Regulators Probe Market Amid Rising Meme Stocks

Market swings and the surging prices of meme stocks have caught the attention of the U.S. Securities and Exchange Commission (SEC), Bloomberg reported on Monday (April 7). The SEC is doing a deep dive into the markets for evidence of manipulation and other improper behavior in light of escalating meme stocks like AMC and GameStop.

High-Frequency Trading: A Sociologist’s Take

For Donald MacKenzie, individuals’ interactions with machines, mathematics and technology in competitive settings – and the risks that may ensue – are subjects of great fascination, whether in financial markets, bitcoin mining or nuclear weaponry.

MacKenzie comes at it not as a technologist, mathematician or engineer, but rather as a social scientist.

Professor Donald MacKenzie weighs the risks of models, algorithms, market concentration and jitter in this article by Katherine Heires and published on the GARP website. Read it HERE.

Beijing has put online giants on notice - Chinese trustbusters’ pursuit of Alibaba is only the start

“Acting on information, China’s State Administration for Market Regulation [SAMR] has started investigation [into] Alibaba Group for alleged monopoly conduct including implementing an ‘exclusive dealing agreement’.” This brief note, posted by Xinhua, the state news agency, on December 24th, was all it took to cut China’s mightiest online titan down to size. Not even the announcement three days later of an additional $6bn in share buy-backs arrested the slide in its share price. By December 28th it had fallen by 13%, wiping $91bn off the firm’s market capitalisation. American regulators, whose detailed charge-sheets against tech giants such as Facebook and Google in recent weeks elicited a yawn from investors, must have looked on with envy.

Read more at The Economist

How many "Supervisory Entities" does the US finance industry have?

The open banking era is upon us, but banking basics still need to be performed as financial institutions weave through the disruption. Most financial institutions do an exceptional job of managing often-overwhelming levels of compliance requirements, and must continually navigate change, especially as new tech presents both challenges and opportunities.

Just consider;

• The U.S. has the most complicated financial regulatory structure of any developed nation with 8 national supervisory entities. And, since banks can also be state-chartered, there’s another 50 state-level regulators

• In comparison, the U.K. has 3 primary “lead” regulators including the European Banking Authority mandated by the EU

• The U.S.’ largest payments regulatory act was the Durbin Amendment, placing interchange limits on debit cards for banks with > $10 billion in assets

• The most impactful regulatory act in the EU is PSD2’s open banking mandate, expected to be in place by year-end 2019

• Only 30% of financial institutions report that PSD2’s compliance requirements were clear

• 41% of E.U. financial institutions failed to meet the March 2019 requirement to offer “developer sandboxes”

A market is springing up for “regtech”, fintech’s nerdy new offspring

"On September 29th, IBM announced the purchase of Promontory, a 600-strong consultancy whose senior staff include former officials from the Federal Reserve, the World Bank, the Securities and Exchange Commission and other regulators. The hope is that person and machine will combine into a vast business. Promontory was founded in 2001 by Eugene Ludwig, who had headed one of America’s primary bank-supervisory agencies. It grew first because of the slathering of new rules during the previous, Bush administration and then prospered, says Mr Ludwig, as this process expanded under Barack Obama".

Read the full article in The Economist

Regulators are scrutinizing HSBC over its huge banking glitch

From Business Insider –

“Regulators are scrutinising HSBC over the bank's two-day online banking outage that has prevented millions of customers from accessing their accounts.

A spokesperson from the Financial Conduct Authority told Business Insider:

“The FCA is in contact with HSBC regarding a recent IT issue. We will be working closely with the bank as it resolves the problem and to ensure there are steps in place to help consumers who are affected.”

Read more>> 

Who is going to supervise fintech?

Will Financial Regulators Supervise Fintech?

From Legal Solutions Blog –

“Regulated financial companies, including those I follow (residential mortgage lenders) must keep records for government examinations and investigations. For mortgage companies, that means loan files and servicing records, but recordkeeping also applies to customer communications (e.g., complaints and resolutions), and communications with counterparties and vendors. Until recently, regulators didn’t focus on communication and recordkeeping technologies used by financial firms.

That changed this summer, when Senator Elizabeth Warren and the New York Department of Financial Services suspected big banks could evade oversight of communications passing through a messaging service of Symphony Communication Services. Symphony touted its platform’s “guaranteed data deletion” and end-to-end encryption. Warren and the NYDFS wanted to know if Symphony could help users circumvent compliance or make it harder for regulators to get messages. IMs have sometimes been used in enforcement actions and missing messages may suggest compliance or recordkeeping failures. (Deutsche Bank’s regulatory headaches following its discovery that some of its electronic chats weren’t archived were widely reported.)”

Read more>>