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Friday, May 1, 2015

Algorithmic Trading, Community Banks, Personal Income Report, Another FX Scheme, Banking Applications and Compliance Outreach

A summary of noteworthy news and publications from financial regulatory agencies on Thursday, April 30, 2015:
The FRB's Senior Supervisors Group (SSG) issued a report assessing the risks associated with algorithmic trading. The report, entitled Algorithmic Trading Briefing Note, represents a joint effort from ten countries and identifies risk-based control principles and questions for those in supervisory positions by highlighting, "key supervisory concerns including whether risks associated with algorithmic trading activity have outpaced control improvements, and whether standard risk management tools are effective for ongoing monitoring." The report also provides a toolset that supervisors can use to help manage flexible and adaptable trading environments.

Fed Governor Daniel K. Tarullo gave a speech at the Independent Community Bankers of America 2015 Washington Policy Summit in Washington, D.C. Tarullo used the speech to announce his dissent for additional regulation of community banks. The speech was entitled "Tailoring Community Bank Regulation and Supervision".

The Bureau of Economic Analysis published the personal income report for March. Personal income increased less than .1% while personal consumption expenditures increased .4%.
The CFTC charged Barry C. Taylor with commodity pool fraud in a multi-million dollar FX scheme.The CFTC alleges that over $2.4 million from ~24 investors was fraudulently taken by OTC Investments LLC and Forex Currency Trade Advisors, LLC. Taylor allegedly made material misrepresentations and omissions to commodity pool participants, and failed to disclose that investors would be paid in a "Ponzi scheme" like fashion. Taylor is not expected to have enough money to repay investors.

Commissioner Luis A. Aguilar gave a speech entitled "Focusing on Dealer Conduct in the Derivatives Market". He used the speech to discuss the effects of Dodd-Frank on the derivatives market and to announce that he is in favor of imposing additional regulations on the derivatives market, but he did so reluctantly. 

CFTC Chairman Timothy Massad gave a speech before the National Energy Marketers Association at the 18th Annual National Energy Restructuring Conference. He used the speech to discuss some of the initiatives the CFTC has been working on. In other words, this was a canned speech.

The Federal Reserve Board released the Semiannual Report on Banking Applications Activity. The report provides information on proposals filed by banking organizations with the Federal Reserve. It includes information on 1) the number of proposals that have been approved, denied, and withdrawn, and the average length of time it takes to process proposals.This report covers the period July 1, 2014 to December 31, 2014.

The SEC announced a schedule for Compliance Outreach Programs via regional seminars sponsored in six cities. The goal is to "provide an opportunity for SEC staff to share information about risks, priorities, and deficiencies observed in examinations or investigations and to discuss how senior executives and compliance professionals have addressed such matters." Key dates and locations are below: