|
Update 212 — Fin. Market Treasury Report, Pt. 2: Regulatory Agenda Clear, Legislative Not So Much
Last Friday, the Treasury Department released the second of four promised reports on financial regulation and capital markets. This installment features a serviceable recitation of industry complaints, endorsements of portions of GOP legislation such as the CHOICE Act, and a firm deregulatory stance.
How far does the Trump administration want to roll financial regulation back and in what areas? Does it have suggestions for maintaining or beefing up protections? How does it treat DFA rules? What else is coming down the pike? Are there any legislative implications to speak of? See below.
Best,
Dana
_______________________________________
Scope of Deregulation
The administration’s ambition to strip down the regulatory regime implemented in the wake of the financial crisis is evident throughout last week’s Treasury report, “A Financial System that Creates Economic Opportunities: Capital Markets.” The report focuses on capital markets, capital formation, the debt, equity, commodities, and derivatives markets, as well as on financial market utilities and other operational functions.
• Securities Regulation
The Treasury Department argues that deregulation of the securities market is necessary to protect it as the “byproduct of, and safeguard to, America’s global financial leadership.” It calls for significant rollbacks on regulations that govern capital requirements, liquidity standards, and expanded disclosure mandates on the grounds that they punitively discriminate against high-quality securitized product, despite the damaging role of securitizations during the recession.
The report also calls for a securities market liberation which includes the rationalization of capital required for securitized products with the capital required to hold the same disaggregated underlying assets, as well as a relaxation of liquidity standards for senior tranches of securitization.
• Where are the JOBS?
On rules pertaining to access to capital, the Treasury pursues an agenda of regulatory relief. The report builds off JOBS Act of 2012, advocating an increase in the SEC registration threshold to $10 million and an increase in the amounts capital that can be raised in a 12-month period from $1 to $5 million.
When adopted in 2012, the JOBS Act was heralded as bound to launch a wave of new startups and jobs, to create robust markets and reduce costs and red tape. Evaluating the record, its results are nothing to write home about. Treasury’s proposal to extend rollback of the SEC’s ability to monitor fraud in firms may have created more risk than risk capital.
• Treasury Market
The report claims that the supplementary leverage ratios (SLR) have inhibited banks from securing repo financing. In response, Treasury recommends lowering the SLR and capital surcharge for Global Systemically Important Banks (G-SIB), while raising the threshold for Intermediate Holding Companies from the current $50 billion to an unspecified level for participation in the Comprehensive Capital Analysis and Review. These changes would quickly loosen the grip the regulatory agencies and Democrats have fought for since the crisis over Wall Street. The first steps will be to press Republicans to clarify by how much they want to slash leverage ratio requirements and to what level they would raise the G-SIB threshold so we can move forward in defending these provisions put in place to protect our economy.
Treatment of DFA
Where the last report suggested reshaping specific DFA rules on financial institutions, this report gave DFA relatively lighter treatment.
• Derivatives
The Treasury goes to lengths to demonstrate the importance of derivatives to almost every sector of the American economy. While it raises general concerns about regulatory burden, it does not call for wholesale regulatory rollback in the derivatives market. It recognizes broad support among market participants of the central clearing and platform trading standardization mandated by Title VII of the Dodd-Frank act. This suggests Title VII will likely remain a durable part of the American regulatory landscape and that the Treasury sees the derivatives regulation enacted in Dodd-Frank as comprehensive.
• Corporate Bond Liquidity
In the absence of any new ideas this report reiterates the Treasury’s recommendation made in June, which included weakening the Volcker, bank capital, and bank liquidity rules. These changes are not fully specified as becoming the norm in regards to this administration, but would remove safeguards against highly dangerous leverage and investing practices while simultaneously exposing more of the economy to them. All in the name of trying to free up cash for corporations in times of “stress.”
New Regulatory Proposals
Some additional rules, procedures, and regulations have been suggested here, though they fall in line with Congressional legislation friendly to Wall Street and shareholders above all.
