Institutional Investor (May 31)
Last December, “the SEC proposed a set of trading reforms detailing significant changes on vital features such as tick size, the access fee cap, and competition for retail orders.” NASDAQ broadly supports the moves, but worries that “they may not accomplish what the SEC is trying to accomplish” or lead to “unintended consequences that harm liquidity.” Instead, NASDAQ and others believe the SEC “should sequence the proposals rather than do them simultaneously and pause periodically to assess the impacts and determine whether additional reforms are warranted.”
Tags: Access fee cap, Assess, Competition, December, Impacts, Liquidity, Nasdaq, Proposals, Retail orders, SEC, Sequence, Tick size, Trading reforms, Unintended consequences
Financial Times (March 15)
Silicon Valley Bank “was conveniently non-significant in life, but became systemically significant in death.” Looking ahead, “regulation of systemically significant banks must be extended throughout the system.” We’re reached a point where “even in a modest crisis deposits cannot be sacrificed, and rules on haircuts for provision of liquidity will go out of the window.” Since they stand “at the heart of the credit system,” banks must be regulated as “wards of the state.”
Tags: Credit system, Crisis, Deposits, Haircuts, Liquidity, Regulation, Rules, Sacrificed, Silicon Valley Bank, Systemically significant
American Banker (January 10)
“When depositors began pulling money out of Silvergate Capital Corp. following the collapse of the cryptocurrency exchange FTX, the California bank shored up its liquidity by tapping a quasi-government agency not typically known as a lender of last resort.” The $4.3 billion lifeline that “Silvergate got from the Home Loan Bank System shows one way in which the crypto industry has managed to find its way into the mainstream banking system.”
Tags: $4.3 billion, Bank, California, Cryptocurrency exchange, Depositors, FTX, Home Loan Bank System, Lender of last resort, Lifeline, Liquidity, Money, Silvergate Capital. Collapse
Wall Street Journal (May 13)
“Well, the party was fun while it lasted. But now the liquidity tidal wave is crashing as it always does when credit conditions tighten. This week’s crypto-currency crash is the first body exposed on the beach, and let’s hope the damage doesn’t spread too far into the financial system and broader economy.”
Tags: Broader economy, Crash, Credit, Crypto-currency, Damage, Financial system, Liquidity, Party, Spread, Tidal wave, Tighten
Reuters (January 28)
“A growing number of Chinese construction and decoration companies are writing off assets or issuing profit warnings as debt woes at China Evergrande Group and other property developers debilitate their suppliers.” Despite government measures “to ease developers’ liquidity stress and support the cooling economy, recent data suggests the problem will get worse.”
Tags: Assets, China, Companies, Construction, Debt, Evergrande, Government, Liquidity, Profit warnings, Property developers, Suppliers, Woes
Investment Week (March 12)
“BBB corporate bonds, the lowest investment grade rating band in which a company’s debt rating can reside, have now grown to make up more than half of the entire global investment grade (IG) market.” When the next downturn strikes,”there could be a cascade of ‘fallen angels’, companies that are downgraded from IG to high yield (HY), swamping the smaller HY market and causing problems for investors as liquidity dries up and imperfect market clearing mechanisms struggle to cope.”
Tags: BBB, Bonds, Debt, Downgrade, Downturn, Fallen angels, High yield, Investment grade, Liquidity, Market clearing, Strikes
Reuters (February 1)
“Socialist President Nicolas Maduro is under intense pressure to step down, with Venezuela in deep economic crisis and the government facing widespread international condemnation for elections last year seen as fraudulent.” It appears he is making plans “to sell 29 tonnes of gold held in Caracas to the United Arab Emirates by February in order to provide liquidity for imports of basic goods.”
Tags: Basic goods, Condemnation, Crisis, Elections, Gold, Imports, Liquidity, Maduro, Pressure, Socialist, UAE, Venezuela
Institutional Investor (October 2)
The Securities Exchange Commission is conducting a pilot program to determine whether a wider tick range will help drive liquidity and research, while reducing volatility. “Proponents believe a wider spread–$0.05, instead of the current $0.01 on exchanges—will lead to more displayed liquidity and thus an easier trading regime.” Over the next two years, 400 stocks will trade at the widened tick, while 1,200 stocks will serve as a control and two other groups of 400 stocks will test the effects of other variations.
Wall Street Journal (August 28)
“The turmoil in world markets may push back the date the Federal Reserve raises interest rates…. One consequence even in anticipation of the Fed’s move is that investors in emerging markets risk getting caught in a rip tide of liquidity heading back to the U.S.”
Tags: Emerging markets, Federal Reserve, Interest rates, Investors, Liquidity, Markets, Turmoil, U.S.
Wall Street Journal (August 23)
“The People’s Bank of China is preparing to flood the banking system with liquidity to boost lending,” most likely by reducing the reserve-requirement ratio by half a percentage point. The planned move “signals that the Chinese central bank’s exchange-rate maneuvering in the past two weeks is backfiring, forcing it to again resort to the reserve-requirement reduction, the same easing measure that so far has failed to help spur economic activity.”
Tags: Backfiring, China, Easing, Exchange rate, Lending, Liquidity, PBOC, Reserve requirement
