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Testimony Before the U.S. House Committee on Financial Services, Washington, DC
June 16, 2011--Good morning Chairman Bachus, Ranking Member Frank and members of the Committee. I thank you for inviting me to today’s hearing on the international context of financial regulatory reform. I also thank my fellow Commissioners and CFTC staff for their hard work and commitment on implementing the legislation.
I am pleased to testify alongside my fellow regulators.
Global Crisis
It has now been more than two years since the financial crisis, when both the financial system and the financial regulatory system failed. So many people – not just in the United States, but throughout the world – who never had any connection to derivatives or exotic financial contracts had their lives hurt by the risks taken by financial actors. The effects of the crisis remain. All over the world, we still have high unemployment, homes that are worth less than their mortgages and pension funds that have not regained the value they had before the crisis. We still have significant uncertainty in the financial system.
Though the crisis had many causes, it is clear that the swaps market played a central role. Swaps added leverage to the financial system with more risk being backed up by less capital. They contributed, particularly through credit default swaps, to the bubble in the housing market and helped to accelerate the financial crisis. They contributed to a system where large financial institutions were thought to be not only too big to fail, but too interconnected to fail. Swaps – initially developed to help manage and lower risk – actually concentrated and heightened risk in the economy and to the public.
read more
Source: CFTC.gov
PowerShares files with the SEC
April 15, 2011-PowerShares has filed a post-effective amendment, registration statement with the SEC for the
PowerShares Fundamental Pure Large Growth Portfolio
and
PowerShares Fundamental Pure Large Value Portfolio
view filing
Source: SEC.gov
BNY Mellon Launches BNY Mellon Clearing International
New company to clear futures and derivatives trades for institutional clients in Europe, Middle East and Africa
June 15, 2011--BNY Mellon, the global leader in investment management and investment servicing, today announced the creation of a new company to clear futures and derivatives trades on behalf of institutional clients in Europe, Middle East and Africa. Headquartered in Dublin, the business, BNY Mellon Clearing International Limited ("BNY Mellon Clearing International" or "BNYMCIL") is the first MiFID authorised futures and derivatives clearing entity in Ireland and is regulated by the Central Bank of Ireland. It plans to become a clearing member on major exchanges and central clearinghouses globally to support the trading activities of BNY Mellon clients and intends to lead to the creation of 50 new jobs in Ireland over the next two years.
BNY Mellon Clearing International will be an important addition to BNY Mellon's Irish operations where the company is ranked the number one fund administrator and currently employs over 1,800 employees, offering a broad range of services to traditional and alternative asset managers, banks, pension funds, insurance companies and corporates. Tim Murphy will serve as head of BNY Mellon Clearing International for Europe, Middle East and Africa, reporting to Sanjay Kannambadi, CEO and global head of BNY Mellon Clearing LLC (BNYMC), who is based in the company's New York headquarters.
The company plans to clear listed futures and option trades on behalf of institutional clients. Services are expected to include general operations; including trade novation, margin management, risk management, and reporting. As over the counter (OTC) swaps move into control clearing, BNY Mellon Clearing International and BNYMC will provide solutions to clear these products.
"As a leading securities servicer for major derivatives participants, BNY Mellon provides a comprehensive clearing solution to our institutional clients through BNY Mellon Clearing. Through this new entity, we can now offer clients clearing member services for exchange-traded derivative products on exchanges and clearing houses both in the US and Europe," said Art Certosimo, CEO of Global Markets at BNY Mellon, responsible for the derivatives clearing business.
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Source: The Bank of New York Mellon Corporation.
SEC Provides Guidance and Temporary Relief Regarding Security-Based Swap Provisions of Dodd-Frank Act
June 15, 2011 – The Securities and Exchange Commission today provided guidance as to which of the Title VII requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act will apply to security-based swap transactions as of July 16, the effective date of Title VII. It also granted temporary relief to market participants from compliance with certain of these requirements.
The guidance issued today makes clear that substantially all of Title VII’s requirements applicable to security-based swaps will not go into effect on July 16. The Commission’s action also grants temporary relief from compliance with most of the new Exchange Act requirements that would otherwise apply on July 16.
In addition, to enhance the legal certainty provided to market participants, the Commission’s action provides temporary relief from Section 29(b), which generally provides that contracts made in violation of any provision of the Exchange Act shall be void as to the rights of any person who is in violation of the provision.
view the exemptive order
Source: SEC.gov
SEC Proposes Ways to Strengthen Audits and Reporting of Broker-Dealers to Protect Customer Assets
June 15, 2011-- The Securities and Exchange Commission today unanimously proposed amendments to the broker-dealer financial reporting rule in order to strengthen the audits of broker-dealers as well as the SEC’s oversight of the way broker-dealers handle their customers’ securities and cash.
The SEC’s proposal builds upon rules adopted in December 2009 that strengthened the protections provided to investors who turn their assets over to investment advisers.
