"Exchange giant Intercontinental Exchange Inc., known as ICE, quietly unveiled a plan earlier this month to impose a three-millisecond 'speed bump' - or brief delay - on some trades in gold and silver futures....
"Under the plan, the three-millisecond delay would apply to incoming orders seeking to hit unexecuted buy or sell orders already posted on ICE. Traders posting new orders to be displayed on the exchange wouldn't be affected.
"Such a design would benefit market makers, the firms that facilitate trading by continuously quoting prices for stocks or futures. Market makers would be able to cancel or adjust their quotes without having to wait three milliseconds.
"The losers from ICE's plan would be high-speed trading firms that 'pick off' slightly out-of-date quotes posted by slower-moving market makers - in other words, buying just as the price is about to tick up or selling just before the price drops."
Federal Reserve officials widely favored ending the runoff of the central bank's balance sheet this year while expressing uncertainty over whether they would raise interest rates again in 2019, minutes of their January meeting showed. (Bloomberg Economics | Feb 20)
Mortgage loan servicers will be thrust into the spotlight as the success of the so-called Uniform MBS set to launch on June 3
is highly dependent on the continued convergence of prepayment speeds seen in Fannie Mae and Freddie Mac securities. (Bloomberg Markets | Feb 19)
Liquidity created by securities lending by asset managers in the shadow market could dry up in response to a run by investors, according to a working paper from the Bank for International Settlements. "Our findings highlight the importance of the shadow banking system as a potentially fragile determinant of market efficiency," the paper says. (BIS | Feb 19)
A Federal Reserve proposal to make banks' capital requirements more sensitive to risk would discourage banks from clearing derivatives, four members of the Commodity Futures Trading Commission said (one commissioner recused herself from commenting). The proposal fails to incorporate a margin clearing offset when banks' supplementary leverage ratio is calculated, the CFTC members said in a letter to the central bank. (CFTC | Feb 19)
The Securities and Exchange Commission voted Tuesday to expand its "test-the-waters" rules to give more prospective stock-issuers time to engage with potential investors, including institutional firms such as asset managers and other accredited investors. (Pensions & Investments | Feb 19)
Binge reading disorder
Hand-curated, chosen with love
Once hailed as unhackable, blockchains are now getting hacked
More and more security holes are appearing in cryptocurrency and smart contract platforms, and some are fundamental to the way they were built.