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 →

January 31, 2012 has come and gone, and the Federal Insurance Office (FIO) Report on insurance industry modernization — clearly mandated by Dodd-Frank to have been delivered to the U.S. Congress no later than that date — is now officially late. Although the report may just be another in a string of late Dodd-Frank deliverables, could its delay indicate something more foreboding than a blown bureaucratic deadline? As I have articulated in detail in prior blog posts on this subject (“FIO Report to Congress: The Moment of Truth Approaches” and “The U.S. Federal Insurance Office: McRaith Takes the Reins”), numerous large and … Continue Reading →

The Federal Insurance Office (FIO) is busy finalizing its eagerly awaited report and recommendations on modernizing and improving insurance regulation, which — mandated by the 2010 Dodd-Frank Act — is required to be delivered to the U.S. Congress this month. The industry stakeholders involved in the submissions process leading up to this report have been numerous and diverse, which, in my view, is both positive and negative. As a refresher, under Dodd-Frank, the U.S. Department of the Treasury formed the Federal Stability Oversight Council (FSOC), which in turn created the Federal Insurance Office (FIO), which has now appointed members to … Continue Reading →

The Markets in Financial Instruments and amending Regulation (MiFIR) released on October 20, 2011 looks to introduce competition in the European derivatives space through open access to central counterparties (CCPs) and trading venues, and fair licensing of and access to benchmarks. These changes came as a shock to certain major dominant players in the derivatives market, but were welcomed by those looking to enter the derivatives markets. After all, derivatives margins are a lot higher than those in equities. Since the launch of derivatives products on the Turquoise platform, Turquoise’s Adrian Farnham has been particularly vocal on this space. He … Continue Reading →

It is well understood that the U.S. healthcare system is under tremendous pressure from all directions. Government fee reductions, declining private-sector program enrollments, provider and supplier cost and price increases, and uncertainties of impending regulatory change are simultaneously impacting healthcare economics. What is not so well understood are the repercussions of this pressure beyond the healthcare system. One relevant and glaring case in point is the significant and growing practice of cost shifting — charging the nation’s property and casualty (P&C) insurance companies, specifically the automobile insurance segment, for medical-provider services. This leakage has been masked until now by lower-than-usual … Continue Reading →

The need for interchange regulation, hotly debated by the U.S. Congress for more than a year, ended in the passage of the Durbin Amendment. Not surprisingly, this resulted in U.S. banks implementing “replacement” revenue streams in the form of fees. Price-fixing an industry has never worked and does not work now. The Durbin Amendment’s attempt to do something right for consumers has become detrimental to them. What does it all mean? Consumers will pay more for demand deposit relationships and the debit cards that access them. Some consumers will switch to credit cards. Those who can no longer afford checking … Continue Reading →

The Federal Housing Finance Agency (FHFA), the conservator of Fannie Mae and Freddie Mac, recently announced that Freddie Mac used faulty analytical methodologies relating to mortgage buybacks in its US$1.35 billion settlement with Bank of America. In effect, FHFA contends that Freddie Mac underestimated questionable 2005 to 2007 Countrywide-originated mortgages and did not take into account teaser-rate loans, whose credit risks differ from more traditional mortgage products. The FHFA senior examiner concluded that the settlement was inadequate and that Freddie Mac had done so in order to preserve its relationship with Bank of America, a large underwriter of loans used … Continue Reading →

The mobile recording technology market has responded to the U.K. Financial Services Authority’s (FSA’s) requirements to introduce mandatory call recording for what the regulations describe as “relevant conversations” by those who provide financial advice and execute financial transactions by mobile phone. The scope of the technology varies. Compliant Phones, for example, has developed second-generation Inline Mobile Recording to work across any network worldwide, overcoming limitations of network-only-based solutions for global customers, while BT and Teleware have announced the immediate availability of a network-based recording service for mobile devices, specifically to address the requirements under the U.K. FSA regulations. Cross-border phone … Continue Reading →

Taxes, entitlements, and the national debt limit are not the only controversial topics in Washington this summer. The Securities and Exchange Commission’s proposal to apply a uniform fiduciary standard to investment advisers and broker-dealers alike has created a ruckus in the retail investment industry. The Securities Industry and Financial Markets Association (SIFMA) and the National Association of Insurance and Financial Advisers (NAIFA) are lobbying vigorously against the SEC proposal.* What’s behind this brouhaha?  We are not qualified to offer legal advice, but here is a layman’s account. As with so many other regulatory issues these days, the debate originated with the Dodd-Frank … Continue Reading →

This is my fourth Durbin Amendment blog posting since April 2011. Since the Federal Reserve Bank posted the rules, my fury over government price fixing has reached an all-time high. The concurrent political wrangling to sort through the U.S. budget and looming deficit has only compounded my fury. It is clear that elected officials are merely posturing to get re-elected or gain majority power in congress. This is just more evidence that no elected official is truly capable of taking the higher road when it comes to the state of the U.S. economy or our society as a whole. Case … Continue Reading →