• ​Banks likely to meet 2021 Libor deadline for new contracts but not legacy, UK FCA chief Bailey says
    11 April 2019
    Andrew Bailey, head of the UK’s Financial Conduct Authority, expressed confidence that banks would meet a 2021 deadline for transitioning from Libor benchmarks to less risky market-based rates in new financial contracts.

    However, many current contracts with inter-bank Libor rates will likely not be amended by then, said Bailey, who also is co-chair of the Financial Stability group coordinating the worldwide transition.

    Asked about prospects for meeting the 2021 deadline, he said in an interview in Washington yesterday: “There shouldn’t be any need to use Libor for new products.”

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  • Shadow banking needs more light, Goldman Sachs CEO tells Congress
    10 April 2019
    Goldman Sachs Chief Executive David Solomon told lawmakers today that short-term, wholesale funding among non-banks deserves more attention from regulators.

    “At the moment I don’t think it’s systemic, but it is growing. It’s obscured, and I think it’s something over time, if the cycle continued, we’d want to have a closer look at,” Solomon told the House Financial Services Committee.

    This less-regulated “shadow banking” sector includes leveraged lending, or high-yield loans by private equity firms, hedge funds and pension funds to heavily indebted corporations.

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  • Fed draws industry concern about liquidity plan for foreign banks' US branches
    10 April 2019
    The US Federal Reserve’s request for public input on the question of whether to extend liquidity rules to foreign banks’ US branches is drawing the dismay of industry.

    “The Fed already has ample supervisory tools to ensure the safety and soundness of US branch operations,” Briget Polichene, head of the Institute of International Bankers, said in an e-mail today. “We are concerned that imposing a novel liquidity requirement could have the consequence of promoting fragmentation and financial instability.”

    The Fed sought feedback Monday on treatment of these US branches, which are not subject to standard liquidity requirements like overseas banks’ separately capitalized US subsidiaries.

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  • JPMorgan Chase's Dimon lists global systemic importance approach as his top regulatory concern
    08 April 2019
    Jamie Dimon, JPMorgan Chase's chief executive, said his biggest regulatory concern is that the international method for calculating global banks’ systemic importance lacks empirical basis and needs updating.

    This flaw, Dimon said in his annual letter to shareholders last week, could infect US Federal Reserve stress tests because they would include the international approach under a pending proposal.

    Without recalibration of post-crisis systemic risk requirements, he said, “certain products and services will continue to be pushed outside the banking system,” where they lack regulatory oversight.

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  • Repo market still dominated by big banks even after Basel III rules, study says
    05 April 2019
    The US shadow banking market in repurchase agreements has opened only slightly to new securities dealers since post-crisis capital rules were introduced, leaving the short-term loan market under the domination of large banks, according to US Federal Reserve Bank of New York researchers.

    “The prediction of a tectonic shift in the repo market with new repo participants’ gaining market share seems not to have materialized,” the study this week said.

    New dealer participants in one of the two main interdealer repo markets made up only 3 percent of total gross activity in the last quarter of 2018, the New York Fed economists’ blog said.

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