A ‘Win’ for the IIAC: Implementation of the Net Stable Funding Ratio (NSFR) delayed (IIAC Blog)
The NSFR is one of the Basel Committee’s key reforms to promote a more resilient banking sector. Under NSFR, Banks are required to hold a minimum amount of assets that can provide stable funding in the event there is disruptions to a bank’s regular funding sources that could lead to a bank failure and potentially pose a systemic risk. NSFR has an international implementation date of January 2018, however, the Office of the Superintendent of Financial Institutions (OSFI) had announced a domestic implementation date of January 2019. The IIAC wrote to OSFI on multiple occasions requesting that implementation be further delayed. An area of considerable attention by IIAC members has been the potential effects of the NSFR on the functioning of collateral markets and, by extension, the broader financial system.
In a February 6, 2018 letter, OSFI indicated that based on implementation progress at the international level, it will target a revised NSFR implementation date for Canadian deposit-taking institutions of January 2020—a win for the IIAC.
A delay in implementation will allow: i) OSFI the opportunity to undertake additional consultations with stakeholders to ensure domestic implementation is appropriately calibrated for the nuances of the Canadian market, and ii) market participants will have more time to digest the NSFR requirements and incorporate changes into their business/operational practices.
FinTech Summit: Merging the Worlds of Finance and Technology (IIAC Blog)
FinTech innovations are revolutionizing the financial services industry, driving new business models, applications, processes and products. At the same time, FinTech technologies raise novel regulatory, technical and legal issues for firms and their customers. Join us on June 1, 2018 to hear from FinTech leaders who will share their insights on how Member firms can harness FinTech to trim costs, streamline operations and offer better value propositions to their clients. Learn from legal, regulatory and technical experts on how to navigate this new terrain. Network with peers, featured experts and vendors.
Topics to include:
– Pitfalls of not having cybersecurity awareness
– Capitalizing on the Cloud
– Legal considerations
– Implementation strategies
– How RegTech can help compliance and operations
– Where do the regulators fit in?
Registration information and guest speakers to be announced shortly.
Boosting Flagging Business Investment (IIAC Blog)
On the surface, Canada’s economy seems to be doing well. Yet, there is one area of persistent weakness that weighs on policy makers – private sector capital formation. Canada is well down on the list of OECD countries when it comes to business spending as a share of GDP.
Businesses investment in physical capital (especially machinery and equipment) matters critically for productivity growth. It spurs innovation, efficiency gains and increased competitiveness.
In my January Letter from the President, I outline some reasons as to why businesses may be underinvesting and propose some policy initiatives to boost capital formation in the country. You can read it here.
Canada’s Investment Industry Faces. Nominate someone from your firm. (IIAC Blog)
Canada’s investment industry employs approximately 40,000 people from all walks of life and virtually every region of the country. Many of these individuals work in areas like IT, marketing, back office support and administration. They play essential roles in ensuring their firms efficiently and cost-effectively deliver a full range of services to investors, businesses and governments.
To call much-deserved attention to their dedication, achievements and community service efforts, the IIAC has a dedicated section on its website featuring the profiles of individuals working in these, and similar capacities.
If you would like to nominate someone from your firm, please email us at PublicAffairs_AffairsPubliques@iiac.ca.
Speech – Outlook for Risks to Capital Markets (IIAC Blog)
Yesterday, I participated in the Empire Club of Canada Annual Investment Outlook Luncheon and gave remarks on the Outlook for Risks to Capital Markets. While we look for another year of relatively healthy growth in the global economy, new risks and vulnerabilities have emerged in global capital markets. First, the fragmentation of international regulation is a real concern as it impairs market efficiency, and cross-border capital and investment flows. Second, markets have shown a disturbing trend for liquidity to evaporate in times of stress, when needed the most. Third, stock indices have become more and more concentrated in portfolios, raising concerns about the impact on financial markets, if asset prices decline sharply. And, finally, the increased frequency and sophistication of cyber-attacks can not only cause financial loss and breach of confidentiality, but interfere with trading venues and capital markets more generally. I concluded my remarks by offering some recommendations to guard against potential risks. If interested, you can watch a video of my speech here.
