Private Money Funds, U.K. Annual Reviews, ICE: Compliance

Attempts by regulators to prevent another run on the $2.7 trillion money-market fund industry are having some unintended consequences.

Some of the largest fund providers, led by Federated Investors Inc. and BlackRock Inc., are considering offering private funds with a fixed $1 share price as an alternative to institutional prime funds that were forced last year to adopt a floating price. Invesco Ltd. is discussing several alternatives with clients, including letting them move money into its existing private pool, said Lu Ann Katz, who heads the firm’s global liquidity business.

Abandoning the stable share price was among the key changes the U.S. Securities and Exchange Commission introduced last year to make the biggest money funds safer. Opponents unsuccessfully argued that the change could drive large corporations to look for alternatives. If the money managers go ahead with their plans, billions of dollars may end up leaving the regulated funds.

The rule forces institutional funds that invest in securities other than those issued or backed by the U.S. government to adopt a floating share price and impose redemption fees and gates in times of market stress.

Money managers are responding with a range of alternatives before the rule goes into effect October 2016.

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Compliance Policy

U.K. Top Finance Managers to Face Annual Review in New Rules

The U.K. Financial Conduct Authority plans to require senior managers “capable of causing significant harm” to a firm, its customers or the markets’ integrity to be assessed and certified annually.

The regulator laid out its plans to improve accountability for individuals in banking in a statement Monday.

The agency also proposed “Presumption of Responsibility” guidelines that would mean the manager of an activity where the financial-services firm broke rules would be guilty of misconduct.

The measures implement recommendations made in 2013 by U.K. lawmakers to address standards and culture in the wake of scandals including the rigging of the London interbank offered rate. Firms will need to provide regulators with statements of each senior manager’s responsibilities. The burden will fall on executives to show they took reasonable steps to prevent wrongdoing if misconduct occurs.

The FCA and Prudential Regulation Authority will give feedback on comments about the rule. Final rules should be published by this summer and will take effect by March 7, 2016. They’ll cover banks, building societies, credit unions and PRA-designated investment firms.

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Compliance Action

ICE Will Pay $3 Million to Settle CFTC Data Reporting Violations

Intercontinental Exchange Inc. will pay $3 million to resolve U.S. Commodity Futures Trading Commission claims that it reported flawed derivatives trading data to regulators daily for more than a year and a half.

The Atlanta-based company submitted inaccurate records to the CFTC on every reporting day from October 2012 to May 2014, the agency said in a statement Monday. ICE’s U.S. futures exchange, which handles energy, agricultural and financial trading, continued the errors after being notified by agency staff, the CFTC said.

According to the settlement, ICE said the errors were a result of technology changes and didn’t affect data disclosed to the public. Brookly McLaughlin, a spokeswoman for the company, declined to comment.

As part of the agreement with the CFTC, ICE must bolster its regulatory reporting capabilities.

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Banks’ Average Core Capital Ratio Highest Since 2009, EBA Says

The weighted average common equity core Tier 1 capital ratio of European banks was 12.1 percent in the third quarter of 2014, the highest level since 2009, the European Banking Authority said Monday in a statement on its website.

The capital ratio increase “was driven by an increase in retained earnings and capital issuances that outpaced a more modest growth of risk weighted assets,” the authority said.

“The levels of nonperforming loans remained stable,” though still high, indicating a need for continuous monitoring and transparency, the EBA said in the statement.

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Comings and Goings

Former CIA Inspector General to Lead Federal Forensics at KPMG

David Buckley, a former Inspector General for the Central Intelligence Agency, has joined KPMG LLP, where he will be a managing director in its Forensic Advisory Services, the firm said in a statement.

Buckley will lead the firm’s Federal Forensic practice, providing investigative and advisory services to help clients understand the risks posed by possible misconduct in their programs and operations. He anticipates advising civilian agencies of the federal government in assessing fraud risk, compliance and ethics program development and integrity monitoring.

Buckley was nominated as Inspector General by President Barack Obama and served from October, 2010, to January, 2015. While at the CIA, he conducted statutory oversight and led internal fraud investigations, as well as managing internal audit and inspection programs at the agency, according to the statement.

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