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A recent Bank for International Settlements (BIS) quarterly review article attempts to solve the too-big-to-fail (TBTF) problem without causing systemic disruption to financial markets, by offering a new resolution template to recapitalize banks on the verge of bankruptcy. It may, however, inadvertently legitimize a de facto bail-in model against the consent of depositors, and put their money at risk.
Since the financial crisis of 2008, regulators worldwide have sought to reduce the likelihood of a TBTF failure through increase in capital quality and quantity enshrined internationally in Basel III, as well as setting various resolution mechanisms set to wind down failing institutions.
The U.S. regulators have taken two major specific steps, in the context of the Dodd-Frank financial regulatory overhaul. They have imposed prudential supervision rules with stringent capital, liquidity and leverage...
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The financial industry is scrambling to understand the Commodity Futures Trading Commission’s final rules for firms trading derivatives on an electronic platform.
Representatives say several aspects of the rules adopted in May remain unclear, including which trades have to be traded electronically, how to adequately disclose risks in swaps, and the timeframes for complying with the rules.
Firms trading on electronic platforms known as swap execution facilities (SEFs) face a number of tough decisions on day one: multiple SEFs, building a request for quote system in a way that will not drive the market against them, and understanding which trades will be executed on a SEF.
Experts say their ability to make the right decisions will have a big say on regulators’ efforts to increase...
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The U.S. Justice Department on Wednesday said it has chosen a former New York County prosecutor who is known for his innovative pursuit of criminals to police HSBC’s efforts to clean up its anti-money laundering program.
The Department’s decision to announce its choice at a time when a federal judge’s hesitation to sign-off on its settlement with HSBC has raised questions over the settlement’s prospects suggests the move is an attempt to win the judge’s approval, compliance experts said.
“It’s a smart move. Maybe it stirs a reluctant and reticent judge,” said a banking industry anti-money laundering compliance officer familiar with the Justice Department’s months-long search for a qualified monitor.
The man chosen for the five-year monitor post, which is expected to pay millions of dollars a year, is Michael...
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The suspicious-activity reports and other filings submitted by anti-money laundering officers are quite unlike a child’s letters to Santa Claus — they can be assured of an audience, Manhattan’s top local prosecutor and top staffers told reporters last week.
New York County District Attorney Cyrus Vance Jr. said his staff is continuing the war Bob Morgenthau, his predecessor, waged against the usual focus of AML efforts – drugs, fraud, taxes and terrorism – but they are using new tools and methods to fight emerging criminal threats as well as lower-level “street crime.”
Suspicious-activity reports (SARs), currency transaction reports and IRS Form 8300 reports of large cash transfers are used as forensic tools by staff in the prosecutor’s office working under a newly launched Financial Intelligence Unit (“FIU”) that aims to bring prosecuting crime fully into the Internet era.
“The internet is our 21st century...
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The Commodity Futures Trading Commission has issued industry-sought guidance clarifying trading violations it intends to monitor in the swaps and futures markets, but agency officials have expressed concern about its enforcement ability.
The document, or interpretive statement, gives more detail about the deceptive trading practices that are banned under section 747 of the Dodd-Frank Act.
Under Dodd-Frank, it is unlawful for individuals to violate a bid or offer price. It is also unlawful for individuals to demonstrate “reckless disregard” for the “orderly execution of transactions during the closing period. Reckless conduct, according to the CFTC’s division of enforcement, is partly determined by what the individual knew at the time of the trade.
Lastly, Dodd-Frank bans “spoofing,” a type of manipulation often...
