Friday 27th February 2015
NEWS TICKER, FEBRUARY 26TH 2015: The CME Group says that the volume in the Mexican peso interest rate clearing in the opening weeks of 2015 has outstripped the volume recorded in the whole of 2014. January was a particularly good month, with record volume m with $50bn cleared (MXN760bn), and $163bn cleared since launch. Meanwhile open Interest has grown to over $139.5bn (MXN2trn) – doubling since the start of the year - Italy’s payment systems specialist SIA reports operating margin up 22.5% at €81.9m and revenues up 7% at €336.9m over the 2014 financial year. The firm says it has proposed an ordinary dividend of €0.21 per share, with a total value of €35.68m. The firm reports a substantive 146% growth in the number of payment transactions processed through 2014 (touching 12bn over the year, with 9.2bn of those related to credit transfers (up 316%) and 3bn via cards (up 9%). The firm also reports a 5% increase in trading and post-trading operations, with service levels of 100%. The firm notes the success of its “Jiffy” service launch in the year, the new “Person to Person” (P2P) payments service, an App permitting money transfer in real time by Smartphone to a user’s contacts, associating the IBAN code of the account with the phone number included - The Straits Times Index (STI) ended -14.65 points lower or -0.43% to 3426.18, taking the year-to-date performance to +1.81%. The FTSE ST Mid Cap Index declined -0.31% while the FTSE ST Small Cap Index declined -0.29%. The top active stocks were SingTel (-0.47%), DBS (-0.66%), Global Logistic (+1.17%), UOB (-0.26%) and OCBC Bank (-0.38%). The outperforming sectors today were represented by the FTSE ST Consumer Goods Index (+0.77%). The two biggest stocks of the FTSE ST Consumer Goods Index are Wilmar International (+1.85%) and Thai Beverage (+0.71%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -1.28% with Midas Holdings’s share price declining 3.08% and Geo Energy Resources’s share price unchanged. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (-0.12%), STI ETF (-0.87%), SPDR Gold Shares (+0.50%). The three most active Real Estate Investment Trusts (REITs) by value were CapitaMall Trust (unchanged), Ascendas REIT (-1.59%), Suntec REIT (-0.51%). The most active index warrants by value today were HSI25000MBeCW150330 (+5.50%), HSI25000MBeCW150429 (+7.38%), HSI24400MBePW150330 (-10.11%). The most active stock warrants by value today were OCBC Bk MBeCW150803 (-5.74%), SGX MB eCW150803 (-1.16%), DBS MB eCW150915 (-5.33%) -World Bank today called for more transparency in India's power subsidy regime and suggested re-identification of the target population to improve the balance-sheets of losses-stricken distribution companies. The global development finance body says the sector should be allowed to operate in a commercially viable manner by ensuring that those firms that are not eligible for subsidy pay for what they consume - The country witnessed a decline of 12 per cent in solar power generation at a total 883 MW last year, according to energy consulting firm Mercom Capital Group. Total solar energy installations in 2013 stood at 1,004 MW, it said. However, its 2015 forecast remained unchanged at an approximately 1,800 MW with some upside - BNP Paribas Securities Services has appointed Andrea Cattaneo as head of Brazil. "We have expanded our custody offering in Brazil and across Latin America in recent years with great success," says Alvaro Camuñas, head of Spain and Latin America at BNP Paribas SS - A new draft text on an EU system for the use of Passenger Name Record (PNR) data, tabled by lead MEP Timothy Kirkhope (ECR, UK), was discussed in the civil liberties committee on Thursday morning. An evaluation of the necessity and proportionality of the proposal in the face of current security threats, its scope (list of offences covered), retention periods, the inclusion or exclusion of intra-EU flights, the connection with the on-going data protection reform, as well as the consequences of the EU Court of Justice judgement annulling the 2006 data retention directive, were among the issues discussed by MEPs. The 2011 Commission proposal would require more systematic collection, use and retention of PNR data on passengers taking “international” flights (those entering the EU from, or leaving it for, a third country), and would therefore have an impact on the rights to privacy and data protection.

Blog

Regulatory Update

Protect Your Firm... And Your Personal Assets!

