MetLife Oversight, Saudi Exchange, ISDA Chief: Compliance

The Financial Stability Oversight Council is poised to label MetLife Inc. a potential threat to the financial system, subjecting the insurer to oversight by the Federal Reserve, two people with knowledge of the matter said.

The council’s decision may come as early as July 31, when it is tentatively set to meet, said the people, who asked not to be identified because the process isn’t public. The vote may be delayed briefly because the council hasn’t formally closed its review of the company, the people said.

MetLife, the biggest U.S. life insurer, might be subjected to stricter capital, leverage and liquidity requirements as a result of Fed supervision. The company has been under consideration as systemically important for more than a year, and its executives have met more than 10 times with council staff members to argue it doesn’t pose a risk.

The council vote would be a proposed designation, and MetLife would have 30 days to request a hearing before the council to contest the decision, after which the regulators would hold a final vote.

John Calagna, a spokesman for New York-based MetLife, and Suzanne Elio, a Treasury spokeswoman, declined to comment.

Compliance Policy

Saudi Stock Opening Shut to Some With ‘Hot Money’ Unwanted

Saudi Arabia’s Capital Market Authority will publish rules next month allowing participation for the first time by qualified foreign financial institutions starting in the first half of 2015, the regulator said on its website July 22.

The world’s biggest crude exporter is opening one of the most restricted major stock exchanges as King Abdullah pushes to diversify the economy from oil and create new jobs. Entry to MSCI Inc.’s benchmark emerging-markets index could mean $40 billion of inflows to Saudi stocks, said Rami Sidani, the head of frontier markets investing at Schroder Investment Management in Dubai.

“They have been very clear about what they are looking for, which is very large institutional investors, sticky money with long investment horizons,” Amer Khan, a senior executive at Shuaa Asset Management in Dubai, which oversees more than $300 million in assets, said by telephone. “They have seen what happened during the financial crisis, and they want to limit hot money.”

The kingdom currently allows nonresidents to invest indirectly in shares, through equity swaps or exchange-traded funds. Approval of overseas financial institutions to trade equities may herald a similar relaxation of rules in the local-currency primary debt market, according to Mashreq Capital DIFC Ltd. and Rasmala Investment Bank Ltd.

Banker Group ‘Encouraged’ by FDIC Action on Capital Conservation

The Independent Community Bankers of America said it’s “encouraged” that the Federal Deposit Insurance Corp. considered the concerns of small banks when issuing guidance July 21 on the Basel III capital conservation buffer for firms structured as Subchapter S corporations, or S-corps.

The guidance is aimed at helping relieve many banks structured as S-corps from rules that would restrict their ability to raise capital and serve communities by encouraging them to request case-by-case exceptions to the Basel III capital conservation buffer, the bankers’ association said in a statement.

The group said the buffer rules would hurt the community of about 2,000 banks structured as S-corps.

ICBA raised concerns about the rules in a February letter to banking agencies.


SEC Updates Rules to Make Money-Market Funds Safer: Videos

Bloomberg’s Peter Cook breaks down new rules adopted by the U.S. Securities and Exchange Commission to protect investors in money-markets funds.

He also discussed and the potential declaration of MetLife as a systemically important financial institution. He spoke on Bloomberg Television’s “Market Makers.”

For the video, click here.

Separately, SEC Commissioner Daniel Gallagher discussed the SEC’s new money-market rules, which follow years of debate on how to make the $2.6 trillion industry safer. He spoke on Bloomberg Television’s “Street Smart.”

For the video, click here.

Comings and Goings

Former CFTC Commissioner O’Malia Is Named Swaps Group CEO

Scott O’Malia, a former senior official at the U.S. Commodity Futures Trading Commission, has been named as the new chief executive officer of the International Swaps and Derivatives Association, Inc., the group said in an e-mailed statement.

He succeeds Robert Pickel.

O’Malia served as a CFTC commissioner from October 2009. His resignation from the agency becomes effective Aug. 8, according to a statement on the website of the CFTC.

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