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Archive for the ‘Regulation’ Category

Dodd-Frank Stands Technically Corrected and Small Banks Lose

“People got a bit lax,” Queen Elizabeth II said last week of the time leading up to the financial crisis. “Perhaps it was difficult to foresee.” The U.K.’s monarch also lamented that her nation’s Financial Services Authority “didn’t have the teeth” to curb risky business through 2008. And dental enhancements for global banking regulators continue to [...]

Too Big To Fail Makes a “Fine” Mess for British Banks

Solving the too-big-to-fail problem in banking just got international. Authorities could seize a Global Systematically Important Financial Institution (GSIFI) — and dismantle it as appropriate — under a joint plan by the Federal Deposit Insurance Corporation (FDIC) and the Bank of England released Monday. “For many GSIFIs, this strategy holds the best possibility of preserving stability [...]

Lighting Up Dark Pools and Dissing Dodd-Frank

Shadow banking may sound like the demon brainchild of Dr. Evil and Gordon Gekko, but about half of the banking system’s assets are in this mostly unregulated realm of finance. And global regulators at the Financial Stability Board recently looked at taming that realm. Liquidity buffers, leverage limits and standards on how to make calculations [...]

Regulatory Reform: It’s The System, Not The Software

Trading stood still on more than 200 companies Monday, as a server kept the New York Stock Exchange from publishing quotes for most of the day. Taken alone, this seems like a technical glitch. But combined with earlier problems, such as Knight Capital in August, Facebook in May, BATS in March and other issues this [...]

Dodd-Frank and the Global Culture Change

Author’s Note: Happy Veterans Day! “The impact of Dodd-Frank for foreign banks is going to be widespread and long-lasting,” according to a recent report by Boston-based research and consulting firm Celent. “The new rules would alter the trading strategies and operations of most of the large swap trading firms globally.” U.S. firms would see less [...]

Not-Ready-for-Real-Time Players Handicap Themselves

Three in five financial institutions cannot perform real-time reconciliation because they haven’t started working on it for any of their asset classes, according to a recent survey. And they don’t think they’ll be ready to start work on this regulation-essential project before the end of next year, stated the survey by London-based software solutions provider [...]

Europe Takes Control of High-Speed Trading

The European Parliament’s financial committee decided last week to rein in the velocity of high-frequency trading. The Economic and Monetary Affairs Committee’s unanimous vote paves the way for a half-second speed limit on those using computers to execute lightning-fast stock deals. “All market players and trading venue operators would be required to lay down clear [...]

Looking For Perfect in the Trading World

Stricter risk controls are necessary at all levels of the high-frequency trading cycle, according to the Federal Reserve Bank of Chicago this week. HFT firms aren’t employing risk controls endorsed by industry and regulatory bodies, the bank’s study found, and algorithms run amok more often than expected. Kill switches that terminate trading at certain levels, [...]

McDonald’s Transparency Offers Financial Industry Food for Thought

“Would you like 500 calories, er, fries with that?” Global fast food juggernaut McDonald’s will list the calorie values on its menus across the U.S. next week, giving customers the chance to evaluate their choices. The parallel between this fast food initiative and the financial services industry may seem unclear, but I’ll try to make [...]

Securing The Future And The Bottom Line With Data Management

It’s increasingly expensive for big banks to maintain their size, especially while they face growing data management challenges, increased capital reserve requirements and regulatory surcharges. Conventional wisdom used to hold that a bigger bank could better spread its risk. With more assets under its control, a big bank can diversify to the point of almost [...]