By James Langton March 5, 2021, Investment Executive Global policymakers are launching a review of the impact on investment fund liquidity as financial markets tumbled in response to the initial onset of the COVID-19 pandemic.

The International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB) are carrying out a joint analysis of the open-ended investment funds that faced redemption pressures due to pandemic-driven market stress in March and April last year.full article

By Colby Smith and Brooke Fox March 8, 2021, Financial Times The Federal Reserve is ending the bulk of the remaining emergency facilities it rolled out last year to support financial markets through the Coronavirus crisis, in the latest sign that the economic recovery is gathering momentum.

The US central bank announced on Monday that it will allow three lending programmes to expire as scheduled at the end of the month, citing low usage. The Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, and the Primary Dealer Credit Facility were launched in March last year to combat turbulent trading conditions that engulfed markets when investors scrambled to hold cash. full article

By Olaf Storbeck, Martin Arnold, Sylvia Pfeifer, Kaye Wiggins, and Stephen Morris March 7, 2021, Financial Times Europe’s top banking regulator has asked the continent’s lenders for details of their exposure to stricken Greensill Capital and its key client GFG Alliance, as officials try to understand whether the crisis is contained, according to four people familiar with the matter.

Greensill last week was pushed to the brink of insolvency after Credit Suisse abandoned €10 billion of supply chain finance funds linked to the group and as Germany’s banking watchdog BaFin froze its Bremen-based bank and filed a criminal complaint alleging balance sheet manipulation.full article

By Daniel Thomas March 7, 2021, Financial Times Mid and small-cap companies should be exempt from “overly restrictive” MiFID II research rules, say most of the UK investors and companies surveyed in a report by the Quoted Companies Alliance and broker Peel Hunt.

As the government and Financial Conduct Authority consider their responses to a review by Lord Hill into the UK’s listing regime published last week, the report sets out a list of demands from investors and executives about how regulators and policymakers can grow equity markets.full article

By Harry Wilson and Silla Brush March 4, 2021, Bloomberg A widening gap between Britain and the European Union over finance regulation is starting to emerge, with a post-Brexit alignment dropping down the UK agenda.

In policy statements Wednesday, Chancellor of the Exchequer Rishi Sunak outlined measures to increase London’s competitiveness, including easier listing standards and a likely cut in bank levies. There was no discussion of trying to win Brussels’ endorsement for the regulatory equivalence that big firms like HSBC Holdings Plc say is vital.full article

By Louie Woodall March 3, 2021, Risk Top dealers told the European Central Bank (ECB) they thought credit terms and conditions for trading over-the-counter derivatives and securities financing transactions (SFTs) would tighten somewhat over Q1, after they loosened in the second half of 2020. The survey of 26 banks showed that 13% said price and non-price terms would likely tighten somewhat, and 4% that they’d likely ease. The same survey covering Q4 2020 showed just 4% thought terms would tighten and 9% that they’d ease.full article

By Sarah Wynn March 5, 2021, The Bond Buyer The Municipal Securities Rulemaking Board’s proposal to expand Regulation Best Interest to cover bank dealers would affect just a handful of dealers in an effort to reach regulatory parity.

In a notice filed Thursday afternoon, the MSRB asked for comment on proposed changes to its Rule G-19 on suitability, to extend the requirements of the Securities and Exchange Commission’s Reg BI to bank dealers. Bank dealers are not covered by the SEC’s standard. The change would affect 21 bank dealers registered with the MSRB.full article

By Gillian Tett March 4, 2021, Financial Times

This month, a “whodunnit” — or “what-did-it” — mystery hangs over markets. No, this is not about gyrations in bitcoin prices or GameStop shares.

Instead, the issue is the $21tn US Treasuries sector. In March 2020, as Covid-19 hit the west, Treasury prices went haywire as market liquidity collapsed. That was shocking in a sector that is normally “the largest and most liquid government securities market in the world”, according to the Federal Reserve.full article

By Louie Woodall March 4, 2021, Risk Holdings of Treasury securities by the eight US global systemically important banks (G-SIBs) increased a whopping 42% over 2020 to $1.19 trillion.JPMorgan disclosed the largest increase in Treasury holdings dollar-wise, of $142.4 billion (62%) to $370.4 billion. This amounted to almost 11% of its total assets as of December 31. Citi’s holdings increased the most percentage-wise, by 73% to $232.2 billion, making up about 10% of its end-year assets.full article

By Louie Woodall March 3, 2021, Risk Big US banks disclosed large increases in the amount of risk-weighted assets (RWAs) consumed by over-the-counter derivatives, repo and margin loan trades over 2020. The build up reflected the rapid growth of these banks’ OTC portfolios as well as a deterioration in the creditworthiness of trade counterparties.Citi reported a near 51% increase in counterparty credit risk (CCR) RWAs over 2020, to $120.3 billion. The total exposure at default (EAD) of its derivatives, repo and margin loan trades grew 39% over the same period, to $244.1 billion. The faster growth of RWAs meant that the risk density – RWAs divided by EAD – of Citi’s portfolio increased over the year to 49.3% from 45.5%.full article

By William Shaw, Silla Brush, and Alex Harris March 5, 2021, Bloomberg Regulators kicked off the final countdown for the London interbank offered rate Friday, ordering banks to be ready for the end of a much maligned benchmark that’s been at the heart of the international financial system for decades.

