Commodity Futures Trading Commission Chairman Timothy Massad believes central clearing has been “transformative” for derivatives markets and will continue to play a role in the development of sound markets.

Amid much discussion about the technical issues associated with regulatory reform, Massad reminded the audience at CME Group’s 8th Annual Global Financial Leadership Conference that it is important to not lose sight of overarching priorities. In his speech, Massad detailed the three elements that he deems critical to a healthy and sound central clearing landscape:

  1. Daily Risk Management: “We must remember that clearinghouse resiliency is primarily about daily risk management. … The daily margining practices, the stress and back testing, the oversight and ongoing risk surveillance are critically important. … No recovery plan — and no set of rules that kick in when there is a problem – can take the place of these everyday activities.”
  2. Continuity of function in the event of a default: “Our contingency planning must account for different scenarios.
  3. (read more…)

Terry Duffy is the Executive Chairman and President of CME Group, which is hosting its annual Global Financial Leadership Conference next week in Naples, Fla. Mr. Duffy chatted with SmartBrief and shared more background on the GFLC.

The Global Financial Leadership Conference is now in its 8th year … How has the event evolved?

The GFLC has evolved into one of the foremost events for leaders in our industry. This annual, two-day conference brings together some of the greatest minds in global economics and politics to discuss significant issues impacting our world. Over the years, we’ve featured former U.S. presidents, foreign heads of state, global business luminaries, and much, much more.

Virtually every speaker at GFLC comes from a field dealing with increased volatility. From geopolitics and financial markets to natural resources and media disruption, what are some of the keys to effectively handling volatility?

Volatility is a component of every market and has been since they were invented. (read more…)

Financial institutions need to focus on resilience and sharing information about cybersecurity, which should be treated seriously as a matter of national defense in the US, said experts and regulators at the Securities Industry and Financial Markets Association’s Annual Meeting in Washington, D.C., on Tuesday.

“We need national defense priority on cybersecurity,” just as with nuclear defense, because no company has the budget to battle sovereign nations launching cyberattacks, said Ronald Kruszewski, chairman and CEO of Stifel Financial.

Jim Rosenthal, chief operating officer of Morgan Stanley, suggested the Reserve Officers’ Training Corps, or ROTC, could train students toward careers in cybersecurity to help make up for the US’ talent gap in that area.

Treasury Secretary Jack Lew and Securities and Exchange Commission Chair Mary Jo White reiterated the need for companies to share breach-related information among one another and with the government. Doing so will help other firms detect wider patterns and defend against the kinds of breaches that have occurred to other organizations, Lew said. (read more…)

Cybersecurity is a hot topic at every financial services firm. SmartBrief recently connected with two experts from the Financial Services Roundtable – Jason Kratovil, Vice President of Government Affairs for Payments and Chris Feeney, President of BITS – to discuss cybersecurity legislation currently under consideration on Capitol Hill and what the industry is already doing to combat cyber threats.

The Financial Services Roundtable recently helped conduct a survey of bank directors and senior management on the role they play in managing the security of digital assets. What did the survey results show?

Chris Feeney: The results showed a dramatic increase in the number of boards actively addressing cyber risk at Forbes Global 2000 companies, with the financial industry as a clear leader in cyber improvement and focus. Cybersecurity is now a boardroom-level issue for nearly two-thirds (63%) of the companies surveyed, a significant jump from 2012, when only 33% of boards were actively addressing computer and information security. (read more…)

A new study by Broadridge Financial Solutions finds that large banks could cut costs of processing trades by 40% though the adoption of a utility-type model. Sharing a range of functions such as post-trade processing, reconciliations and post-trade data, expense management and regulatory reporting would save the average Tier 1 bank $100-$300 million per year.

The new report, “Charting a Path to a Post-Trade Utility,” deals with the increasing costs of meeting new regulations and economic hurdles that cut into banks’ profit margins. “Despite significant cost cutting and restructuring post-crisis, most banks still struggle to post returns that exceed their cost of capital,” said Broadridge COO Tim Gokey. “Over the next five years, regulatory pressures are set to grow, so banks are increasingly looking to new and unconventional ways to regain efficiencies, particularly within the trade life-cycle. Emerging utility models hold significant promise.” Industry-wide savings could reach $4 billion, according to Broadridge. (read more…)