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Financial Regulation Roundup: October 20, 2017

Rupert Eyles

Here are the top stories on the financial regulatory landscape in the U.S., EU and around the world over the past two weeks.

U.S. News:

Fed Chair Race

  • Now with no clear winner in sight, markets see a tight horse race shaping up for the Fed chairmanship in a shifting field. A report that President Donald Trump was impressed by Stanford University economist John Taylor drove Treasury yields slightly higher earlier this week. Around the same time, another article said the president would interview the much more dovish Fed Chair Janet Yellen for another term, helping to push yields lower. ( read more)

MiFID II US Impact

  • MiFID II may lead to fewer initial public offerings in the U.S. because there will probably be less coverage of smaller stocks by analysts after the European Union rules come into force in January, Cowen & Co. analyst Jaret Seiberg wrote in a note to clients. Newly public companies will have trouble getting covered by research brokers and that may dissuade firms from listing until they are bigger, Seiberg wrote in the Oct. 18 report. That conflicts with the U.S. Securities and Exchange Commission’s priority of boosting the domestic IPO market. (Bloomberg: read more)

Wells Fargo Compensation over ETP Volatility

  • Wells Fargo agreed to compensate customers after recommending exchange-traded products linked to stock-market volatility without fully understanding the securities’ risks. The Financial Industry Regulatory Authority ordered a brokerage division of Wells Fargo that has financial advisers around the country to pay $3.4 million for recommending the volatility ETPs between July 2010 and May 2012 (The Wall Street Journal: read more)

E.U. News:

Insurers to delay Insurance Distribution

  • Insurers have welcomed calls from the European Parliament to delay the application date of the Insurance Distribution Directive. The directive will replace the current Insurance Mediation Directive and will govern how insurance is sold across the EU. It is currently due to come into force in February 2018. A statement from the ABI said it welcomed ‘the ECON Committee of the European Parliament’s call for a delay of the application date of the IDD’. (Insurance Times: read more)

EU Rules Out Further Deadline Extensions to Mifid II

  • The EU's financial services chief has today ruled out any further delay to an apprehensively awaited array of securities market reforms. The new Markets in Financial Instruments Directive (Mifid II), due to come into force in January, has already been postponed for 12 months and the European Commission had left open the possibility that this could be extended. But commissioner Valdis Dombrovkis said today at a regulatory conference in Paris that the January implementation date was set. (City AM: read more)


Liquidity Rules

The Treasury Department will soon decide whether to recommend scrapping the Dodd-Frank Act’s rules for liquidating failing banks, as some Republicans are urging. But foreign regulators are threatening to impose new curbs on American firms if it’s ditched. What’s known as Orderly Liquidation Authority was established in Dodd-Frank to avoid confusion if a complex financial institution fails, like Lehman Brothers did a decade ago. The act gave the Federal Deposit Insurance Corp. the power to unwind bank holding companies, systemically important nonbanks and other financial firms, and set up a fund to pay for the associated costs. The F.D.I.C. would initially borrow from the Treasury, and recoup the expenses with a fee imposed on big bank. (The New York Times: read more)

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