Investment Week (December 21)
“The asset and wealth management industry is set to face a busy year of regulation, with the impact of recently passed legislation, including sustainability disclosure requirements and new listings rules, combining with that yet to come, such as long term asset funds. Past decisions will also bring change, as LIBOR also comes to an end this year, with very slim exception, while the spectre of Brexit is far from banished.”
Tags: Asset management, Brexit, Disclosure requirements, Funds, Impact, Legislation, LIBOR, Listings rules, Regulation, Sustainability, Wealth
Wall Street Journal (March 13)
“Regulators are pressuring Wall Street to do away with the London interbank offered rate by year-end. Companies are still making the switch.” The Federal Reserve is pushing the Secured Overnight Financing Rate (SOFR) as a replacement, but “the U.S. is running behind the U.K. and Europe, where investment firms and companies have been faster to transition to alternative rates,” including the Sterling Overnight Index Average (Sonia).
Tags: Europe, Fed, Investment firms, LIBOR, Regulators, Replacement, SOFR, Transition, U.K., U.S., Wall Street
The Economist (September 29)
“A scramble to replace LIBOR is under way” before it is phased out permanently in 2021. Though scandals have revealed LIBOR’s numerous inadequacies, “a staggering $260trn-worth of financial products, from interest-rate swaps to retail mortgages,” are estimated to be priced using LIBOR and many of the contracts lack fallback clauses. “Creating and then switching to truly market-based alternatives is an almighty task.”
Tags: Contracts, Fallback clauses, Financial products, Inadequacies, Interest-rate swaps, LIBOR, Market-based alternatives, Retail mortgages, Scandals, Scramble, Staggering
Financial Times (December 19)
“The conspiracy to fix Libor appears more extensive than had been previously thought. This was not just a question of massaging submissions to make UBS’s financial position look stronger than it was after the crisis. The settlement also points to a co-ordinated effort across banks to manipulate market rates for profit.” Collusion and anti-trust charges may lead to class-action suits. Libor may become “the banks’ ‘tobacco moment’, when long-running bad behaviour is finally rumbled and the lawsuits roll in.”
Tags: Anti-trust, Banks, Class-action, Collusion, LIBOR, Tobacco, UBS
Financial Times (July 12)
“The banking sector hardly needs another scandal.” In just two weeks, Barclays has been sanctioned for market fixing Libor submissions, the Royal Bank of Scotland had a system failure which hindered customer account access, and now HSBC is being hauled in front of Congress for money laundering. “With the world’s biggest banks entangled in investigations, it is foolish to think that the industry, already scraping the bottom of the barrel of public goodwill, has put the worst behind it.”
The Economist (July 7)
The latest banking scandal may have been a tipping point in the court of public opinion. “The attempts to rig LIBOR (the London inter-bank offered rate), a benchmark interest rate, not only betray a culture of casual dishonesty; they set the stage for lawsuits and more regulation right the way round the globe. This could well be global finance’s “tobacco moment”.
The latest banking scandal may have been a tipping point in the court of public opinion. “The attempts to rig LIBOR (the London inter-bank offered rate), a benchmark interest rate, not only betray a culture of casual dishonesty; they set the stage for lawsuits and more regulation right the way round the globe. This could well be global finance’s “tobacco moment”.
Tags: Banking, Global finance, LIBOR, Regulation, Scandal, UK
Wall Street Journal (July 6)
The scandal over manipulation of the London Interbank Offered Rate (Libor) is “more proof of the failing wizardry of the First World’s monetary-cum-banking arrangements.” During the crisis, regulators relied on “questionably legal improvisations” to keep the whole system afloat. A rise in Libor could have set off a panic. “The larger lesson isn’t that bankers are moral scum, badder than the rest of us. The Libor scandal is another testimony (as if more were needed) of just how lacking in rational design most human institutions inevitably are.”
The scandal over manipulation of the London Interbank Offered Rate (Libor) is “more proof of the failing wizardry of the First World’s monetary-cum-banking arrangements.” During the crisis, regulators relied on “questionably legal improvisations” to keep the whole system afloat. A rise in Libor could have set off a panic. “The larger lesson isn’t that bankers are moral scum, badder than the rest of us. The Libor scandal is another testimony (as if more were needed) of just how lacking in rational design most human institutions inevitably are.”