Monday, 30 July 2012 Written by 
Protect Your Firm... And Your Personal Assets! Hoping for a respite from regulatory change?  Think again.  Gathering forces may create a regulatory storm that is even more difficult than the one faced in the 2007-2009 financial crisis.  In this tempest, both the regulated and the regulators will have bull’s-eyes on their backs.  Regulators are likely to become more conservative in their analysis and more active.  It is therefore imperative to assess your firm now and prepare yourself to withstand regulatory inquiries.  You can also expect more scrutiny from investors who will seek to allocate funds only to those firms that they believe are fully complying with applicable laws and regulations. http://www.ftseglobalmarkets.com/

Hoping for a respite from regulatory change?  Think again.  Gathering forces may create a regulatory storm that is even more difficult than the one faced in the 2007-2009 financial crisis.  In this tempest, both the regulated and the regulators will have bull’s-eyes on their backs.  Regulators are likely to become more conservative in their analysis and more active.  It is therefore imperative to assess your firm now and prepare yourself to withstand regulatory inquiries.  You can also expect more scrutiny from investors who will seek to allocate funds only to those firms that they believe are fully complying with applicable laws and regulations.

What fuels this gathering storm?  Outright major misappropriations by the likes of Madoff and Peregrine's Wasendorf are part of the equation.  In addition, events such as the LIBOR-fixing scandal at Barclays, J.P. Morgan’s “London Whale” trading losses, and MF Global’s failure to segregate customer funds serve as cautionary examples.

These stories highlight that a firm’s assets, reputation, and in some cases, even the firm’s fundamental viability are at stake when things go awry.  As if that weren’t bad enough, senior executives face additional consequences.  In these and other similar incidents, personal assets can be at stake even when others are the primary wrongdoers.  



Think you are immune from these risks?  Think again.  Labaton Sucharow LLP, a plaintiff's law firm, recently published a unsettling study indicating that one in four financial industry professionals in the U.S. and U.K. believe wrongdoing is necessary for success.  If this study is credible, the message it sends to the general public is highly negative.  It speaks to senior management of alternative investment firms loud and clear: sometimes the best-intentioned executive may have an employee who hears an "unintended message" and veers off course.  Intended or not, the executive may ultimately bear responsibility. 

The first line of defense for an investment advisory firm and its executives is to build a culture in which the firm’s standards clearly and consistently meet all applicable regulatory and ethical expectations.  It is particularly important for firm leaders to reaffirm these standards and expectations during times of economic and operational stress, when legal and internal requirements may appear to conflict with business drivers (such as maximizing short-term results).  Employees must internalize that senior management will take the ethical route in order to maximize the long-term value of the firm—and expects them to do the same.

The second line of defense, at least in the U.S., is to develop a governance structure that satisfies the requirements specified in the U.S. Attorneys’ Manual.  This manual offers incentives to companies that adopt a comprehensive compliance and ethics program (and take certain actions upon the occurrence of alleged missteps).  A program that satisfies these requirements will contain elements in addition to those required by the SEC and CFTC.  Complying with the U.S. Attorneys’ Manual can be an invaluable safeguard that reduces the likelihood of an executive or his firm being charged with criminal violations.

The third line of defense is to undertake an honest self-assessment, and to consider the types of pressures that senior management and employees will encounter should the weakened state of the global economy continue.  Topics in the regulatory spotlight should be included in this assessment.  The intent here is to prepare for the possible pressures employees and senior management might face, thereby reducing the chance that hasty decisions are made in the heat of the moment. Ill-considered actions can carry serious penalties and act as a lightning rod for litigation by regulators, investors, and other third parties (such as credit providers).  Advance preparation will help your staff make faster and better decisions if the need should arise. 

You can't always remove that bull’s-eye on your back, but you can at least make the target less bright.

Deborah Prutzman

Deborah Prutzman is the founder and CEO of The Regulatory Fundamentals Group (RFG), a New York-based firm that designs and implements business and risk solutions for alternative asset managers and institutional investors. RFG's senior-led team employs a robust suite of tools, including practical alerts on new and potential industry developments and its powerful RFG Pathfinder® knowledge management platform which simplifies the challenges of operating in a regulated environment.  To learn more about The Regulatory Fundamentals Group call (212) 537-4058, email a representative at Information@RegFG.com or visit RegFG.com

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