Week InReview

A more turbulent second half?

"The evaporation of market volatility has baffled many analysts and investors, given the noisy political environment and vulnerable economic recovery, and frustrated traders, who depend on turbulence and healthy turnover to generate profits.

"But a sell-off in technology stocks and a spate of hawkish central bank speeches have caused volatility to make a modest but noticeable return in recent weeks."

Long period of calm in stock and bond trading shows signs of ending
Fri Jul 14, 2017
Let's recap
In case you missed it . . .
Has Trump flipped on financial regulation?
President Trump showed his independence last week at the Group of 20 meeting in Hamburg by opposing an international consensus on climate change. Yet in another area, the G20's attempt to regulate global finance, Mr. Trump signed on to a communiqué that runs counter to his promises on the campaign trail and in office. (Jul 14)

The Securities and Exchange Commission has found "broad consensus" to pursue a test of access fee changes, Clayton said in his first major policy speech since becoming chair in May (Jul 12)

Asset management revenue falls in 2016 for first time since 2008
Industry reaches 'tipping point' as fee pressure builds; h edge funds and private equity among hardest hit, BCG says (Jul 11)

Wall Street wins round in fight with exchanges over audit system
SEC is reviewing exchanges' plan to pay for surveillance tech; system meant to catch cheaters, diagnose mysterious crashes (Jul 10)

Is best-interest contract doomed?
The fiduciary rule  may survive without its best-interest contract exemption (BICE),  which allows investors to bring class-action suits against brokers who they say failed to act as fiduciaries (Jul 10)
The Cyber Cafe
Cybersecurity news every Friday.
Cybersecurity: Asset managers face ratings threat
A new study released by Moody's Investors Services about the cybersecurity preparedness of US fund management firms suggests that asset managers could face a credit ratings downgrade if they can't protect their critical data. That data could include anything from a proprietary algorithm to trade positions, client data and business strategies.
FinOps Report

How to avoid cyber attacks: 5 best practices from SEC And FINRA
Regulators agree that cybersecurity threats pose significant risks to financial firms, investors and the markets. As a result, cybersecurity practices are a key focus for regulatory examinations this year for both the Financial Industry Regulatory Authority and the Securities and Exchange Commission.
- Forbes

Look beyond job boards to fill cybersecurity jobs
The cybersecurity staffing shortage is reaching crisis proportions, and companies are looking beyond the traditional channels of job boards and headhunters to find and hire new talent. Here are some of the unconventional ways companies are identifying talent.
SEC chair gives first major speech
Covers fiduciary rule, disclosures, bond markets
(Jul 12) -- In his first major speech since becoming chair of the Securities and Exchange Commission, Jay Clayton discussed the fiduciary rule, easing disclosure burdens, and bond market structure before the Economic Club of New York.

Fiduciary Rule
The SEC intends to work with the Department of Labor to create protections that don't deprive Main Street investors of "affordable investment advice or products." Clayton said he wants to hear from individual investors and others about whether or not the SEC should proceed with its own fiduciary standard and and to send "feedback and any data that may be helpful to us."

Bond Market Structure
Clayton wants to boost the SEC's focus on the functioning of U.S. bond markets. "The time is right for the SEC to broaden its review of market structure to include specifically the efficiency, transparency, and effectiveness of our fixed income markets." He said agency staff will set up an industry advisory committee to focus on bonds, similar to one the agency has to advise on the functioning of the stock market.

Disclosure Burdens
Clayton suggested relief from disclosure burdens may be on its way. He said SEC staff is "making good progress" on rule proposals that would update and simplify Regulation S-K, the reporting requirements for various SEC filings.
Yellen on the Hill
Reports on Fannie-Freddie, leveraged lending & Volcker rule
(Jul 12) -- Federal Reserve Chair Janet Yellen told the Senate Banking Committee it's "important to move forward with reforms" of Frannie Mae and Freddie Mac. Yellen said she agrees with what Fed Governor Jerome Powell told the American Enterprise Institute last week, i.e., to put private capital ahead of taxpayer support and promote more competition, rather than re-drawing the entire mortgage system.  Before the House Financial Services Committee, Yellen signaled she would consider Treasury's call for granting small banks relief on debt policy. Yellen also stressed the importance of regulatory scrutiny over leveraged lending by banks, but  reiterated her support for granting small banks relief from the Volcker rule.
FSOC requests delay on MetLife SIFI challenge
Needs regroup on litigation strategy
(Jul 11) -- The Financial Stability Oversight Council filed a motion asking for a 30-day delay in the MetLife lawsuit until after a July meeting, for which no date has been set. The regulators want to discuss FSOC's litigation strategy before a federal appeals court further considers MetLife's challenge to its "systemically important" label and said they "anticipate that at that time we will be able to file a motion to govern further proceedings that will reflect the Council's deliberations."
Binge reading disorder
Hand-curated, chosen with love.
How to win every battle
'The Art of War' in a 5-minute video

Bored traders on Tinder are a symptom of Wall Street revenue dip
One bond trader says he's been slipping out early to watch his kids play sports. A fund manager says his office just staged a golf retreat. A trading supervisor at another bank confides he's swiping through a lot of profiles on Tinder, the dating app.

4 signs of a bubble
"An asset allocation is like a wet bar of soap - the more frequently you touch it, the more rapidly it disappears." - William Bernstein