Recently, the US inflation rate reached a 13-year high, triggering a debate about whether the country is entering an inflationary period similar to the 1970s. WSJ’s Jon Hilsenrath looks at what consumers can expect next.

By Alice Tchernookova April 28, 2021, Practice Insight from IFLR The EU’s capital markets union project may never truly see the light of day until its banking union is completed, according to several sources. But member states’ unwillingness to share risk continues to be a key impediment.

“Without a banking union, so without common institutions, supervision and resolution, there will never be full financial and banking system integration in the euro area,” said Jeromin Zettelmeyer, deputy director in the International Monetary Fund’s strategy, policy and review department, during a recent event held by the Peterson Institute for International Economics (PIIE). “One of the fundamental obstacles to this in recent years has been the reluctance to risk-sharing, which ultimately has to do with trust between governments and in EU institutions.”full article

By Wendy LisneyApril 29, 2021, Global Investor Group Regulators and market participants are failing to learn the lessons of Libor as they rush headlong into the environmental, social and corporate governance (ESG) space, which is based on metrics that imply precision but could result in capital misallocation.

That is the view of Hester Peirce, a commissioner at the US Securities and Exchange Commission, who has warned that what appears to be an enticing, simple tool could lead to the misallocation of capital.full article

By Wendy Lisney April 29, 2021, Global Investor Group The Derivatives Service Bureau (DSB) expects to begin testing for its upcoming Unique Product Identifier (UPI) for over-the-counter (OTC) derivatives in the second quarter of 2022.

Malavika Solanki, a member of the DSB’s management team, said internal testing would begin in the second quarter before the service is rolled out for user testing in the third quarter. Go-live is scheduled for July next year, when institutions will begin creating the first UPIs that are reportable to regulators.full article

By Richard Waters April 30, 2021, Financial Times Quantum computing could be brought to bear on some of the most complex calculations in financial markets within five years, considerably earlier than expected, according to research jointly conducted by Goldman Sachs.

The findings come as banks and other companies at the leading edge of quantum research have turned their attention to trying to get practical results using the imperfect quantum computers that are expected to be in use in the next few years, rather than wait for the much more powerful systems that are one day expected to bring a revolution in computing.full article

By Orla McCaffrey and Richard Rubin April 29, 2021, The Wall Street Journal Part of the funding for President Biden’s $1.8 trillion American Families Plan hinges on a beefed-up reporting requirement for banks designed to identify unreported income.The proposal would require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirement would also extend to peer-to-peer payment services such as Venmo but wouldn’t require individuals and businesses to report any additional information to the government, according to people familiar with the plan. Financial institutions already must report interest, dividend and investment income, and the IRS can get bank information during audits.full article

By James Langton April 28, 2021, Investment Executive A trio of US industry groups is championing the idea of further shortening the trade settlement cycle from T+2 to T+1.

The US Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI) and The Depository Trust & Clearing Corporation (DTCC) have announced that they’re working together to reduce the U.S. settlement cycle.full article

By Chris Flood April 28, 2021, Financial Times The UK’s financial regulator has proposed several “quick fixes” to rules covering investment research and reporting requirements for share trading to ensure that asset managers are not at a disadvantage to their European competitors now the country has left the EU.

The Financial Conduct Authority suggested the tweaks after EU authorities last year revealed a wide-ranging series of updates to the pan-Europe market rules, known as MiFID II, which came into effect in 2018.full article

By Wendy Lisney April 28, 2021, Global Investor Group As swap execution facilities capture a growing percentage of euro sterling-denominated interest rate derivatives trading, the chief executive of trade body ISDA has called for equivalence between Europe and the UK to reduce fragmentation and prevent a negative impact on liquidity in European derivatives markets.

