Jan 232015
 

Despite the shortened holiday week there was flurry of activity on the financial market and regulatory front, though slightly overshadowed by the EU finally announcing their long awaited quantitative easing program and earnings season being in full swing. A consortium of asset managers, led by Fidelity, announced the launch of a private trading venue to facilitate their large block trades in order to bypass Wall Street dark pools. It is an interesting move and story worth watching over the coming months since the venture brings together rival firms, and will compete with the banks and existing exchanges for trading volumes.   The CFP examined a number of issues related to dark pools and high frequency trading at its conference last September with FINRA.

The SEC also released its 2015 priorities. The issues revolve around matters of importance to retail investors, issues related to market-wide risks and using data to analyze potentially illegal activity. The Commission also noted they will be re-examining proxy advisory firms. The CFP and CFA Institute hosted a panel discussion on this topic this past November.

 

ECB unveils massive QE boost for Eurozone

Too little too late for Eurozone

 Money managers led by Fidelity close to launch of dark pool

 SEC Examination Priorities for 2015

 Kill cheating by pulling trades out of the shadows

 CFTC Bowen calls for review of retail FX rules

 China stocks dive after crackdown on margin trading

 Maybe FX investors do need a nanny

Jan 212015
 
Bill Longbrake

Bill Longbrake

2014 ended with the “surprising” collapse of oil prices, although there were plenty of warning signals in advance. With the benefit of hindsight, the commodity price boom was just another bubble. It was initiated by substantive changes in the global economy but then carried to unsustainable heights by cheap and abundant money. Now as 2015 commences, bond yields around the world are in free fall and worries of potential deflation abound. Of course, the two sets of developments are related and are the inevitable result of monumental global adoption of market-driven economic systems and by aggressive use of policy to try to tame the extremes of market-driven systems. This has led to an explosion in aggregate global supply that has not been matched entirely by a commensurate expansion in global aggregate demand. Such a mismatch inevitably leads to intense deflationary pressures. In marked contrast with global developments, the U.S. economy seems to be doing just fine and is gaining economic momentum.

Bill Longbrake focuses this month’s commentary on developments in the U.S., which for the most part are favorable. Nonetheless, the U.S. outlook is not free altogether from risk and one needs to be careful not to be dismissive of troublesome international developments or their potential consequences.  Read this month’s letter.

Jan 162015
 

Politicians and regulators wasted no time getting back to business so far this year. The House passed a bill easing some parts of the Dodd-Frank bill, though the Senate has not yet taken up the bill. Some Democrats warned that the measures passed risked watering down the bill, thus putting the financial system at risk; but others noted the measures simply fix the most broken parts of the bill.

The biggest story of the week was the SNB unexpectedly abandoning their currency cap. The Swiss franc moved 30% roiling financial markets across the globe as moves greater than 3% intra-day are extremely rare in developed currencies. Several retail currency brokerage firms faced capital shortfalls, and some major banks reported significant losses due to the market dislocation. It will be worth watching regulators response to this event over the coming weeks and months, especially with respect to retail currency trading.

 

2015 CFP events

May 1 — Second annual conference on financial market regulation with the SEC and CFA Institute

May 11 — Conference on the intended and unintended consequences of financial regulation with The Clearing House

Visit the CFP’s website for the latest information on these events.

 

Currency Move Shows Risks of A Highly Interconnected Financial System

Why Dodd Frank is Vulnerable

House Passes Legislation To Ease Some Dodd-Frank Rules

SEC agenda 2015: Swaps, ‘pay ratio’ and new Republican oversight

SEC Strategic Plan 2014-2018

SEC adopts rules establishing regime for swap data warehouses

SEC To Weigh-In On Leveraged ETF Debate

Van Hollen Supports Fee to Curb High Frequency Trading

FINRA Investigating Deals Between Brokers and Exchanges

Dec 192014
 

Policy makers remain busy and market volatility remains high ahead of the holidays.  Oil’s continued move lower, Russia and the FOMC statement were the key events driving this past week’s volatility.  The Fed also announced a two-year delay in the implementation of some parts of the Volker Rule this week.  The delay did not affect the ban on proprietary trading which banks must stop by July 2015.

The University will be on holiday until January 5, 2015.  The News & Policy Round-Up will return next year.  The CFP wishes everyone a happy and safe holiday season.

 

Fed Grants Volker Rule Reprieve

http://www.bloomberg.com/news/2014-12-18/fed-grants-banks-two-year-delay-of-volcker-ban-on-private-funds.html

http://www.cnbc.com/id/102276880

Fed Press Release

FOMC “Patient” On Interest Rates

http://www.reuters.com/article/2014/12/17/us-markets-stocks-idUSKBN0JV1BU20141217

http://blogs.wsj.com/economics/2014/11/06/feds-mester-new-fomc-statement-important-step-in-conveying-fed-outlook/?KEYWORDS=fomc

FOMC Press Release

Market Microstructure

NYSE Offers Many Concessions to Investors

Danger Seen In Shedding Light On Dark Pools

Dec 182014
 
Bill Longbrake

Bill Longbrake

In this month’s letter, Bill Longbrake provides a brief overview of key global economic themes as we end 2014 and enter 2015. There is also an in-depth assessment of the impacts and potential consequences of the recent 45 percent crash in oil prices. He provides a year-end assessment of observations he made a year ago about how the U.S. and global economies might fare in 2014 – noting what he got right and the many things he didn’t. He then speculates about what might happen in 2015 and outlines key risks to the 2015 outlook.  Read the full letter.