• Comment: Fed's partisan split on capital reduction plan spreads to Senate
    21 May 2018
    A rare partisan split among US banking regulators spread to the Senate last week as two influential Democrats faulted Federal Reserve Governor Randal Quarles for a proposal to ease Wall Street’s capital requirements.

    Sherrod Brown, the Senate Banking Committee’s top Democrat, and Elizabeth Warren, the Senate’s most vocal critic of Wall Street, bashed the Fed plan to loosen the supplementary leverage ratio for the eight biggest US banks.

    The senators’ criticism at a banking committee meeting — a confirmation hearing for two Fed nominees — injects an unpredictable political element into a debate normally framed in wonky terms among interest groups. It also sends a signal to Trump appointees considering other Dodd-Frank Act rollbacks.

    “I am very concerned,” Brown said, “with collective amnesia with regulators in place in other agencies and at the Fed who want to deregulate.”

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  • US derivatives clearinghouses get relief in EU Parliament committee vote
    18 May 2018
    US derivatives clearinghouses and regulators have won some relief in a European Parliament committee vote to scale back European authorities’ extraterritorial reach on a proposal that has angered American officials.

    “For the issues that matter to the Americans, we found solutions,” Danuta Hübner, the parliament’s leader on the bill, told MLex.

    Europe’s proposal to overhaul clearinghouse supervision aims chiefly at preparing for Brexit, when trading in crucial euro-denominated swaps — handled by LCH, a unit of London Stock Exchange Group — will fall outside the bloc.

    But the move to give the European Securities and Markets Authority, or ESMA, power over clearinghouses abroad, or else cut off EU traders’ access to them, upset US companies and agencies including the Commodity Futures Trading Commission.

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  • Fed to seek input on living-will guidance for US and foreign banks, Quarles says
    17 May 2018
    Washington regulators plan to seek public input soon on whether to change living-will guidance for large US banks and foreign banks with American operations, US Federal Reserve Governor Randal Quarles said.

    The comment requests, to deal with institutions’ resolution strategies under bankruptcy, are part of a broader effort to improve lagging US and overseas cooperation in case an international bank collapses.

    The Fed and the US Federal Deposit Insurance Corp. want to “reduce the incentives for damaging and unpredictable seizures of resources by local regulators during times of stress,” Quarles, the Fed’s regulatory point man as vice chairman of supervision, said in a speech Wednesday.

    US regulators use living wills to make sure that a bank balances resources managed out of headquarters with capital and liquidity prepositioned for local claimants in the event of crisis.

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  • Data centers in China, India prone to high cloud-security risks, says industry body
    17 May 2018
    Countries such as China and India need to work harder to make themselves safer places for data centers, according to a report* released by the Asia Cloud Computing Association, or ACCA..

    Almost half of the 14 Asian nations assessed by the ACCA ranked below average in the category of data-security risk, with these two Asian juggernauts being identified as high-risk areas. The report looked at cloud readiness in different countries based on various metrics.

    More mature jurisdictions such as Hong Kong, Singapore and New Zealand stood out as the safest places for data centers, which are a key factor for mass adoption of the emerging cloud technology.

    Data-center risks and cybersecurity issues are among the primary concerns for companies, notably major financial institutions, that are looking to outsource part of their data to third-party service providers such as Amazon and Microsoft.

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  • Pension funds get earlier derivatives-clearing mandate in EU lawmakers' compromise
    16 May 2018
    Big EU pension funds would have to clear their derivatives sooner, in a compromise by European Parliament party leaders ahead of a committee vote today to overhaul rules for the financial instruments.

    Employee retirement plans above a certain size threshold — to be set later — would get two more years free from having to send their derivatives trades to clearinghouses for risk management, under amendments worked out by lawmakers ahead of the Economic and Monetary Affairs Committee vote in Brussels.

    The waiver could be extended by one year, according to the draft obtained by MLex, if needed to implement technicalities such as how pension funds can meet margin requirements without having to divert investments into cash.

    But the transition would come faster than the European Commission’s original proposal — which was for a three-year waiver extendable by two years — in order to ease the way for pension funds to join the global clearing system for over-the-counter derivatives, such as swaps used to hedge the risk of interest-rate changes.

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