal to amend CSDR.”full article