WHAT’S TRENDING
Week of May 29, 2017
PEERS: TOP THEMES
Company
Themes
BNY Mellon
New subsidiary for repo market
GC: BNY Mellon strengthens repo hold with new subsidiary
BNY Mellon has formed a wholly owned subsidiary in a bid to increase efficiency of the
US government securities clearance and tri-party repo markets.
BNY Mellon Government Securities Services is designed to improve capabilities,
governance, transparency and resiliency in the US government securities and US triparty repo businesses.
The move reinforces BNY Mellon’s position as the dominant provider in the repo
market following the closure of JP Morgan’s GCF repo settlement division.
WSJ: BNY Government Securities Unit Formed to Settle Treasury Trades
Bank of New York Mellon Corp. said it has formed a new unit to support its growing
role in settling trades in the nearly $14 trillion Treasury market
Bank sees subsidiary becoming the only settlement firm for Treasurys traded between
big bond brokers
Trustee for new cannabis fund
New Cannabis Ventures: $100 Billion Fund Manager and BNY Mellon Greenlight
Cannabis Stocks
Illinois-based fund manager First Trust, which manages over $100 billion in aggregate
across a range of retail and institutional investment products, has filed a S-6
prospectus for a medical cannabis unit investment trust (UIT), FT 6766, which consists
of a single portfolio known as Medical Cannabis Portfolio Series. A UIT is a pooled
investment vehicle with a defined lifespan that is invested in a fixed portfolio of
securities.
FT 6766 could become the first U.S. listed cannabis fund. First Trust is intending to
price it at the same initial price that Horizons ETF used, $10.00, and it will have a
maximum sales charge of 2.75%. The Bank of New York Mellon will serve as Trustee.
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Appointments to the Executive Committee and in Asia
PR Newswire: Michelle Neal, CEO, BNY Mellon Markets joins BNY Mellon’s Executive
Committee
Neal joined the company in the fourth quarter of 2015, leading the Markets team in
delivering a comprehensive suite of innovative solutions and services to help clients
access capital, financing and liquidity.
Asia Asset Management: Rohan Singh said to be joining BNY Mellon
Rohan Singh, who recently left US-based custodian bank Northern Trust Corporation
(Northern Trust), will reportedly join rival BNY Mellon to head its securities servicing
business in the Asia Pacific region. According to Investment Operations & Custody, a
Sydney-based business weekly, Mr. Singh is about to take up the position of Asia
Pacific regional head for BNY Mellon’s securities servicing business. The report cited
unnamed market sources.
Northern
Trust
New survey of asset managers and institutional investors on alternatives
HedgeWeek: Investor demands evolve with the mainstreaming of alternatives, says
Northern Trust
The survey was conducted in partnership with The Economist Intelligence Unit (EIU).
The aim, says Stuart Lawson, Senior Vice President and Product Manager, Northern
Trust, was to ascertain any shift in focus among global asset managers and asset
allocators, from a post-financial crisis perspective. […]
“The survey primarily focused on transparency and risk management. We wanted to
understand if the needle had moved post-financial crisis with respect to those two
areas, and if it had, if there were any insights we could draw in terms of how these
groups were addressing those two considerations. Ultimately, we wanted to
understand the difference in how the industry views traditional vs. alternative asset
classes,” explains Lawson.
See also download this infographic with survey results.
BlackRock
Voting for proposal on climate change report at Exxon, along with Vanguard and
SSGA
Washington Post: Financial firms lead shareholder rebellion against ExxonMobil
climate change policies
ExxonMobil management was defeated Wednesday by a shareholder rebellion over
climate change, as investors with 62.3 percent of shares voted to instruct the oil giant
to report on the impact of global measures designed to keep climate change to 2
degrees centigrade. […]
BlackRock and Vanguard are the biggest shareholders in ExxonMobil, owning 13
percent, or $43.6 billion worth, of the company’s stock. State Street Global Advisers,
another big financial advisory firm that has called for greater climate disclosures, is
close behind with 5.1 percent of the stock. The vote by them against management
marked an important step for groups that have been trying to force corporations to
adopt greater disclosure and transparency about the financial fallout of climate change.
BlackRock, which said that climate disclosure is one of its top priorities, had warned on
its website that “our patience is not infinite.”
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“This is an unprecedented victory for investors in the fight to ensure a smooth transition
to a low carbon economy,” said New York State Comptroller Thomas P. DiNapoli, a
trustee of the New York Common Retirement Fund which co-sponsored the proxy
resolution.
Larry Fink on economic outlook in Europe vs. US
Bloomberg Markets: Larry Fink Says Europe Has Brighter Economic Outlook Than
U.S.
The U.S. economic outlook is looking worse because of uncertainty over tax and
infrastructure policies while Europe is looking stronger, according to BlackRock Inc.’s
Larry Fink.
“Europe will grow as fast as the U.S. if not faster this year, which is a big surprise,”
Fink, chief executive officer of the world’s largest asset manager, said Tuesday during
an investing conference in New York. […] “I’d say the second quarter is going to be
disappointing in terms of earnings and growth,” Fink said. “It’d tell me markets are
probably fully priced at this moment.”
Other comments:
•Investing in passive funds will grow because of the U.S. Department of Labor’s
fiduciary rule, which is expected to take effect in June
•Many active managers use passive or indexed exchange-traded funds to actively
allocate their investments, a trend likely to accelerate
•Exchange traded funds don’t present higher risk of market illiquidity or volatility than
other investments
Targeting insurers with new ETF rules
ETF.com: BlackRock Sees Windfall From Insurers After New ETF Rules
BlackRock expects $300 billion in new money from insurers to flood into the alreadybooming bond exchange-traded fund sector over the next five years, a spokeswoman
said on Tuesday, following a move by regulators to adjust some requirements on how
the investments are valued.
