Week InReview | OFR says markets weaken in response to concerns about global growth & oil | SEC to continue push for market structure rules in 2016 | Bank strains echo European crisis seen in U.S. money markets | ICYMI + Binge Reading
(Feb 10) The OFR released its latest Financial Markets Monitor. The monitor says prices of equities and other risky assets have declined markedly in 2016 due to concerns about global growth and low oil prices. Developments in China fueled market concerns about the effectiveness of Chinese economic policies, while oil oversupply pushed prices to the lowest levels in more than 10 years.
(Feb 9)
The Securities and Exchange Commission in 2016 will continue work to finalize regulations aimed at improving U.S. equity market structure, Stephen Luparello, Division of Trading and Markets director, said at an industry conference. Luparello pointed specifically to proposals that would enhance transparency and oversight of alternative trading systems. Meanwhile, the commission continues work to finish regulatory proposals regarding order routing, requiring additional traders to register as broker-dealers and imposing new recordkeeping requirements on high-frequency traders. The agency also is at work on a market disruption proposal to restrict certain types of traders from effectuating specific trades during times of market stress.
Bank strains seen in U.S. money markets
Echo European crisis
(Feb 9) Key derivatives that measure risks to the U.S. financial industry are signaling mounting stress, reminiscent of the banking woes that crossed the pond at the height of Europe's sovereign debt crisis in 2012. The Libor-OIS spread - the difference between the rate banks charge each other for dollar loans in London and the overnight index swap rate - reached its biggest since 2012. The widening gap shows the companies face growing difficulty funding themselves in dollars. It has surged as European banking shares plunge and as other measures indicate that the credit risk of some of the region's largest financial firms is growing.
