• Bank cartel fines shine light on EU's calculation challenge
    29 May 2019
    Billions of euros in fines on the likes of JPMorgan Chase, Crédit Agricole and HSBC for cartel conduct on financial markets have revealed the EU’s contortions when calculating sanctions for complex trading, using an approach designed in an era of chemicals cartels.

    Fines over benchmark rates have garnered criticism at the EU’s top court, and a recent decision showed the regulator’s initial number-crunching arriving at penalties that would have been “over-deterrent.”

    With antitrust abuses getting more complicated, the EU’s approach must keep pace with the times.

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  • Clearinghouses could lead way out of rate-switch black hole
    28 May 2019
    An EU benchmark used to set interest rates in trillions of euros of financial contracts needs to disappear by the end of 2021, with the phaseout to have three stages, a working group backed by the European Central Bank working group said on May 15.

    In use since 1999, the Eonia overnight lending reference rate has been deemed unduly focused on banks, not representative of borrowing across the euro currency area, and unlikely to pass muster under new laws passed in the wake of multiple rate-fixing scandals.

    Those cracks in the system were so deep they could not merely be filled in, the administrator for Eonia concluded last year. Yet abandoning the rate, which is due to happen on Dec. 31, 2021, comes with its own challenges.

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  • EU's climate ambitions to increase as Green surge reaches parliament
    27 May 2019
    Climate legislation is likely to move higher up the EU agenda over the next five years, leading to more determined work on outstanding policy ideas and the potential for new proposals to come to the fore.

    Last night’s European Parliament elections have produced mixed results, and it remains unclear who is going to take over Jean-Claude Juncker’s post as the president of the European Commission. But the impressive gains made by parties in favor of climate action have altered the political landscape, whichever way the cards fall.

    Europe’s Greens had a good night at the polls. They took 69 of the parliament’s 751 seats — an increase of nearly 40 percent over their existing 50 lawmakers — and finished in the top two or three parties in many countries.

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  • Fed's ex-regulatory czar Tarullo warns of `nightmare scenario’ from cyberattack
    23 May 2019
    Daniel Tarullo, the former US Federal Reserve governor most responsible for crafting post-financial crisis Washington policies, said a cyberattack on a bank could set off widespread panic by eradicating ownership records held by the institution.

    “The nightmare scenario is: someone penetrates the information systems of large institutions and wipes out the records of who owns what,” Tarullo, the Fed’s vice chairman for supervision during the Obama administration, said at a Washington event* this week. “It doesn’t matter how much capital the bank has at that point. You’ve got the equivalent of financial pandemonium when no one knows who owns what.”

    He said stress tests that try to determine whether banks have enough capital to absorb economic shocks are “really not directed at big cybersecurity risks. We need to have a whole different approach.”

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  • Investment firms’ storage of customer data may not be safe from hacking, SEC says
    23 May 2019
    Some broker-dealers and investment advisers’ storage of customer records and other information may not be safe from hacking, according to a risk alert issued for firms today by the US Securities and Exchange Commission’s compliance office.

    The SEC’s Office of Compliance Inspections and Examinations said it discovered security risks during recent examinations in the way some firms store information in the cloud and on other network storage solutions.

    “In some cases, firms did not adequately configure the security settings on their network storage solution to protect against unauthorized access,” the SEC alert said. “In addition, some firms did not have policies and procedures addressing the security configuration of their network storage solution.”

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