Week InReview

Question of the Week: Did the global elite's devotion to borderless capitalism sow the seeds of a populist backlash?

"For the 3,000 people who will convene in the small Swiss town from Jan. 17 to 20, the 2017 event could be a moment of reckoning. At speakers' podiums, coffee bars, and the ubiquitous late-night parties, they'll be asking themselves whether Davos has become, at best, the world's most expensive intellectual feedback loop - and, at worst, part of the problem." 

Read the entire article here.
Fri Jan 13, 2017
Let's recap
In case you missed it . . .
Supreme Court rebuffs banks on FDIC lawsuits; action lets stand 2d Cir. ruling on mortgage-backed securities suits (Jan 10)

American dominance 'drawing to a close,' report suggests; China, Russian ambitions will rise to 'gray zone' aggression (Jan 9)

FINRA to focus on firm's hiring and monitoring of high-risk, recidivist brokers in 2017; for first time, FINRA will publish summary reports that outline exam findings in selected areas (Jan 9)

Some of the technologies that will shape the finance industry the most in the digital age, banking and technology chief executives told a financial conference (Jan 9)

Alternative investment funds raised a total of $602 billion in 1,228 funds last year, down in capital terms from $637 billion raised by 1,486 funds in 2015, according to a new report by alternative investment research firm Preqin (Jan 5)
FSB guidance for asset managers
Includes modest changes to original proposals
(Jan 12) In order to prepare asset managers and funds for future stress events, the Financial Stability Board plans to flesh out 14 recommendations - which include modest changes to their original proposals - over a two-year period. The FSB may return to the issue of whether to designate individual fund companies as systemically important. The policy guidelines backed off from earlier proposals that would have imposed rigid oversight of asset management companies, including stress test of the $77 trillion industry. The International Organization of Securities Commissions (IOSCO) will continue work on the funds' liquidity recommendations this year and on leverage measures in 2018. The FSB proposals are as follows:
  1. Authorities should collect information on the liquidity profile of open-ended funds in their jurisdiction proportionate to the risk they may pose from a financial stability perspective.
  2. Authorities should review existing investor disclosure requirements and determine the degree to which additional disclosures should be provided.
  3. Authorities should have requirements or guidance stating that funds' assets and investment strategies should be consistent with the terms and conditions governing fund unit redemptions.
  4. Where appropriate, authorities should widen the availability of liquidity risk management tools to open-ended funds, and reduce barriers to the use of those tools.
  5. Authorities should make liquidity risk management tools available to open-ended funds to reduce first-mover advantage, where it may exist.
  6. Authorities should require and/or provide guidance on stress testing at the level of individual open-ended funds to support liquidity risk management to mitigate financial stability risk.
  7. Authorities should promote clear decision-making processes for open-ended funds' use of exceptional liquidity risk management tools, and the processes should be made transparent.
  8. Authorities should provide guidance on the use of exceptional liquidity risk management tools in open-ended funds when used in stressed conditions.
  9. Authorities should give consideration to system-wide stress testing that could potentially capture effects of collective selling by funds and other investors on the resilience of financial markets.
  10. Consistent measures of leverage in funds should be identified and/or developed by IOSCO to facilitate more meaningful monitoring of leverage for financial stability purposes.
  11. Authorities should collect data on leverage in funds, monitor the use of leverage by funds not subject to leverage limits, and take action when appropriate.
  12. IOSCO should collect national/regional aggregated data on leverage across its member jurisdictions based on the consistent measures it develops.
  13. Authorities should have requirements or guidance for asset managers to have comprehensive and robust risk management frameworks and practices, especially with regards to business continuity plans and transition plans.
  14. Authorities should monitor indemnification provided by agent lenders/asset managers to clients in relation to their securities lending activities.
Read more:

- Pensions & Investments

- Financial Stability Board
FSOC meets on nonback financial companies
Publishes last meeting's minutes
(Jan 11) The Financial Stability Oversight Council held a closed meeting, at which members voted to approve its Nov. 16  minutes , and received updates on
  • global economic and market developments
  • initial staff work on FSOC's 2017 annual report
  • FSOC's review of the quantitative thresholds applied in Stage 1 of the nonbank financial company designation process
  • recent developments in short-term funding markets following the Oct. 2016 effective date of certain requirements under the money market mutual fund reforms adopted by the Securities and Exchange Commission in July 2014
Is swaps industry ready for Mar 1 margin date?
CFTC to consider requests for more time
(Jan 10) The Commodity Futures Trading Commission will weigh industry requests for an extension of the March 1 deadline for margin requirements for uncleared swaps, according to CFTC chair Timothy Massad. CFTC staff is talking with market participants and will look at the industry's readiness to meet requirements that  variation margin be exchanged between buyers and sellers in over-the-counter swaps, Massad said in an interview.  Margin rules became effective for the largest swap-dealers last September. Variation margin requirement are scheduled to be extended to other participants in March.
Binge reading disorder
Hand-curated, chosen with love
This winter, bartenders around the world are slinging up herbal cocktails
Don't be surprised if herbs, spices, and plants show up in your drink this winter
- Bloomberg Pursuits

Research: Cracking a joke at work can make you seem more competent
Telling a joke to an unfamiliar audience is risky - Will they laugh? Will they be offended? Even if they laugh, will they really think the joke is funny?

Seven science-backed tips for forming habits that stick
Mark Twain once wrote, "Habit is habit, and not to be flung out the window by any man, but coaxed downstairs one step at a time."
- Quartz

How to cut your eMail time in half
Constantly checking your email is an addiction that's destroying your productivity. Here's how to break the habit

Putin's real long game
The world order we know is already over, and Russia is moving fast to grab the advantage. Can Trump figure out the new war in time to win it?