• Financial Market Utilities (FMUs)
Treasury asserts that since the passage of Dodd-Frank risk concentrations in FMUs have increased dramatically, especially in central counterparties (CCPs). While FSOC has designated a number of FMUs as systemically important, the Treasury concludes that the regulatory oversight and resolution regime of these institutions remains inadequate. In a departure from the rest of the report’s deregulatory push, Treasury calls for “heightened regulatory and supervisory scrutiny” of systemically important FMUs, including:
— the allocation of additional resources to the CFTC to enhance its supervision of of CCPs
— streamlining “advance notice” review processes to better identify systemic risk
— reviewing the risks involved with the lack of Federal Reserve Bank deposit accounts for certain CCPs
— expanding the scope of stress tests to cover different products and scenarios and develop viable recovery wind-down plans for systemically important firms
• Treasury Market
The report aims to address the opacity of Treasury securities trading. To do this they suggest reporting of these trades to the Trade Reporting and Compliance Engine, supporting the Fed’s desire to collect trade data from its bank members, and directing the CFTC to share its futures transaction data daily.
• Credit Union?
Not that kind. There is a new regulatory idea of some merit promoted in the report. It addresses the fact that multiple agencies are sometimes charged with promulgating and implementing different aspects of the same rule, creating an after-you-Alfonse cycle of delay. The report recommends implementation of a rule in such cases by an ad hoc authority. Credit where it is due and perhaps the parties can unite behind this innovative approach.
• Derivatives
Treasury does advance a number of specific recommendations on how these market modifications can be improved. These broadly fall into issues of regulatory harmonization, cross-border issues, capital treatment of derivatives, end-user issues, and market infrastructure. While the scope of each of these recommendations is minor, it is possible that they will have a significant impact on the regulatory landscape of the derivative market in aggregate.
Where from Here?
With reports on OLA, Fin-Tech, and Asset Management/Insurance forthcoming, we still have to brace for another wave of attacks on DFA. These reports will clue us in as to how serious the Trump administration is serious about dismantling the centerpieces of DFA, specifically, its systemic risk provisions. June’s report outlined substantive recommendations on DFA rules for financial institutions, while this report was relatively modest in that respect. We should know more by October 21, when the next reports are expected.
|
You got a very great website, Gladiola I observed it through google. https://atherosclerosismed.com buy atherosclerosis drugs over the counter
It’s an awesome post in support of all the internet people; they will take advantage from it I am sure.|
Thank you for another informative web site. The place else could I am getting that kind of information written in such a perfect manner? I have a challenge that I am just now running on, and I’ve been at the look out for such info.
It is truly a great and useful piece of info. I am happy that you just shared this helpful information with us. Please stay us up to date like this. Thank you for sharing.really good.
Thanks for sharing your thoughts on asmr https://0mniartist.tumblr.com. Regards
0mniartist asmr
Awesome things here. I’m very satisfied to look your article.
Thank you so much and I am taking a look ahead to contact you.
Will you kindly drop me a mail? 0mniartist asmr
Fantastic web site. A lot of useful information here. I’m sending it to several buddies ans additionally sharing in delicious.
And of course, thank you in your effort! 0mniartist asmr
It is the best time to make some plans for the future and it’s time to be happy.
I’ve read this post and if I could I want to suggest you few interesting things or suggestions.
Perhaps you can write next articles referring to this article.
I want to read more things about it! 0mniartist asmr
local women dates
online free dating service
WOW just what I was searching for. Came here by searching
for where
Incredible points. Solid arguments. Keep up
the amazing work.
Today, I went to the beachfront with my children. I found
a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She
put the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear.
She never wants to go back! LoL I know this is entirely off topic but I had
to tell someone!
Hello! I just wanted to ask if you ever have any issues with hackers?
