The CFTC Division of Clearing and Risk ("DCR") issued an interpretation harmonizing regulations applicable to derivatives clearing organizations ("DCOs") under CFTC Part 39, with risk management standards under the CPMI-IOSCO Principles for Financial Market Infrastructures ("PFMIs"). The PFMI risk management standards address, among other things, risks associated with: (i) exchange-of-value settlement services; (ii) DCOs' link arrangements; (iii) the requirement to use central bank services (where available and practicable); and (iv) requirements regarding the conduct of due diligence on

The Office of Financial Research ("OFR") published a working paper, "An Agent-based Model for Crisis Liquidity Dynamics," that examines the effect of financial crises on (i) the balance sheets of market makers and their ability to take on inventory; and (ii) the difference in time frames between liquidity demanders and liquidity suppliers. In order to "successfully model the dynamics of liquidity during market crises," the authors of the working paper claim that it is important to understand demander and supplier (i) decision cycles, (ii) market dislocation; and (iii) stress to their portfolio

FDIC Chair Mark J. Gruenberg boasted of the FDIC's "impressive and somewhat underappreciated" progress in developing a framework for "the orderly failure of a large, complex, systemically important financial institution". In remarks to the FDIC Banking Research Conference, Chair Gruenberg argued that the Orderly Liquidation Authority framework for "living wills" "avoid[s] the taxpayer bailouts and the market breakdowns that took place during the recent financial crisis." Chair Gruenberg called the Orderly Liquidation Authority a "backstop" that "effectively [provides] a public-sector

IOSCO published a report, titled IOSCO Task Force on Cross-Border Regulation, that identifies cross border regulatory challenges and provides corresponding regulatory tools. The report incorporates a toolkit describing three broad types of cross-border regulatory options with supporting case studies, a description of the processes used to assess the comparability of foreign regulatory regimes, and other tips on how to best use the toolkit. The report presents a series of concrete next steps aimed at supporting cross-border regulation. In this regard, IOSCO observed that cross-border regulation

The SEC charged four former clearing firm officials for their roles in a series of accounting and disclosure failures stemming from decisions to extend credit to certain customers beyond what is allowed under the margin requirements. The SEC alleged that the clearing broker-dealer provided customers with nearly $100 million in margin loans secured by mostly "risky, unrated municipal bonds," such as those that were used to fund a horse racetrack operated by one of the customers. The SEC investigation found that instead of liquidating the collateral, accounting for the loan losses properly and