The UK Financial Conduct Authority confirmed that the final fixings for most rates will take place at end of this year, with just a few key dollar tenors set to linger for a further 18 months.full article

By Sarah Wynn March 2, 2021, The Bond Buyer Broker-dealers and operators of electronic trading platforms are warning the Securities and Exchange Commission that expanding alternative trading system regulation to request for quote functions would harm the municipal market.

In comment letters filed to the SEC on Monday regarding a concept release to update the current alternative trading system regime to create uniformity, broker-dealers cautioned the SEC against using stringent regulatory requirements on all electronic platforms without first conducting a study on the impact of additional regulations.full article

By William Shaw, Lananh Nguyen, and Matthew Boesler March 2, 2021, Bloomberg The Federal Reserve is intensifying its scrutiny of banks’ efforts to shed their reliance on the London interbank offered rate, and has begun compiling more detailed evidence on their progress, according to multiple people with knowledge of the matter.

Banks are being asked for specifics on their Libor exposure, their plans for amending contracts tied to the benchmark, and the fallback provisions being utilized to facilitate the shift to alternative rates, said the people, who requested not to be named given the sensitivity of the inquiries. The move is viewed partly as way for the Fed to telegraph the urgency of the transition, but also as a prelude to concrete supervisory action in the months ahead.full article

By Huw Jones March 2, 2021, Reuters France’s banking industry body wants a new European Union law that would force non-EU banks to shift swathes of euro derivatives clearing from the City of London to Frankfurt, people familiar with the matter said.Since Britain fully left the European Union in December the City of London finance industry has lost access to its biggest market and trading in euro shares and swaps have moved to the EU. Brussels is now targeting euro clearing and last week began a fact-finding mission by meeting with banks.full article

By Alexandra Harris and Benjamin Purvis June 1, 2021, Bloomberg The key benchmark that the Federal Reserve targets to control monetary policy slipped closer to zero, raising the possibility that the central bank might need to tinker with the tools it uses to control it.

The shift also adds to the debate about policy more broadly, as the glut of cash that’s keeping downward pressure on short-end rates combines with longer-term inflation concerns to fuel talk about just how soon the Fed might need to take its foot off the accelerator.full article

By Najiyya Budaly June 1, 2021, Law360

Europe’s securities regulator said on Tuesday that it has finalized guidelines that will recommend that trading venues quickly publish data on prices as it seeks to make financial markets more transparent and give participants an overview of trading activity.

The European Securities and Markets Authority has published final guidance on how trading venues should publish market data. Information on the price of trades should be published after each equity trade “on a reasonable commercial basis,” according to the rules. The venues should then make it available to the public, without charge, 15 minutes later.

full article

By Oliver Wade June 1, 2021, Global Investor Group The European securities regulator has published a draft set of guidelines intended to serve as a framework for the transfer of data between trade repositories (TRs) under its stock loan and repo reporting rules.

The new guidelines, set out in the European Securities and Markets Authority’s (ESMA) latest consultation, come as the TR landscape has undergone “major changes” as a consequence of multiple TR registration withdrawals and the UK’s departure from the European Union.full article

By Jeannette Neumann and Nicholas Comfort May 27, 2021, Bloomberg Top banking watchdogs are warning European Union lenders to stop resisting new rules or risk weakening the financial system and undermining the bloc’s role defending global accords.

The clash comes as negotiations on stricter global capital rules move into a decisive phase in the EU. Lenders and regulators are jockeying to be heard by officials at the European Commission, who are gearing up to propose how to implement the new standards in the fall ahead of their slated start in 2023.full article

By Martin Arnold and Patrick Temple-West June 2, 2021, Financial Times A global agreement is within reach that would require all listed companies to disclose the risks they face from climate change in a standardized way, the governor of France’s central bank has said.

François Villeroy de Galhau told the Financial Times that talks between government and central bank officials on new climate risk disclosure rules had progressed faster than expected and that an international framework could be agreed at November’s UN COP26 climate conference in the Scottish city of Glasgow.full article

By Lorenzo Migliorato May 27, 2021, Risk Six of the eight US systemic banks continued to pile on US Treasuries and excess reserves in the first three months of the year, despite the impending end of the Federal Reserve relief for leverage exposure. Such holdings returned to weigh on the banks’ supplementary leverage ratios (SLRs) on April 1, after the Fed revoked permission to exclude them from the denominator.full article

By Lorenzo Migliorato May 26, 2021, Risk A benign Bank of England (BOE) rule allowed the top five UK banks to lop an aggregate £717.5 billion ($1.02 trillion) off their leverage ratio exposures in the first quarter – the most since the European Union and UK leverage regimes diverged in 2016. UK-based lenders have been able to deduct qualifying central bank balances for their exposure measures for the UK-specific leverage ratio, something not permitted by the EU-wide measure under the Capital Requirements Regulation (CRR) regime.full article

By Julie Segal May 24, 2021, Institutional Investor Hedge funds have fallen short on their promises — and new research expects that performance will continue to trail the broader market for at least the next five years.

Aggregate hedge fund performance has declined over the past decade, according to a research paper that will be published in the CFA Institute’s Financial Analysts Journal.full article

By John Crabb May 27, 2021, Practice Insight from IFLR The majority of respondents at the first day of the IFLR European Capital Markets Forum expressed concern about the divergence of the MiFID II rules affecting the UK and the EU’s primary markets.

When polled on the topic during a session on the ongoing MiFID II review, 80% of respondents suggested that they were worried about deviating rules as a result of Brexit. Just 10% were not concerned.full article