As staff in the City start gradually coming back to the office, regulatory experts are warning there is an increased chance of rule breaches while some keep working remotely, despite compliance teams' efforts at digital surveillance.

Compliance teams must get a firm handle on the potential for new conduct risks to emerge, experts are warning, but privacy concerns continue for City firms who overreach in their monitoring of staff activity.

The...

Trillions of dollars’ worth of pandemic aid has rolled out in the U.S. to help bolster households and communities, but also to rekindle the economy by keeping credit conditions loose.

“Almost all the cash disbursed over the last three stimulus rounds, and then the money people aren’t spending, are all sitting on the sidelines,” said Jim Vogel, an FHN Financial fixed-income strategist.

“And as everyone has cash, and as we get deeper into the debt-ceiling-limit talks, the prospect of more Treasury bills is more distant,” Vogel told MarketWatch in a phone interview.

Read: Can Democrats raise the debt ceiling alone and avert a market meltdown?

Large-scale asset purchases by the Federal Reserve and other central banks during the pandemic have been blamed for tamping down bond yields and draining supply of Treasurys from markets.

Germany’s 10-year government bond yield TMBMKDE-10Y,

(Bloomberg) -- New research from quant firm Robeco is lending heft to fears that the day-trader billions flooding the stock market spell trouble for some of Wall Street’s smartest minds.

With suspicions growing that amateur investors are disrupting market patterns, a study from the 188 billion euro ($220 billion) manager suggests retail allocations favoring speculative technologies are in almost direct opposition to traditional systematic trades.

Robeco’s research, limited to indexes from two issuers, found the frenzy for thematic funds -- from artificial intelligence to space travel -- is bidding up expensive stocks that promise growth in cash flows over the long haul. 

The investing approach favored by the Robinhood-powered cohort is in stark contrast to those systematic players who tend toward cheap equities and profitable companies.

“Investors in thematic indices are effectively trading against quant investors,” David Blitz, chief...

(Bloomberg) -- The overabundance of cash in U.S. money markets that’s been weighing on short-term dollar borrowing costs appears to be spilling over America’s northern border.

Foreigners plowed around C$18.8 billion ($14.9 billion) into Canadian money-market instruments in June, the biggest single month of inflows on record, according to government data. And that was even before the debt-ceiling related money glut reached full force. 

With the reinstatement of the U.S. debt limit fueling imbalances in the market for Treasury bills, investors have been scrambling to find somewhere to park their cash.  Much of that has ended up at the Federal Reserve reverse repurchase agreement facility -- now home to more than $1.1 trillion -- but some looks to have found a home in Canada.

The imbalance in T-bills, which has helped to peg money market rates around zero, has been spurred in large part by rules surrounding the U.S. debt cap, which came back...

Federal Reserve officials last month indicated they were on track to begin reversing their easy-money policies later this year, despite lingering differences over when exactly to pull back support for an economy growing faster than they expected earlier in the year.

Minutes of their July 27-28 Fed meeting, released Wednesday, revealed an emerging consensus to begin scaling back the bank’s $120 billion in monthly purchases of Treasury and mortgage securities at any of the officials’ three remaining policy meetings this year.

“Most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” the minutes said.

The minutes said several officials favored reducing asset purchases in the coming months in order to better position the Fed to potentially raise interest rates if the economy strengthens further next year, while others...

(Bloomberg) -- The ability to trade in the world’s biggest debt market is deteriorating just as traders are on high alert ahead of the Federal Reserve’s Jackson Hole symposium next week for clues on the timeline for tapering stimulus.

A key gauge of Treasury liquidity -- market depth, or the ability to trade without substantially moving prices -- has fallen to the lowest in more than five months, according to JPMorgan Chase & Co. data. Ten-year yields hover at about 1.25%, up from a six-month low of 1.13% touched on Aug. 4. Stronger-than-expected July payrolls released earlier this month gave some lift to yields though growth concerns triggered by surging coronavirus cases has since weighed on them.

“Treasury market depth has continued to decline in recent weeks, and now at its lowest levels since early March, when yields were moving rapidly higher amid increased vol and a series of weak Treasury auctions,” JPMorgan strategist Jay Barry wrote in a...

The bill, formally introduced last month, would require federal agencies, federal contractors and organizations that are considered critical to U.S. national security to report security incidents to the Cybersecurity and Infrastructure Security Agency within 24 hours of discovery (see: Senators Introduce Federal Breach Notification Bill).

It defines several types of intrusions that would trigger the notification to CISA, including those that involve nation-states, an advanced persistent threat actor or a transnational organized crime group; those that could harm U.S. national security; or those that involve ransomware with national security implications.

Noncompliant companies could face financial penalties up to 0.5% of the previous year's gross revenue. Other national breach notification bills have failed to advance in Congress in recent years.

Federal regulators are pursuing cryptocurrency startups in court and striking a growing number of legal settlements for rule violations, triggering complaints from the industry and sympathetic lawmakers who say it threatens a growing sector of the economy.

Over the past month alone, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department announced more than $120 million in penalties aimed at digital currency exchanges and other service providers that officials said weren't complying with federal markets regulations and anti-money-laundering requirements. Several states also escalated their own crypto enforcement crackdowns this summer.

The letter seems to be applying political pressure for the two government agencies to act on their own, rather than waiting for a bill requiring the creation of such a group to become law.

When the Paycheck Protection Program began last year to help small businesses that were struggling during the pandemic, the federal government was determined to get the relief money out fast — so it waived much of the vetting lenders traditionally do on business loans.

The absence of those safeguards meant that fraud was highly likely. But just how much of the program’s $800 billion was taken illicitly?