“When investors hand their assets over to a broker-dealer, they trust that their broker-dealer will hold and invest the assets as directed,” said SEC Chairman Mary L. Schapiro. “To protect investors and help maintain confidence in the market, we must take strong steps to help safeguard the assets held by broker-dealers.”
view the proposed rule
Source: SEC.gov
Direxion Launches Five New Leveraged and Inverse ETFs
Funds Targeted at Sectors That are Currently Attracting Large Assets and Heavy Trading Volume
June 15, 2011-- Direxion, a pioneer in providing alternative investment strategies to sophisticated investors, is pleased to announce the launch of five new Direxion Daily ETFs to its existing lineup of multi-directional funds.
The new ETFs include: Bull and Bear funds that seek 300% of the daily performance, or 300% of the inverse of the daily performance (before fees and expenses) of the S&P Materials Select Sector Index; Bull and Bear index funds that seek 300% of the daily performance, or 300% of the inverse of the daily performance (before fees and expenses) of the S&P Healthcare Select Sector Index; and a Bear index fund that seeks 100% of the inverse of the daily performance of the MSCI US Broad Market Index (before fees and expenses). Funds offered by other sponsors covering these same sectors are currently trading large volumes and garnering substantial assets.
There is no guarantee that the new ETFs will achieve their objectives. The funds are intended for use only by sophisticated investors who understand the risks associated with seeking daily investment results and plan to actively monitor and manage their positions in the funds.
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Source: Direxion
First Trust files with the SEC
June 15, 2011--First Trust has filed a post-effective amendment No.52, registration statement with the SEC for the First Trust ISE Global Oil Refiners Index Fund.
view filing
Source: SEC.gov
Treasury International Capital Data For April
June 15, 2011--The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for April 2011. The next release, which will report on data for May 2011, is scheduled for July 18, 2011.
Net foreign purchases of long-term securities were $30.6 billion.
Net foreign purchases of long-term U.S. securities were $44.8 billion. Of this, net purchases by private foreign investors were $18.6 billion, and net purchases by foreign official institutions were $26.2 billion.
U.S. residents purchased a net $14.2 billion of long-term foreign securities. Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $18.9 billion. Foreign holdings of dollar-denominated short-term U.S. securities, including U.S. Treasury bills and other custody liabilities, decreased $8.0 billion. Foreign holdings of U.S. Treasury bills decreased $13.4 billion. Banks’ own net dollar-denominated liabilities to foreign residents increased $57.4 billion. Monthly net TIC flows were $68.2 billion. Of this, net foreign private flows were $29.9 billion, and net foreign official flows were $38.3 billion.
view data
Source: US Depaertment of the Treasury
Component Changes Made to Dow Jones Islamic Market Indexes
Press ReleasesMarket ReportsBiographiesContact UsVideo InterviewsComponent Changes Made to Dow Jones Islamic Market Indexes
Regular Annual and Quarterly Review Results
June 14, 2011--Dow Jones Indexes, a leading global index provider, today announced the results of the regular annual review of the Dow Jones Islamic Market Titans 100 Index and its three sub-indexes, Dow Jones Islamic Market U.S. Titans 50 Index, Dow Jones Islamic Market Asia/Pacific Titans 25 Index and Dow Jones Islamic Market Europe Titans 25 Index as well as the Dow Jones Islamic Market Malaysia Titans 25 Index and the regular quarterly review of the Dow Jones Islamic Market World, Country and Regional indexes.
All changes will be effective after the close of trading on Friday, June 17, 2011.
In the Dow Jones Islamic Market Titans 100 Index and sub-index Dow Jones Islamic Market U.S. Titans 50 Index, Exelon Corp. (United States, Utilities, EXC) and Medco Health Solutions Inc. (United States, Health Care, MHS) will be replaced by Accenture PLC Cl A (United States, Industrial Goods & Services, ACN) and Baker Hughes Inc. (United States, Oil & Gas, BHI).
In the Dow Jones Islamic Market Titans 100 Index and sub-index Dow Jones Islamic Market Asia/Pacific Titans 25 Index, Daiichi Sankyo Co. Ltd. (Japan, Health Care, 4568.TO) and Kao Corp. (Japan, Personal & Household Goods, 4452.TO) will be replaced by Rio Tinto Ltd. (Australia, Basic Resources, RIO.AU) and Inpex Corp. (Japan, Oil & Gas, 1605.TO).
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Source: Dow Jones Indexes
U.S. Agencies Adopt A Final Rule To Establish A Risk-Based Capital Floor
June 14, 2011--Three federal banking regulatory agencies adopted a final rule that establishes a floor for the risk-based capital requirements applicable to the largest, internationally active banking organizations.
The rule, finalized by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, is consistent with the requirements of Section 171 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
A banking organization operating under the agencies' advanced approaches risk-based capital rules is required to meet the higher of the minimum requirements under the general risk-based capital rules and the minimum requirements under the advanced approaches risk-based capital rules.
The rule also provides limited flexibility to establish appropriate capital requirements for certain low-risk exposures that, in general, are not held by insured depository institutions, but may be held by depository institution holding companies or nonbank financial companies supervised by the Federal Reserve Board.
The final rule will be effective 30 days after publication in the Federal Register; publication is expected soon.
view the Risk-Based Capital Standards: Advanced Capital Adequacy Framework—Basel II;
Establishment of a Risk-Based Capital Floor
Source Federal Reserve
