The plan to eliminate Fannie and Freddie is no magic bullet. Vaporize Fannie and Freddie and all will be right with our world, say some, who, given the depth of their life experience, should know. What is clearly so sad is that they really don’t know. Their cavalier “just do it” approach to destroy what has been since 1938 (with the exception of an 8- to 10-year blip) a credible and skilled approach to funding homeownership could be even more financially dangerous for the United States going forward than what the country has now. Case in point: In a recent … Continue Reading →

The Investment Industry Regulatory Organization of Canada (IIROC) recently approved amendments to the Universal Market Integrity Rules (UMIR) pertaining to short sales. The following changes will become effective on September 1, 2012: The new rules repeal the “tick test” — a test that prohibits short sales at a price lower than the last sale price of a security. IIROC decided against implementing a circuit breaker like the SEC’s Rule 201. It should be noted, however, that IIROC has since 2008 had the authority (not yet exercised) to designate “short sale ineligible securities.” In addition, IIROC can trigger single-stock circuit breakers that halt trading for a … Continue Reading →

After reading the recent announcement that Bottomline Technologies is buying the commercial banking business of Intuit — the company that makes Quicken and Turbo Tax — I jotted down some comments: Bottomline may be revamping its strategy of purchasing IT assets, managing them on behalf of the partner and at the same time developing further to generate market opportunities for its own business. This is one step ahead in the strategy from the foundation of Bottomline buying Bank of America’s PayMode product in 2009. If this interpretation of the partnership with Intuit is right, then we can expect Bottomline to develop an integrated … Continue Reading →

The European Commission has published a list of deadlines it “expects” will be met before the end of the year, the most interesting of which, from a capital markets technology standpoint, are related to new data retention rules, a pan-European framework for electronic identification, amendments to UCITS, the Securities Law Directive, close-out netting, central securities depositories (CSDs), resolution and recovery arrangements, and data and metadata related to statistics. The EC is proposing a review of (later to be turned into an update of) directive 2006/24/EC, which relates to: “minimum harmonisation that the directive ought to bring (period of retention, types of data … Continue Reading →

Reading last Saturday’s Wall Street Journal story on the unclaimed life insurance policies of Holocaust victims brought to mind a friend of mine (a life insurance producer) who maintains that the financial press consistently presents the life insurance industry in a negative light. By and large, he’s right. The financial press does focus predominantly on scandals around life insurance. The last few years have seen coverage of the following: Insurers failing to write big checks to veterans’ widows, instead issuing checkbooks and holding assets in their own accounts, earning interest Insurers being insufficiently proactive in tracking down decedents who owned life policies … Continue Reading →

There’s no doubt that the European Central Bank’s (ECB’s) Target2-Securities (T2S) planned single platform for settlement across Europe (well, not including settling in currencies like U.K. sterling or Swiss francs) will be a game-changer. The endless delays that have beleaguered it, however (after numerous delays over the last five years, it is now slated to go live in the summer of 2015), and the constant barrage of regulation in other areas of the market have kept most market participants rather distracted. There is still a perception among many that T2S is too far off to care about — other things, like … Continue Reading →

Banks test fees on products all the time. Bank of America is the most recent bank to receive backlash for testing and considering changing fees on checking accounts. Subsequently, there was a public uproar from the suggestion that they may increase fees. And to that I say, stop the madness. I’m tired of the complaints about checking account fees. Like everyone else, I am also tired of the bad economy, of government regulation, of banks getting battered by Congress, of so-called “consumer advocate groups,” and of consumer complaints. Sure, the banks took advantage of the marketplace during the boom economy, … Continue Reading →

On the surface, the U.S. property and casualty (P&C) insurance industry received good news on Valentine’s Day, during Chinese Vice President Xi Jinping’s visit to the United States. U.S. Vice President Joe Biden announced the “Joint Fact Sheet on Strengthening U.S-China Economic Relations,” under which China agreed to open up its US$65 billion auto insurance market to foreign competition. The Chinese insurance market had 2010 annual premiums exceeding US$236 billion, including US$150 billion in life and US$86 billion in P&C, of which foreign life and general insurers hold insignificant market shares of roughly 4% and 1%, respectively. Non-China-based insurers, originally lured to … Continue Reading →

Constituting roughly 80 million individuals born in the 1980s and 1990s, the Generation Y population is estimated to be as large as that of the baby-boom generation. Of Gen Yers, approximately 50 million are of investing age. Capturing this large group is critical for wealth management firms that want to see assets continue to grow once their baby-boomer clients hit retirement. What characterizes these young investors? A December 2011 Aite Group survey of 1,000 investors (240 Gen Y investors) that hold a minimum of US$25,000 in investable assets reveals the following: Half are entirely self-directed and state that they “look into investments … Continue Reading →

The years immediately following the financial crisis were extremely challenging ones for the financial services industry. For the last few years, most bank IT budgets have been monopolized by regulatory compliance, matters related to running the bank, and cost-cutting initiatives, with little to no focus on growth. Further, many of the growth initiatives banks planned for 2011 were put on a back burner or never came to fruition. Despite this, banks continued to see the value of technology and to invest in IT during even the most challenging times. Most institutions enjoyed a small increase in IT spending — about 3% … Continue Reading →