Week InReview
 
"Glass-Steagall divided the world intellectually into two distinct financial arenas, securities markets and banking. Securities markets were subject to the regulatory authority of the SEC, whose major tools were disclosure and enforcement; the banking agencies oversaw banks using a strategy of prudential oversight. Legal specialization aligned this way; so did academic work."

However... "in the ensuing decades, an increasing share of financial activity took place in the large space of functional overlap between banks and securities markets." Since those activities were securities markets, "the principal regulatory tool was disclosure, even though the core activity was maturity and liquidity transformation, the sort of activity that we have learned from banking requires prudential oversight for stability." In conclusion, "[t]he consequence of this regulatory mismatch was a massive increase in systemic risk."

Mike Konczal arguing against a naive approach to breaking up the banks by bringing back Glass-Steagall, quoting Jeffrey Gordon of Columbia Law School
Friday, August 5, 2016
Let's recap
In case you missed it . . .

Exchange trading access fees
SEC to consider lowering them
(Aug 2) The Securities and Exchange Commission will propose a pilot program to lower the fees that traders pay to access stock exchanges, Chair Mary Jo White said. The pilot program would affect the "maker-taker" fee model, in which exchanges charge traders who take liquidity and give access fee rebates to market makers. The agency will act on it later this year, White said at a meeting of the agency's Equity Market Structure Advisory Committee. In July, the committee recommended that the agency test out a lower- or no-fee model for heavily traded stocks.
Living will deadline
Regulators extend for some big banks
(Aug 2)  Some large banks won't have to submit their next living wills until the end of 2017, federal regulators said. The Federal Reserve and Federal Deposit Insurance Corporation announced 38 large financial companies will be required to submit the resolution plans by Dec. 31, 2017. Previously, the companies had to submit their next plans by Dec. 31, 2016. The firms include 36 domestic bank holding companies and foreign bank organizations, as well as two nonbank financial companies. In a joint press release, the Fed and the FDIC said the extension will allow the companies more time to include feedback and guidance into their next submitted plan.
Audit trail action
SEC bumps back deadline
(Aug 1)  The Securities and Exchange Commission delayed until November its decision date on implementing the consolidated audit trail, a sweeping database that will collect real-time information on stock transactions and quotes. Under the plan, a central data repository would collect information on equity orders from brokers and exchanges, who would have to ensure its security and accuracy. After the April release, the agency had 120 days to approve the plan with an option to extend that window to 180 days. The commission said it needs more time to consider the comments on the proposed plan, "which are broad in scope." The agency now has until Nov. 10 to act, a change from Sept. 14.
Binge reading disorder
Hand-curated, chosen with love
Goodbye hedge funds, hello Moomins as financier eyes theme park

China's cheating husbands fuel an industry of 'Mistress Dispellers'

Obscure rule to fix $2.7 trillion market draws tireless opponent

The paradox of quant

This parking space costs more than your house
- BBC
Transparency.
Inclusiveness.
Consensus.