Buy-side, sell-side and platforms must all get to grips with the details of restrictions on non-displayed equity trading in MiFID II.
Mark Carney is determined to solve the problem of banks deemed too big to fail. “This is the year to complete that job,” he says.
Europe’s policymakers are determined to impose position limits and reporting requirements on commodity traders to combat so-called food speculation, despite deep reservations from the industry as to their effectiveness and unintended consequences.
The Bank for International Settlements’ (BIS) 84th annual report has warned that falling risk weightings on bank assets partially undermine improving capital positions. The report found that the global capital shortfall for banks to reach the Basel minimum capital ratio was €85.2bn as of mid-2013, which was a substantial narrowing of €59.6bn from a year earlier.
The European Commission has published a consultation paper on the method for financing the single resolution fund for the banking union, as well as national resolution funds for other EU member states under the Bank Recovery and Resolution Directive (BRRD). The essential concept of a levy that combines a flat rate based on size and a variable rate based on the risk profile of each bank was set out in BRRD, but the commission is now preparing secondary legislation to specify how these levies will be calculated. It must also decide the relative balance between a flat rate and a variable component. The contributions are designed to ensure that funds are available to manage a bank failure – for instance, to finance a bridge bank for healthy assets and liabilities – without drawing on taxpayer resources as a first resort.
Researchers at the International Monetary Fund (IMF) have concluded that concerns over the Basel Committee’s net stable funding ratio (NSFR) may be exaggerated, following the most extensive global study to date. The Basel Committee on Banking Supervision has undertaken quantitative impact studies covering its 27 member jurisdictions. By contrast, staff in the IMF monetary and capital markets department took a sample of the largest banks in each of 128 countries, plus the top 100 banks worldwide by assets.
The future of trading in less liquid assets depends on the correct calibration of liquidity definitions in the Markets in Financial Instruments Regulation (MiFIR), market participants are warning. MiFIR will extend trading obligations such as pre- and post-trade transparency beyond equities for the first time in the EU, to take in fixed-income and derivative transactions. However, these obligations will only apply to assets considered sufficiently liquid.