“As the EU and UK trading venues rules are almost identical, there seems no reason why equivalence should not be possible,” said Scott O’Malia at an ISDA forum on Wednesday afternoon.full article

By Huw Jones April 28, 2021, Reuters The hit to the City of London from Brexit has been less severe than initially predicted but may have further to play out, Britain’s top financial services official said on Wednesday.Britain was under “no illusions” that a post-Brexit “steady state” has been reached, in terms of banks settling on locations for their European operations, Katharine Braddick, head of financial services at Britain’s finance ministry told an event held by the Peterson Institute for International Economics.full article

By Huw Jones April 27, 2021, Reuters Shortly after Britain left the European Union, finance minister Rishi Sunak pledged a series of measures he dubbed “Big Bang 2.0” to ensure the City of London remained one of the world’s top financial centers.

Four months on, many financiers say his reforms to date are a far cry from Margaret Thatcher’s explosive changes of the 1980s, which were known as Big Bang and led to London dominating much of global finance during the following decades.full article

By Huw Jones June 28, 2021, Reuters Global market regulators said on Monday they may mandate the use of planned standards for corporate disclosures about climate change – if they are rigorously drafted.

Earlier this month finance ministers from the G7 rich nations backed the creation of an International Sustainability Standards Board (ISSB) to write “baseline” rules for disclosures on how climate change will affect companies’ performance.full article

By Neel Kashkari June 28, 2021, Financial Times In the early stages of the pandemic I called for large US banks to raise $200 billion of equity capital as a preventive measure to ensure they would have the financial wherewithal to endure a severe COVID-induced downturn.

Small businesses across America, which had been forced to lay off staff, were telling their landlords they would not pay rent until the crisis had passed. Those landlords were, in turn, telling their banks they would not be making mortgage payments.full article

By Eric Krebs June 24, 2021, Bloomberg The lack of thorough and accessible financial data is holding back economies across the world, and breaking down barriers in sharing that information could boost gross domestic product by as much as 1.5% in the European Union, UK, and US, according to McKinsey Global Institute.

Consumers, businesses and banks would all stand to benefit from an “open-data ecosystem,” a centralized, secure infrastructure that’s designed to improve the breadth of shared financial information, McKinsey researchers said in a report released Thursday. The goal would be to expand the amount of exchanged data and standardize how it’s passed around.full article

By Luke Clancy June 24, 2021, Risk The European Commission will draft in the next few months a proposal for a consolidated tape in Europe covering “certain strategic asset classes in the derivatives world” – as well as equities, bonds and exchange-traded funds (ETFs) – with a beta version ready for testing in 2023.Tilman Lueder, head of the securities markets unit at the EC, told a conference on June 23: “We’re still of the opinion that this can be provided by private initiative. We have had many conversations with very motivated actors who are ready to do this and who have the technological capacity. All they’re basically waiting for is some tweaks to the legislative framework so that they can get going.”full article

By Philip Stafford June 28, 2021, Financial Times Banks, regulators, and fund managers are gearing up for a fresh Brussels-led effort to jump-start trading in Europe’s corporate bond market, which has been held back by a stubborn lack of transparency.

The European Commission has this year initiated a push founded on the creation of a central database to hold vital trading information such as the price, size, yield and trading venue of bond transactions.full article

The recent G-7 meeting in the United Kingdom ended with sweeping promises that world leaders would prepare for the consequences of new technologies. They pledged to work together on a “trusted, values-driven digital ecosystem for the common good.” They will have their work cut out of them. The coming digitization of everything will have far-reaching geopolitical implications that we are just beginning to understand.

By Brian Tumulty June 25, 2021, The Bond Buyer Municipal securities dealer groups said Friday they are opposed to the creation of a $20 billion Infrastructure Financing Authority as part of a $1.2 trillion bipartisan infrastructure framework announced Thursday.

Other public finance groups have varying positions.full article

By Andrew Ackerman and David Benoit June 24, 2021, The Wall Street Journal The Federal Reserve gave large US banks a clean bill of health as they emerge from the Coronavirus crisis, paving the way for the lenders to boost their payouts to investors after June 30.

In a vote of confidence for the banks, including Goldman Sachs Group Inc. and Wells Fargo & Co., the Fed on Thursday said it would end temporary limits on dividend payments and share buybacks after all 23 firms performed well in annual stress tests.full article