The IOSCO has recommendations for market authorities as to trade execution services. These recommendations are driven by a general sense that technology has brought about increased fragmentation and that this, unless carefully monitored, is a dangerous thing.
A new youtube video that seems aimed at building public sentiment for preserving section 716 of the Dodd-Frank Act intact, is actually after bigger game. And the bigger game is a far better target. But the word "derivatives" is not really that tricky to pronounce.
Guest columnist Shane Brett looks at AIFMD and what it means for Americans.
Guest columnist Shane Brett explains the steps needed for firms to be FATCA-compliant.
Managers broadly are of the view that the more complex a regulation, the more expensive it is for those affected. The regulations that concern them the most in this respect are: FATCA and AIFMD.
Guest columnist Diane Harrison looks at the U.S. JOBS Act for what it is...and isn't.
A newly issued report by the Bank for International Settlements speaks volumes about what is happening to the world banking system as the new millennium enters its troubled teen years. I refer to the special feature, “How have banks adjusted to higher capital requirements?” written by Benjamin Cohen and included with the BIS’ latest quarterly [...]
On the too-big-to-fail front, for example, AIMA observes that risks associated with the failure of any particular entity "should be adequately addressed...." That is quite unobjectionable. All problems should be adequately addressed.
The CFTC is said to be close to issuing a concept release on high-frequency trading, pushing the regulatory process beyond the agency's earlier talkfests. Christopher Faille muses about an approach the concept release will almost certainly not advocate.
Buried in the midst of a wide-ranging report, we have found the news that the old-fashioned FIX protocol is still a vital force, unlikely to be replaced by the flashier open-source FpML.
As Julian Young, Partner, EMEIA Asset Management, E&Y put it, some alternative investment fund managers will need to "operate across a patchwork quilt of regulatory standards [in Europe] for the next few years at least" despite the standardization goals that were part of the appeal behind AIFMD.
Guest columnist Shane Brett looks at AIFMD compliance for private equity managers.
According to a new 7th Circuit decision, there is a sharp distinction between insider trading in corporate shares on the one hand, and the redemption of fund shares on the other, at least with regard to the traditional theory of such trades.
Guest columnist Shane Brett examines AIFMD compliance.
A year ago the CFTC published its "final exemptive order regarding compliance with certain swap regulations." That order was to last for one-year, and thereby set a clock ticking. Negotiations became frantic in recent weeks as the alarm approached. Nobody wanted to hear it ring.
In an initial consultation report in January of this year, the IOSCO Board took an aggressive position on transparency, saying that transparency of indexes used for ETFs should be such that market participants have "the ability to replicate a published Benchmark level...." The new final statement, EDHEC complains, has lost that language.
MiFIR includes provisions that allow for "dark pools" and that limit the size -- or, if you will, the depth -- of such pools. On June 10, 2013, authorities in Brussels released a new proposal for tweaks of MiFIR in general and these provisions in particular.
“The analyses we’ve done show that the project, as it has been prepared by the commission, will first of all raise nothing at all, there’ll be no revenue,” one prominent Euro-banker says. According to earlier forecasts, the FTT was supposed to raise between €30 and €35 billion. So the prospective return has gone from €35 billion to zero?
One case now before the U.S. Supreme Court poses the issue of the proper interpretation of the whistle-blower protection offered by Sarbanes-Oxley. The underlying problem is that when Congress wrote that statute it had in mind operational companies like Enron, or WorldCom, or Tyco International. The very different world of investment advisers and their funds, [where the public entities are the funds proper which employ no one], wasn't on its collective mind.
Under the Dodd-Frank Act, and the implementing rules now approved by the CFTC, trades that aren't "large notional swaps" are to be reported more rapidly and thoroughly than those that are. This of course makes the definition of a large notional swap (a/k/a a block trade) an important matter.
The Federal Circuit's effort to address en banc the district court's rejection of the applicability of patent law to a fairly commonplace hedge against settlement risk seems to have broken down in confusion. This may have profound implications for both the traditional and the alternative asset management industry.
Shane Brett, of Global Perspectives, makes the point that the "non-European world" is in no position to ignore the implementation of AIFMD. Although the implementation will be gradual, by 2018 any manager from anywhere who wants to bring his road show to a European city will have to be fully compliant.
The great success of the Thatcher-era Big Bang was that it shocked the Square Mile out of insularity. The turnover and value of London-based equity transactions increased from roughly £500 million in 1986 to more than £2 billion nine years later.
IOSCO's new draft report says that regulators ought to do a lot of "monitoring" of the consequences of changes in market structure. A little less predictably: it goes into some detail on the diversity of regulatory systems that bear on the question of fragmentation.
Though the charges against him are civil, not criminal, Mark Cuban may be the Amanda Knox of the jurisprudence of insider trading. He had reason to believe himself vindicated in July 2009, but now the SEC has successfully revived the matter and Cuban faces a trial.
As a three-judge panel of the D.C. Appeals Court saw it, there were two questions in the Brian Hunter case. First, did the CEA’s language encompass manipulation of NG futures contracts as part of the exclusive jurisdiction of intervener CFTC? Second, if so, was that repealed or modified by the 2005 legislation?
In 2008 the U.S. Congress mandated a significant compliance upgrade for brokers and other financial intermediaries, in regard to their 1099-B income reporting obligations. Now new IRS releases recognize that discrepancies will exist between a taxpayer's records of securities transactions and those of the broker, and they attempt to adjust for that. But traps for the unwary remain.