My presentation received media attention, including the Financial Post, Investment Executive, Wealth Professional and Advisor.ca. I was also interviewed by BNN’s Catherine Murray. The BNN interview can be accessed by clicking here.
Highlights of Our 2017 Achievements / Activity Update (IIAC Blog)
The IIAC is committed to constructive engagement with securities regulators and governments to fight for cost-effective rules, fight against rules that interfere with business activity and market efficiency, and to promote incentives for capital formation and growth. Our efforts are paying off. The Highlights of Our 2017 Achievements report provides a snapshot of some of our 2017 advocacy “wins” on your behalf.
Our work is not done. Firms in our industry continue to be besieged by an onslaught of securities regulations, legislative changes and governmental initiatives. Our Activity Update helps our members keep on top of developments. It also provides links to IIAC industry educational material, compliance tools and templates, publications, events and media commentary.
Review and Renovate the Existing Securities Rulebook (IIAC Blog)
In my latest opinion piece for Investment Executive, I call on regulators to review and renovate the existing securities rulebook, with a focus on identifying rules that are obsolete and out-dated, inefficient and duplicative, and have unintended negative consequences on capital formation. Such a review has the potential to yield major efficiency gains in the areas of securities trading and financing, enable more cost-effective investor protection, lower transaction costs and stimulate investor participation in markets, and boost overall liquidity and capital formation in Canada.
I also outline some specific rules regulator should tackle to address the alarming fall-off in small business financings and initial public offerings, and stem the loss of many small retail and institutional boutique dealers.
You can read more here.
Brexit and what it portends for UK-EU and global capital markets (IIAC Blog)
My December 2017 Letter from the President examines Brexit and its implications for UK-EU and global capital markets. Brexit’s impact could be modest, if financial regulation relies on mutual recognition or national treatment, or considerably disruptive, if the EU forces UK dealing banks to conduct trading and clearing with European clients within the EU, requiring a shift in UK operations to Europe.
It is clear post-Brexit, the UK and the EU need a model of regulatory cooperation. I believe the Financial Stability Board (FSB) may be the best possible vehicle to take on responsibility for a regional or global collaborative framework for regulatory coordination of rules and mechanisms to address differences in cross-border regulation.
Click here to read more.
International Capital Market Fragmentation – The Risks are Real (IIAC Blog)
The 2008 global financial crisis shook the global financial system to its core. Massive regulatory reforms ensued, the result of intense dialogue and cooperation between national authorities and international standard-setting bodies. Now, recent developments threaten to weaken cooperation on financial regulations and the process of reform. I write about these threats in the December 2017 issue of the Canadian Business Journal. I also argue that continued regulatory cooperation and coordination are as important as ever to address new risks and vulnerabilities to financial stability, market efficiency and investor protection. Click here to read the article: http://www.cbj.ca/EMAG/2017/Dec/CBJ.php#48
Why fewer companies are listing? (IIAC Blog)
I appeared on Business In Vancouver Radio to discuss the factors that have contributed to fewer companies going public, a trend occurring in Canada, the U.S., and Europe.
The high costs associated with listing on the exchanges and meeting ongoing reporting issuer responsibilities (i.e. disclosure and corporate governance requirements) are keeping many companies from tapping the public markets. Coupled with this, regulatory changes in the various jurisdictions have made it easier for companies to go private. Also, private equity firms are playing a larger role in the market, providing financing, and in the M&A space, buying out public companies and turning them private. Finally, low interest rates have lowered the relative cost of capital, reducing the need to tap public markets for financing.
I discuss the implications stemming from the shift towards private market financing—for the firms, investors, the health of the exchanges and regulators. Click here to listen to the interview.