A new academic working paper released on Tuesday contains an estimate: Around 1.8 million of the program’s 11.8 million loans — more than 15 percent — totaling $76 billion had at least one indication of potential fraud, the researchers concluded.

“There’s been a lot of anecdotes about fraud, but the tricky thing about anecdotes is that it’s very difficult to put them together and get at the scale of what’s going on,” said Samuel Kruger, an assistant professor of finance at the University of Texas at Austin’s McCombs School of Business and one of the paper’s...

Many financial advisors had prior to the pandemic seized the increasing opportunities that technological advancements allowed them to serve clients from remote locations. But the Covid-19 shutdown expanded the definition of advisors’ remote offices—and expanded their willingness to share with clients their locales, even when they are exotic, often expensive, and not previously deemed haunts ideal for achieving tasks efficiently.

“Clients don’t care anymore and that’s a huge plus for us advisors. They don’t care if we are wearing a suit either and that is also a huge plus for lifestyle,” said Ross Gerber, the president and founder of Santa Monica, California-based Gerber Kawasaki Wealth & Investment Management, a registered investment advisory firm with more than $2 billion in client assets.

His comments echoed those of the typically buttoned-up wirehouse crowd, including some who have traipsed to...

By Alice Tchernookova August 12, 2021, Practice Insight From IFLR A recent survey has found that large swathes of the investment management industry are unprepared for the UK’s upcoming Investment Firms Prudential Regime (IFPR), although the new rules will begin to apply in January next year.

The survey, conducted by governance, risk and compliance advisory firm ACA Group across 700 participants, found that 97% of respondents were not ready for the regime. More worryingly, ACA said, 41% of these firms are acutely aware of the required changes but have adopted a wait-and-see approach.full article

By Heather McKenzie August 16, 2021, Best Execution Whenever the cost of market data is discussed, trading firms could be forgiven for thinking it is Groundhog Day. Complaints that market data is too costly have been raised for many years, studies are commissioned and yet the cost of data continues to rise.

Among the market regulators and supervisory bodies currently investigating market data costs are the UK’s Financial Conduct Authority (FCA) and the European Securities and Markets Authority (ESMA).full article

By Ben Goss July 20, 2021, FTAdviser

The UK has never in my lifetime felt as much like an island as it has during the pandemic.

A holiday abroad – once as easy as jumping on a £39 flight – has become something to dream about. Those with family in France or Spain have felt the distance to be as great as if they were on the other side of the world.

full article

By Sonia Rach July 22, 2021, FTAdvsier

The growing trend in the advice profession of firms operating their own platforms as opposed to using white-label or third party versions, is down to advisers reclaiming control and making use of some emerging opportunities, said Mark Polson. Speaking at a virtual event this morning (July 22) called ‘Advisers Assemble! Why advisers and DFMs are choosing to operate their platform,’ the Lang Cat principal referred to research by platform technology provider Seccl which found 44% of advisers are considering platform ownership.full article

By Silla Brush July 14, 2021, Bloomberg Tensions are rising within the European Union over the failure to name a replacement to lead the bloc’s top financial-markets regulator.Paris-based European Securities and Markets Authority has been without a chair since Steven Maijoor’s mandate came to an end in March because of a political standoff at the Council of the European Union, which represents the national governments that make up the bloc. The delayed selection is damaging the watchdog, Evelyn Regner, a member of European Parliament, said in a letter to the presidency of the council.full article

By Jon Hay August 5, 2021, GlobalCapital

A new level of harmonization and simplicity in financial markets communication is on the horizon, according to supporters of the Common Domain Model — a coding framework that will allow bonds, repos and derivatives to be described in a single format, potentially making processing more efficient and less manual.

The International Capital Market Association has just finished developing the first version of its part of the CDM, covering simple bond trades and repos, and has released it to market participants to start using.

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By Thomas Helm August 6, 2021, Practice Insight From IFLR

It has been more than three years since MiFID II/MiFIR entered into force but the errors and omissions rate is still high. According to sources, this is due to a lack of systems and controls in entities responsible to report and lingering interpretation issues.

Research, for example, by the ACA Regulatory Reporting Monitoring & Assurance (ARRMA) service has shown that 97% of firms are reporting incorrectly under MiFIR/EMIR and that on average each report has 30 separate error types.

full article

By Fiona Nicolson July 28, 2021, Funds Europe

The Alternative Investment Fund Managers Directive (AIFMD), which emerged in the wake of the global financial crisis, is currently under review. AIFMD was introduced to tighten regulation of private equity, real estate, and hedge funds. Unlike the UCITS directive that covers traditional and liquid investments such as listed shares, the AIFMD regulates the managers rather than the funds. 

At the heart of AIFMD is investor protection and market stability. The directive’s introduction was a torturous and expensive event for the alternative investment funds industry.

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By Najiyya Budaly August 6, 2021, Law360

The finance watchdog set out proposed disclosure rules on Friday that investment firms authorized in the U.K. will have to follow under a future prudential regime for the sector, which is aimed at boosting competition and ensuring companies can fail without causing disruption.

The Financial Conduct Authority said the planned disclosure requirements for investment companies will apply from January 2022. The proposals will come in force under the forthcoming Investment Firms Prudential Regime, which will require companies in the sector to maintain sufficient capital and have adequate risk controls.

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By Gerald Segal July 13, 2021, FX News Group

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has announced that it is issuing a public statement to remind firms that the receipt of payment for order flow (PFOF) raises significant investor protection concerns.

The regulator added that it also highlights key MiFID II obligations aimed at ensuring firms act in their clients’ best interest when executing their orders.

full article