Week InReview
Friday | Jan 10, 2020
Jan. 9, 1790: 'This Day in Financial History'

" Insider trading gets off to a roaring start as Treasury Secretary Alexander Hamilton submits to Congress his 'Report on the Public Credit,' which proposes buying up distressed bonds to consolidate the national debt. U.S. and state bonds, which had been trading at a fraction of their value, immediately surge in price. In one of the earliest, and most shocking, cases of insider trading on record, several members of Congress hire sailboats and stagecoaches to take them south faster than the news can travel by foot. They can snap up bonds at bargain prices before Southern newspapers spread the news of Hamilton's proposals."

— The Wall Street Journal
in case you missed it...
Researchers at the Federal Reserve Bank of New York said on Wednesday that an increase in sales of riskier corporate debt poses a “financial stability concern,” noting that an economic downturn could force investors to dump assets en masse. (Financial Times | Jan 8)

Federal Housing Finance Agency Director Mark Calabria has suggested Fannie Mae and Freddie Mac could operate under a consent decree. This would technically relieve the companies of government control, albeit with regulatory safeguards, while they raise capital and work toward full independence. (American Banker | Jan 8)

Brokers’ compliance with the SEC’s new conflict-of-interest rules is a top priority for the agency’s examiners in the coming months. The rules, known as Regulation Best Interest, are among the 2020 priorities for the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations, according to a Jan. 7  guide . They are set to become effective June 30. (Bloomberg Law | Jan 7)

The Securities and Exchange Commission's proposal for replacing no-action letters and regulatory guidance on funds' derivatives usage with risk-based rules could open the door for the introduction of new products, experts say. (Risk | Jan 6)

Investors are piling in to U.S. inflation-linked bonds, as the Federal Reserve embraces the idea of letting consumer price-rises run above target to avoid the sluggishness that has dogged much of Europe and Japan. (Financial Times | Jan 6)
SEC to propose that exchanges overhaul data feed policies
(Jan 8) — The U.S. Securities and Exchange Commission on Wednesday will propose ordering exchanges including the New York Stock Exchange and Nasdaq to create a new plan for stock trading data feeds they must make publicly available.

  • The SEC’s proposed order would require exchanges to craft a new plan that would address concerns of conflicts of interest that exist between the consolidated data streams they must provide and their lucrative private data businesses
  • SEC Chair Jay Clayton says during meeting on Wednesday that the structure of current exchanges’ public data plans has “redundancies, inefficiencies, and inconsistencies”
  • The commission will seek public comment on the proposal

Source: Bloomberg Law
the cyber cafe
Former joke ransomware now a genuine threat
Fortinet reports that a new version of DeathRansom, a ransomware strain that previously only pretended to encrypt a user's files, now uses a working encryption scheme and has been spreading online through phishing emails. Researchers say the ransomware's author appears to be Egor Nedugov, a Russian malware operator who has been selling stolen user credentials for years.
—  ZDNet

Muni market prepares for cyberattacks amid U.S.-Iran tension
A quiet unease is hanging over the municipal bond market as participants wait for a potential retaliation against U.S. interests that may include cyberattacks against the financial services industry after the strike that killed Iranian Gen. Qassem Soleimani in Iraq. The Multi-State Information Sharing & Analysis Center MS-ISAC raised its cyber threat alert level to blue (guarded) on Tuesday.

DHS warns of potential digital attack by Iran
The Department of Homeland Security has issued a bulletin warning the U.S. to prepare for a possible cyberattack by Iran that could disrupt critical infrastructure. While no specific, credible threats are known, DHS said that given Iran's "robust cyber program," an attack would not be unexpected in the aftermath of the killing of Gen. Qassem Soleimani, and Americans should back up data and upgrade log-in credentials.
—  The Hill
binge reading disorder
People who pushed themselves too hard at work did these 5 things
Lots of people push themselves too hard at work. This list of some of the tell-tale signs that you might be one of those people is spot on. Unfortunately, I must confess I am guilty of one or two of these things from time to time. Take the poll to share which bad habit you might be guilty of the most.

Innovation, flexibility the new lifeblood of financial firms
As fintech continues to change the industry's landscape, the size of a financial institution is becoming less correlated with its likelihood of success. In today's industry, innovation and flexibility are increasingly becoming the core competencies that financial institutions of all sizes need to get ahead.
—  PYMNTS

Why the U.S. repo market blew up and how to fix it
To keep markets running smoothly at the end of 2019, the U.S. Federal Reserve pumped half a trillion dollars into an obscure but crucial part of the global financial system that suffered a seizure several months ago. But what will it take to keep that funding market, known as repo, out of news headlines in 2020? Remedies from   looser   bank regulation to a permanent   backstop   at the Fed are being debated, even as views differ over what caused the ruckus in the first place.
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