U.K. Proposes New Executive Clawback Rules.
On March 13th, the Bank of England proposed new rules that would require virtually every financial firm to include in their employment contracts provisions allowing the firm to claw back up to six years of vested bonus awards. Comments should be submitted on or before May 13, 2014. (3/13/2014) Bank of England press release.
On March 11th, Bloomberg reported participants in the tri-party repo markets are moving closer to an agreement to address "fire-sale risk," the risk that the failure of one of the tri-party repo participants would spark a run on the financial system. One solution receiving increasing support is for the Fixed Income Clearing Corporation to guarantee the most liquid repo assets while guidelines would be established for the pricing and trading of less creditworthy assets. Solutions.
On March 11th, Bloomberg described two bills which would exempt insurance companies from the Dodd-Frank Act's capital requirements. Exemptions.
Barbarians at the Gate.
On March 10th, Reuters discussed how hedge funds may react to proposals that would allow actively managed exchange-traded funds to disclose their holdings on a quarterly, instead of a daily, basis. ETFs.
Bit by Bit.
A number of developments concerning virtual currencies such as Bitcoin occurred this week. On March 10th, the Texas Securities Commissioner entered an Emergency Cease and Desist Order against a Texas oil and gas exploration company that claims it is the first company in the industry to accept Bitcoin from investors. The order alleges that Balanced Energy has failed to disclose to investors the risks in using Bitcoin to purchase working interests in wells. The price of digital currency is subject to extreme swings, which could affect the amount of money available for business operations. Texas State Securities Board Press Release. On March 11th, PC World reported the New York Department of Financial Services will soon begin accepting applications for the establishment of virtual currency exchanges. The Department intends to construct the regulatory framework for the exchanges by mid-year. Applications. The Financial Industry Regulatory Authority issued an investor alert called "Bitcoin: More than a Bit Risky." The alert notes that while speculative trading in Bitcoins carries significant risk, there is also the risk of fraud related to companies claiming to offer Bitcoin payment platforms and other Bitcoin-related products and services. FINRA Press Release. Reuters quoted acting CFTC Chair Mark Wetjen as saying that his agency is looking into whether virtual currencies could be regulated under the Commodity Exchange Act. Separately, the CFTC is also analyzing whether virtual currencies involve a derivative contract. Wetjen Comments.