A threatened divergence arises because the IASB proposes to distinguish between assets with a 12-month allowance balance and those with a lifetime expected loss balance. This is a 'two bucket' model, according to an update recently presented to the G-20, although for historical reasons it is still sometimes called the three-bucket model.
Collective investment schemes aren't banks. They aren't in the maturity transformation business. Furthermore, they don't want to stumble into that line of business accidentally, either.
The Germans seem prepared to experiment with limits on high-frequency trading, as we see in a recent Bundestag vote that leaves the particulars to BaFin. I spoke recently to David Weild, a former vice chairman of NASDAQ, about this experiment and about related issues.
Lehman's adversary proceeding may yet raise the important issues of risk management that arise out of the relationships among the major Wall Street players at times of crisis. But the latest 'Blame the whale' request by the bankruptcy lawyers involved is a blatant distraction and diversion.
This is the second of a two-part discussion of a paper jointly issued by Basel and IOSCO on margin requirements for non-centrally cleared derivatives. The new paper solicits feedback on the phase-in timeline it proposes, a phase-in designed to provide flexibility so the affected markets can meet "operational and logistical challenges" by which they might otherwise be stymied.
This is the first of a two-part discussion of a paper jointly issued by Basel and IOSCO on margin requirements for non-centrally cleared derivatives. The new paper solicits feedback on only four still-open issues, and the list of issues itself illustrates the near finality they claim for this paper.
In the February 5th roundtable on the use and consequence of penny increments (decimalization), an event hosted by the SEC, several strong voices spoke in favor of alternative tick sizes, and others pressed for at least a pilot program. It appears that the SEC may have thought of this gathering as a way of laying the foundation for the latter.
Lawyers argued an intellectual property issue of great significance to our readers before the Federal Circuit Court of Appeals en banc, on Friday, February 8, 2013. They were disputing a patent claim that, if upheld, will make life a lot more complicated than it already is for those attempting to provide the infrastructure of the alternative-investment industry.
The authors want a new "Restricted UCITS" label created to ward off a possible arms race in which depositaries otherwise will attempt to satisfy their clients in a competitive way in an escalation that will end with them "offering guarantees for risks they cannot really control."
Forty-three percent of managers see Dodd-Frank as having a negative impact; 35 percent see it as having no impact at all; only 22 percent see it as a positive. The positive they see in it may simply be the presumed improved access to institutions that are “keen to invest in vehicles with some degree of regulated oversight,” in the words of Preqin's Amy Bensted.
The great political problem (what economists these days call a 'public choice' problem) is that politicians worldwide have every incentive to defer or avoid decisions about pension reform, however urgent or necessary that reform. Investors should be aware, and be wary.
IOSCO reminds investment banks and other intermediaries that they "may make the reasonable choice of treating all customers as retail because doing so may be more cost-effective than establishing separate categories for customers." Those words appear in a footnote but, given the context created in the rest of the report, they seem rather pointed.
The directors of a corporation selling itself have a duty to their shareholders to familiarize themselves with all the material facts, and they are to be discouraged from stuffing wax in their ears in order to avoid hearing anything inconvenient.
So why not just say: ‘everybody has to have a CCP for everything!’? If we cannot for reasons of practicality do that all at once, why not do it more gradually? There are lots of good answers to that.
Under the new directive, if an alternative investment fund manager manages AIFs that employ "substantial leverage," then this AIFM must include in the information it reports to its EU member home state's competent authority the overall level of leverage employed by each fund. That authority may then require further information as it pertains to systemic risk.
Vikas Shah looks at the state of global regulation and what it means to the global alternative investment community.
The ETF desk of UBS was in the business of trying to pick up as many coins as it could. It employed people like Adoboli as, so to speak, its arms and fingers. It also employed people like Steward as eyes and legs – their job was to get the bank out of the way of the steam roller in time. In this case, Adoboli became the steam roller.
Recent scholarship shows that pari passu language has not been copied mechanically from one form into another down through the decades, that the precise wording has varied over time, in ways that may shed some critical light on its contemporary meaning and function.
Well … that’s over with. It was a good election year for incumbents all around. As of Wednesday morning, it appears that the composition of the House of Representatives will not change greatly as a consequence of Tuesday’s election. The Republicans will lose some seats net, but they’ll retain their majority and John Boehner will [...]
A three-judge panel of the Court of Appeals for the Second Circuit has ruled against Argentina on a case arising out of Argentina's 2001 default and its subsequent efforts to restructure its debt. On the substance of the case, the panel interpreted the pari passu language of the issuing documentation in the way the plaintiffs desired. As to remedy, the result is a bit more ambiguous.
The notion of a flight to safety has never before sounded so paradoxical. The impending fiscal cliff illustrates the unsustainable fiscal position of the U.S. Treasury, and the uncertainties this creates may generate a flight to the presumed safety of ... U.S. Treasuries.
The EC is proposing changes in UCITS, especially targeted at the roles and liabilities of depositaries. We summarize here the proposal itself, and a responsive position paper put out by the Alternative Investment Management Association.
This is the second of a two-part discussion of recent developments in the Cayman Islands concerning the interpretation and enforcement of side letters. Today, we discuss Mr. Justice Charles Quin's decision in Lansdowne Limited & Silex Trust Company v. Matador Investments.