Financial Regulatory Forum

Nov 22 (Reuters) – The U.S. Commodity Futures Trading Commission faces the mammoth task of writing detailed regulations to implement reforms passed by Congress giving the agency oversight of the $600 trillion over-the-counter derivatives market.

Working from a list of 30 topic areas, the agency may end up writing 50 to 60 regulations, CFTC Chairman Gary Gensler has said.

The CFTC hopes to unveil the first drafts of most of the proposed rules by the end of the year to allow time for public comment and revisions before its July deadline for final regulations. Some rules have earlier deadlines.

Regulators have held hundreds of meetings with industry players as they consider the details. For a full list of meetings, see: http://r.reuters.com/hum65p

Below is a list of rule-making areas for the CFTC: (more…)

"They love a conspiracy theory on the boards," David Jones, chief market strategist at spread betting firm IG Index told UK correspondents Rosalba O'Brien and Matt Scuffham when they were reporting for "The stock, the web, the CEO and his lawyers" . It's a look at some of the shenanigans around highly speculative resource stocks when they are discussed on message boards like  ADVFN and iii. Late-night gossip and personal insults are par for the course: some suspect organised short-sellers may be behind the talk. Given the high volumes of online trading in the UK, we wonder how long it will be before regulator FSA is forced to take a closer look.

Day-trader John Douce is sceptical about the boards' impact on stock prices

By Keith Mullin, Editor at Large, International Financing Review

– the views expressed are his own –

LONDON, Nov 12 (Reuters) The popular quote about focusing on the journey rather than the destination could well have been written about current moves to create the next generation of bank capital instruments and determine the place of hybrid debt in bank capital structures.

Stakeholders – politicians, regulators, supervisors, issuers, intermediaries and investors – have spent an inordinate amount of time trying to come up with a formula that will offer affordable hybrid capital to banks that meets lawmakers’ demands for a robust safety net (i.e. one that absolves taxpayers of responsibility) and at the same time hits investors’ return and risk metrics. Yet for all of the progress made so far, we are nowhere near a conclusion on rules and processes that will facilitate any of the above. (more…)

By Scott McCleskey, Complinet

Suppose a law were passed that made driver licenses optional. If you want one, you’d still need to pass exams and pay fees every few years, and you’d be subject to fines for speeding and parking violations. Or you could just say ‘no thanks’, turn in your license, and get back on the road. Of course, no lawmaker would contemplate such a thing. But flawed provisions in the Dodd–Frank Act would do exactly that for the credit ratings agencies, making regulation an optional multimillion dollar expense.

The license in question is designation as a Nationally Recognized Statistical Rating Organization (NRSRO). Having this status used to mean something. NRSRO ratings have been written into the financial regulations for a good thirty years, so that the designation was a license to print money. Yet until Congress passed a law regulating them in 2006 (only implemented in late 2007), there were virtually no regulatory requirements imposed on NRSROs and their activities. We all know how that turned out.

OUT FOR BLOOD

The 2006 law imposed requirements, costs and penalties for non-compliance on the NRSROs, but it was still worth the bother to be one because the designation was required in order to do business. But the financial crisis exposed both the flaws in the way the NRSROs conducted their ratings and the widespread damage that their mistakes could cause, and the politicians were out for blood.

It ain't easy being an oracle.

Pilloried for going too easy on the mortgage-backed securities that eventually sparked off the global financial crisis, credit rating agencies have been accused more recently of being trigger-happy on euro zone sovereign ratings downgrades that have roiled global markets.

The likes of Moody's, Standard & Poor's and Fitch are now in the cross-hairs of government regulators, with the G20 set to endorse reforms aimed at curtailing investors' reliance on these ratings.

But other than credit ratings, do investors have alternatives to assessing credit risk?

– John Kemp is a Reuters market analyst. The views expressed are his own –

By John Kemp

NEW YORK, Nov 9 (Reuters) – Two proposed regulations published by the U.S. Commodity Futures Trading Commission (CFTC) clarify its power to take enforcement action in cases of market manipulation and are intended to lead to a tougher regulatory regime in future.

The Commission is giving effect to the sweeping provisions of Section 753 Dodd-Frank Wall Street Reform and Consumer Protection Act (PL 111-203) which give it strong new powers over market manipulation and spreading false information.

By Dena Aubin

NEW YORK, Nov 2 (Reuters) – U.S. rule-makers are mulling an expansion of fair-value accounting to land and buildings held for investment, a change that could reshape the balance sheets of hundreds of real estate companies.

Fair value, which measures assets by their market worth rather than historical cost, is at the center of a big debate in the banking sector, where the Financial Accounting Standards Board is broadening its use. (more…)

By Lisa Lambert

WASHINGTON, Nov 2 (Reuters) – The strongest weapons that U.S. regulators use to combat fraud in the $2.8 trillion municipal bond market have long been financial disclosure requirements, but rules on their content and timeliness are proving difficult to wield.

(more…)

By Kevin Drawbaugh

WASHINGTON, Oct 28 (Reuters) – If Republicans make big gains in U.S. Congressional elections on Tuesday, as expected, Wall Street and big banks will have sweet, but incomplete, revenge on Democrats who drove through sweeping financial reforms against industry opposition.

The likeliest outcome of Democrats losing control of one or both chambers of Congress will be divided government and two years of legislative gridlock on issues important to the financial services sector, said policy analysts and aides.

That means the sector’s regulatory headaches — near migraine level following the enactment in July of the Dodd-Frank Wall Street Reform and Consumer Protection Act — won’t get worse, but probably won’t get much better, either.

By Al Yoon and Matthew Goldstein

NEW YORK, Oct 20 (Reuters) – Houston attorney Kathy Patrick represents a group of powerful mortgage investors trying to wring money out of Bank of America, but many legal experts say her chances of winning are slim.

For the second time in two months, the Gibbs & Bruns partner has sent a letter to a big bank trying to get some measure of financial relief for her clients who hold $16.5 billion of home loans packaged into bonds.

(more…)