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U.S. regulator laments weak broker rules

Monday, 29 March 2010 00:00
Written by GPF Editorial

Securities and Exchange Commission member Luis Aguilar told investment advisors in Washington that he would not support any attempt to weaken the current standard for their industry.

Reuters report that Aguilar, who sits as one of five Commissioners preparing to make a decision on federal security rules, disapproved of weaker rules for brokers and said that brokers should be required to act in their client's best interest. "It makes sense for investors to expect that all securities professionals providing them with advice would be subject to the same obligations."

Aguilar drew attention to the disparity between investment advisory standards and that of brokers. "Currently brokers are required to follow so-called suitability standards, which require them to ensure that any financial product is suitable for a client. In contrast, investment advisers are bound by so-called fiduciary duties to put their clients' best interests first."

Aguilar's comments don't indicate how such a standard could be regulated by the SEC at present, so are his suggestions just wishful thinking? With competing interests and regulatory pressure, could brokers be bound by a fiduciary code? Let us know by dropping us a comment.

Tax on Banks gains international traction

Monday, 29 March 2010 00:00
Written by GPF Editorial

An in depth article from the Wall Street Journal today looks at the burgeoning consensus for levying a tax on banks, designed to cover future bail-outs. Drawing attention to international variations, the article examine how different versions of the proposal are currently making their way through the U.S. legislature,

"Congress is moving toward imposing a levy to build a fund before a crisis. The Obama administration favors the post-crisis option, a difference that will be worked out as financial-regulation legislation moves through Congress."

The piece also goes on to note that, "Officials in the U.S., Europe and the IMF say the bank-tax concept has gained so much momentum that it is likely to be on the agenda when of the Group of 20 industrial and developing nations meet in Canada in June."

Are the moves just cynical ploys by politicians to court public favour, or should the banks really foot the bill? Is it right to see this as a "financial crisis responsibility fee" as the U.S. treasury does? Leave us a comment and tell us what you think.

Derivatives transparency to be heightened by regulators

Friday, 26 March 2010 00:00
Written by GPF Editorial

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New global rules requiring trading information on over-the-counter derivatives are to be unveiled by regulators in the coming weeks the Financial Times reports.

The rules, formulated by the 40-member OTC Derivatives Regulators' Forum will apply to credit, interest rate, and equity derivatives traded off exchange, and will require information such as the identity of investors to be passed on to global financial watchdogs.

The regulators forum, which includes Federal Reserve and the Securities and Exchange Commission from the US, the UK's Financial Services Authority and European banking regulators, has taken guidelines set out by the Depository Trust & Clearing Corporation which will give regulators “unfettered access” to its information.

The new rules and information warehouses come out of the near collapse of AIG after its exposure to undetected credit default swaps, and other potential problems spouting from potential derivative dealers going bust.

As said, the FT has the full story, once you’ve read and absorbed, let us know your opinion on these new rules. Are they enough, do they go too far, could the increased transparency affect trading, or do disasters such as the lack of exposure to Greek derivative trades require this to happen? Comments below.

Securitisation market continues to suffer stillborn recovery

Friday, 26 March 2010 00:00
Written by GPF Editorial

The Fed 1 by flickr user afagen

An in-depth exploration of the securitisation market's spectacular crash over at The Economist, as national support begins to step aside or wind down for the beleaguered market. The U.S. industry in particular is likely to feel tested, as Federal programs draw to a close. From the article,

"The Fed’s purchases of almost $1.25 trillion-worth of such MBSs since last year have helped keep rates near record lows. But this programme is due to expire at the end of March. Most think the effect of the Fed’s withdrawal will be muted, because the move has been telegraphed and because there is money on the sidelines waiting to take the Fed’s place. But rates are still expected to rise at a time when housing demand remains muted: sales of new homes hit a record low in February."

The withdrawal of support from government backed agencies for the housing market in particular is a cause for consternation. The securitisation market's recovery has been characterised as limp, at best, compared to other markets, and regulatory frameworks are still uncertain, leaving the future of the industry very uncertain; the article touches on the specifics of the current billed tabled for congress.

Is the securitisation market likely to remain stagnant? If recovery does materialise then from what quarter will it come?

Using Garbage to Measure Consumption

Wednesday, 05 August 2009 20:31
Last Updated ( Wednesday, 05 August 2009 20:35 )

To solve the so-called equity premium puzzle, one researcher has gone digging through the garbage.Please Login or Register to see the full article

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