A National Association of Insurance Commissioners working group in April modified
requirements on how insurers can record some bond ETFs for accounting purposes.
[…] In some cases, insurers will be able to calculate a bond ETF's value based on the
cash flows of the bonds held by the fund.
‘Systematic Value’ Accounting
That switch to a "systematic value" accounting treatment is a potentially big shift within
the conservative world of asset management at insurance companies.
BlackRock […] is eager to get its ETFs used more often and by more investors. It
helped design the new accounting methods during the NAIC's four-year process to
redraft its rules. Insurers have been an important target for BlackRock's growth
strategy because they invest billions in bonds that have become harder to trade, at low
cost, for smaller investors.
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JP Morgan
Weaker trading results at JPMorgan and other banks impact financial stocks
Barron’s: Oops. JPMorgan Just Broke the Financial Sector
JPMorgan Chase's revelation that trading volume is down from a year ago has caused
bank stocks to drop today
As JPMorgan Chase (JPM) goes, so goes the financial sector. And the revelation that
JPMorgan's trading revenue is down 15% from a year ago, made at an industry
conference today, has done just that--caused financial stocks to tumble.
Bloomberg: Trading Revenue on Pace to Drop 15% This Quarter
“Low rates, a more cautious outlook on rates, low volatility have led to low client flows
and a generally quiet, subdued and challenging trading environment,” CFO Marianne
Lake said. “There’s not a lot to trade around right now, and so there’s not a lot of
market themes.”
WSJ: JP. Morgan, Bank of America Signal Weaker Trading Results
Executives at the two biggest U.S. banks signaled Wednesday that second-quarter
trading is weakening, bringing to a halt a string of strong quarters that have boosted
bank results.
Bloomberg: Morgan Stanley CEO Sees Trading Drop Similar to JPMorgan, Bank of
America
Morgan Stanley Chief Executive Officer James Gorman indicated his firm is seeing
similar trading declines as competitors JPMorgan Chase & Co. and Bank of America
Corp., which said second-quarter trading revenue is on pace to drop at least 10
percent.
The estimates from JPMorgan and Bank of America “are reflecting reality and I don’t
think we’re very different,” Gorman said in an interview with Bloomberg Television’s
Tom Mackenzie in Beijing. “We all have similar clients, if not the same clients.”
Vanguard
Voting for proposal on climate change report at Exxon, along with Vanguard and
SSGA
See stories under BlackRock
New UK platform to list rival funds
Financial News: Vanguard may list rival funds on new platform
Express: Five-minute guide to Vanguard's new fund platform
New retail platform has already led to predictions of a price war as incumbents struggle
to compete
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Vanguard, the $4tn US low-cost fund manager which rattled rival asset managers this
month with the launch of its UK fund platform, says its retail service could in future list
competitor products. However, it has acknowledged its ability to cut fees may not reach
that of its US service. […] Hagerty said: “When Vanguard enters an area of the market,
people notice. It does tend to bring price down.” However, the Vanguard executive said
there is a “misunderstanding” that Vanguard is solely focused on selling passive funds.
According to Hagerty, the asset manager plans to bolster the product line-up on its UK
platform to include more active expertise. “People mistake that we are pushing passive
investing. We believe in active and index, but low cost versions of both,” said Hagerty.“
You will see active fixed income and low-cost active equity offered to UK investors in
future.”
Other
Wells Fargo – more organizational changes, loss of business in NY, and an indepth feature on the corporate culture in Vanity Fair
Reuters: Wells Fargo's head of wealth and investment management to retire
Company said on Thursday David Carroll, head of wealth and investment
management, would retire effective July 1 after nearly 38 years with the company.
Carroll, who will be succeeded by current head of Wells Fargo Securities Jonathan
Weiss, will remain with the company until July 31 to ensure a smooth transition.
WSJ: Wells Fargo Again Shuffles Retail-Bank Executives in the Wake of Its Scandal
Bank reorganizes unit’s western U.S. region, makes changes to regional leaders
CNN Money: New York City to cut Wells Fargo from future business
New York City has a message for scandal-ridden Wells Fargo: clean up your act, now.
Mayor Bill de Blasio and Comptroller Scott Stringer announced plans on Wednesday to
vote in favor of punishing Wells Fargo by blocking the bank from getting new contracts
for the city's deposits. The sanctions, set to be voted on at 4 p.m. ET by the city's
banking commission, would also suspend Wells Fargo's lucrative role in running the
city's bond sales for one year.
Bloomberg: New York City Bars Wells Fargo From Banking Work After Scandals
New York Mayor Bill de Blasio and Comptroller Scott Stringer blocked Wells Fargo &
Co. from leading municipal bond sales or landing other banking business until it
improves its track record of lending in poor communities. The Democrats, who sit on
the New York City Banking Commission, joined city Finance Commissioner Jacques
Jiha, a de Blasio appointee, to ban the bank from conducting new work for the city. The
commission, which met Wednesday, approves and oversees the banks that hold city
contracts.
Vanity Fair: How Wells Fargo’s Cutthroat Corporate Culture Allegedly Drove Bankers
to Fraud
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MEDIA INTELLIGENCE WEEKLY
Most Americans have assumed their bank accounts are sacrosanct. But with the major
scandal unfolding at Wells Fargo, angry former employees illuminate the alarming
pressure that allegedly led local bankers to defraud perhaps more than a million
customers
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