Just When You Thought it Couldn't Get Worse
Barclays goes and gets hammered again, for selling interest-rate derivatives this time. While not surprising, given dark grumbling about this for a while, it's capped off a remarkably bad week for the banking sector. First, RBS capsized with gusto over the ‘technical glitch' that left thousands of people in arrears. Then Barclays was fined hundreds of millions of dollars by the Commodity Futures Trading Commission (CFTC) and the Financial Services Authority (FSA) for its role in fixing the London Interbank Offered Rate (Libor). Then this, which also includes Lloyds, RBS and HSBC in the FSA settlement notice.
They say that any press is good press (it's not), but I have to say, I'm grateful that I'm not working in the communications department for any of these guys. They have a hell of a job in crisis management ahead of them, and given that Barclays was just the first bank looked at for the Libor scandal, it's not the last that we'll hear of it. It's also not going to help the reputations of the banks in the public eye either, particularly those who might have a Libor-linked mortgage with Barclays, hedged by a swap or structured collar and who are paid by a company with a NatWest bank account. The City's jungle of bars, I imagine, will be more subdued than normal this evening.
Technical Issues
It's just not good enough, really. While everyone makes mistakes, deliberate manipulation of Libor and other areas just adds fuel to the fires that demand all-encompassing regulation of banking entities, and arguments against become shallower with every police action. Of course, the Libor issue might not have been all bad ─ forcing Libor lower, for instance, would lower interest rates on some mortgages, and the idea that all derivatives are evil instruments, concocted by avaricious vultures in the basements of Canary Wharf is nonsense. But, the fact remains, these actions were illegal and the penalties this time were markedly severe (even though it may actually lower the cost of the levy that banks pay to the FSA every year).
With regard to the technical glitch, as well, it happens. But a bank's technology should be fool-proof enough, and with enough redundancy, to be able to recover swiftly and not have something drag on for days. Processing such an enormous amount of information and collecting backlogs is sure to mire RBS's operational department for some time, and while probably not the worst technical glitch to happen to a financial system this year ─ the dubious distinction of which, naturally, belongs to both Nasdaq and BATS at the moment ─ it's still horrendously embarrassing. NatWest will be responsible for charges accrued as a result of this mistake, according to the FSA, but not consequential errors such as losing a holiday or a home. Sentiment is going to be riding at an all-time high, folks.
Big Data
But the immediate effect of all this, and any further prosecutions, is yet to be seen. And it's not the only event of interest this week. Waters hosted its inaugural virtual conference on Tuesday, the subject matter being Big Data. It's fair to say it was a success in our view ─ interesting panels, good presentations from sponsors, with Intel's standing out in particular, and some good discussion on wide ranging topics from bug fixing through to sentiment analysis. Our coverage is up on the website, of course, so please do browse through. For anyone interested in viewing the material from the conference, all you have to do is log back in to the platform, and you can re-watch it on demand.
With regard to the technical glitch, as well, it happens. But a bank's technology should be fool-proof enough, and with enough redundancy, to be able to recover swiftly and not have something drag on for days.
If you have any comments on the virtual summit, or would like to talk about anything else, please feel free to get in touch. I can be reached on +44 207 316 9811, or by e-mail at james.rundle@incisivemedia.com.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Bloomberg, industry bodies push back on Cboe’s proposed OEMS rule change
Some industry bodies disagree with the options exchange’s proposal to carve its Silexx OEMS out of the SEC’s definition of an exchange facility and place it into a separate business line.
Zeros and ones: Industry contemplates T+0 as the next step
With the North American transition to T+1 settlement complete, same-day settlement could be the next goalpost set, though skeptics are many.
The IMD Wrap: Déjà vu as exchange data industry weighs its options
Max highlights some of WatersTechnology’s recent reporting on data costs and capacity issues facing the options industry, and asks, haven’t we seen this before somewhere?
FRTB data quality issues persist amid shifting implementation dates
Banks are finding market and reference data challenges posed by the FRTB’s standardized model tricky, compounded by uncertainty over when the regulation will take effect.
Cboe pushes rule change to make way for proprietary Opra alternatives
As US options data has grown in volume and cost, Cboe says changing the public feed's governing document would make way for more competition from private alternatives, including its Cboe One Options Feed, launched in 2023.
Regulators urged to promote cyber security investment
Public interest in stopping cyber attacks that could trigger bank runs, says Bundesbank researcher
Hong Kong looks for digital response to trade reporting burden
New swaps reporting framework will include more fields than requirements in US or Singapore.
Big questions remain over Dora’s critical third parties
Industry looks for clarity on critical third parties ahead of July 17 regulatory technical standards for the EU’s Digital Operational Resilience Act.
Most read
- Zeros and ones: Industry contemplates T+0 as the next step
- Natixis refines in-house interoperability model
- IEX Cloud closure forces fintech clients to seek data alternatives