My last blog (wordpress) was hacked and I ended up losing many
months of hard work due to no backup. Do you have any solutions to protect against hackers?
browse tinder for free , tider
what is tinder
We stumbled over here coming from a different web page and thought
I might check things out. I like what I see so i am just following you.
Look forward to looking at your web page again.
If some one wishes to be updated with most recent technologies afterward he must
be visit this website and be up to date all the time.
Superb, what a web site it is! This webpage
presents useful data to us, keep it up.
You need to be a part of a contest for one of the
highest quality websites online. I will highly recommend this blog!
Hey very nice blog!
tider , tinder sign up
tider
tider , tinder website
http://tinderentrar.com/
scoliosis
Excellent goods from you, man. I’ve consider your stuff previous to and you’re just too
great. I actually like what you’ve got here, certainly like what you’re saying and the way in which in which you assert
it. You’re making it entertaining and you still take
care of to keep it wise. I cant wait to read far more from you.
This is really a wonderful web site. scoliosis
scoliosis
It’s very effortless to find out any topic on net as compared to textbooks, as
I found this paragraph at this site. scoliosis
free dating sites
I visited many sites however the audio feature for audio songs current at this web page is genuinely marvelous.
https://785days.tumblr.com/ free dating sites
dating sites
I’d like to thank you for the efforts you’ve put in writing this site.
I really hope to check out the same high-grade content by you later on as well.
In truth, your creative writing abilities has encouraged me to
get my own site now 😉 dating sites
Hello it’s me, I am also visiting this web page regularly, this website is actually good and the
users are really sharing nice thoughts.
With havin so much content and articles do you ever run into any problems
of plagorism or copyright infringement? My blog has a lot
of unique content I’ve either created myself or outsourced but it looks like a
lot of it is popping it up all over the web without my permission. Do you know any methods to help stop content
from being ripped off? I’d truly appreciate it.
Hello would you mind letting me know which hosting company
you’re utilizing? I’ve loaded your blog in 3
different internet browsers and I must say this blog
loads a lot quicker then most. Can you recommend a good hosting provider at a honest price?
Thanks, I appreciate it!
Thank you for the auspicious writeup. It in fact was a amusement account it.
Look advanced to far added agreeable from you! However, how can we communicate?
What a stuff of un-ambiguity and preserveness of precious experience on the
topic of unexpected emotions.
Tremendous issues here. I am very happy to peer your post.
Thank you a lot and I’m having a look forward to contact
you. Will you please drop me a e-mail?
When someone writes an article he/she retains the plan of a user in his/her brain that how a user can understand it.
Thus that’s why this post is great. Thanks!
Hello, Neat post. There is a problem together with your
site in internet explorer, may test this? IE still
is the market chief and a large part of other folks will miss your great writing due to this problem.
Hey There. I found your blog using msn. This is a really well written article.
I will be sure to bookmark it and come back to read more of your useful
info. Thanks for the post. I’ll certainly return.
If you desire to increase your experience only keep visiting this site and be updated with the most up-to-date gossip posted here.
Thanks for your personal marvelous posting!
I really enjoyed reading it, you’re a great author.
I will ensure that I bookmark your blog and will often come back from now on. I want to encourage you continue your great
posts, have a nice afternoon!
Really appreciate you sharing this article post.Much thanks again. Will read on…
free dating sites
asian dating sites in america
singapore gay dating website
gay dating sites for teenagers
free gay hiv+ dating
Pingback: south beach keto diet
low cost viagra generic how do you spell viagra acidflx – buy viagra professional australia
Hi! This is my first visit to your blog! We are a group of volunteers and starting a new initiative in a community in the same niche.
Your blog provided us useful information to work on. You have done a
outstanding job!
gay christian singles dating
gay surfer dating
black gay men dating site
I love what you guys are up too. Such clever work and exposure!
Keep up the fantastic works guys I’ve added you guys to
my own blogroll.
best european gay dating sit
short gay guys dating
free gay trucker dating sites
tooele gay dating
gay cupid dating
29 dating 18 gay