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I’d like to thank James Gorman for starting us off this morning during our breakfast session. Again, I’m Tim Ryan, President and CEO of SIFMA and to keep things moving on this very busy day, I’d like to first take care of some official business.
I now declare the opening of SIFMA’s formal annual business meeting for members.
Included in the notice of this member meeting was a report of the Nominating Committee for SIFMA directors and a proxy for use in voting. The corporate secretary has received the required number of votes in accordance with the by-laws and the following new directors have been elected for three year terms:
Francois Barthelemy
Société Générale
Joan Binstock
Lord Abbett
Benjamin L. Brigeman
Charles Schwab & Company, Inc.
Kent Christian
Wells Fargo
Didier Descamps
HSBC Bank plc
Kenneth D. Gibbs
Jefferies & Company, Inc.
John R. Gidman
Loomis, Sayles & Company, L.P.
Thomas Hartnett
Deutsche Bank AG
David B. Heller
Goldman, Sachs & Co.
Douglas M. Hodge
PIMCO
William A. Johnstone
Davidson Companies
Edward J. Kelly, III
Citi
Kathleen Murphy
Fidelity Investments
Thomas R. Nides
Morgan Stanley
Timothy P. O’Hara
Credit Suisse Securities
Thomas Patrick
Bank of America Merrill Lynch
Joseph Sweeney
Ameriprise Financial, Inc.
The Nominating Committee is careful to ensure that SIFMA’s Board of Directors represents all of the major constituencies of the firms in our industry.
Moving on to today’s program. I must say it is set to be one of the best we’ve had. You’ve already heard from James Gorman at Morgan Stanley. His comments provide a good foundation for today’s discussions. Our list of impressive speakers today include: SEC Chairman Shapiro and FDIC Chairman Bair on their outlook for the regulatory rulemaking process that will implement Dodd-Frank.
Additionally, we’ll hear from Kevin Warsh of the Federal Reserve Board of Governors, who will provide insights as to what the Fed is addressing with respect to the Dodd-Frank Act and other areas of policymaking.
We’ll also hear from Robert Kelly, Chairman and CEO of Bank of New York Mellon.
Beyond these keynote speeches, we’ll also be hearing from three featured panels.
Our morning panel of industry experts will dissect the Dodd-Frank Act and what it means for the industry.
Later in the program we’ll hear from practitioners on market structure where panelists will not only address the May 6th Flash Crash, but more systemic, underlying changes that are taking place within our markets.
And lastly, we’ll hear from expert political minds on how last week’s election will affect our industry.
We will end the day hearing from one of the key authors of legislation that has brought sweeping change to the financial services industry: Senator Chris Dodd. He, along with his colleague Congressman Barney Frank, led the effort to pass the Dodd-Frank Wall Street Reform and Consumer Protection Act, sweeping legislation that will change the way our industry does business for the foreseeable future.
But, as Senator Dodd well knows, with legislation now enacted into law, we enter a new phase of the reform process.
Before discussing our priorities during the rulemaking process, however, let me address how last week’s election will impact our work.
Let me be clear. SIFMA will continue to work with the Administration, regulators and Congress to continue to restore faith and confidence in our financial markets, including effectively implementing the Dodd-Frank Act.
Our focus is to share SIFMA members’ broad expertise and experience through thoughtful analysis, information and comment as the process moves forward. Properly crafted rules will safeguard our financial system while continuing to allow financial institutions to finance economic growth and job creation.
We will also remain engaged with Congress on two pieces of unfinished business. American investors face huge tax increases on capital gains and dividends at the end of the year if Congress does not act. SIFMA continues to support the permanent extension of the current 15 percent tax rate.
Additionally, the new Congress will need to address the issue of housing finance reform. SIFMA will work with Congress and the Administration to resolve this complex issue, particularly with respect to the GSEs, in order to restore confidence in the U.S. housing finance market and open access to credit.
Now, let me turn to the priorities SIFMA will be focusing on during the Dodd-Frank rulemaking process.
One of the main goals of the Dodd-Frank Act was to prevent a crisis like the one we experienced in late 2008 and into 2009. The law looked to address systemic risk and end the idea of a financial firm being ‘too-big-to-fail.’ It created the Financial Stability Oversight Council to guard against systemic risk building up in the system and to identify systemically important firms that will be subject to greater regulatory oversight.
The law also created an orderly liquidation, or resolution authority to wind down a failing institution without disrupting the broader financial system and protect the taxpayers.
In a related effort to address perceived excessive risk taking, the Dodd-Frank Act banned proprietary trading and investments in hedge funds and private equity in what has come to be known as the Volcker Rule. The important aspect of this set of rulemaking will be how regulators define what activities are deemed “proprietary” and thus prohibited, while ensuring that markets remain liquid and deep.
For the first time, the trading of derivatives will move from a primarily over-the-counter market to one utilizing central clearing houses and exchange trading. This will mean more transparency and more infrastructure in place to address risks within these markets. In the U.S., beyond those swaps that are fundamentally not suitable for clearing, the only exception to the mandated clearing requirement is for trades where one party is a non-financial, hedging end-user. Otherwise, all swaps that are clearable will be cleared, and in addition required to be executed on an exchange or swap execution facility (SEF). Dodd-Frank also now makes the regulation of over-the-counter derivatives the responsibility of the Commodity Futures Trading Commission and the Securities and Exchange Commission.
SIFMA is also working with the FDIC, SEC, and other regulators to address risk retention in the securitization markets. Dodd-Frank required mandatory risk retention of 5 percent, but provided regulators discretion in imposing retention and exempted any retention for securitizations of “qualified” residential mortgages. Clearly, these new rules will have a major impact on the securitization markets, which are critical to providing credit to finance economic growth, but remain stagnant.
And lastly, we continue to work on what will likely become a new uniform fiduciary standard of care for investment advisors and broker dealers when providing personalized investment advice to retail investors.
Our work on these priorities has already resulted in several comment letters and one impact assessment that we’ve shared with regulators.
Late last week, we submitted comments to the Financial Stability Oversight Council on the kinds of criteria the council should consider when making their designations of firms they deem to be systemically significant.
Beyond the legally prescribed $50 billion in assets for banks, SIFMA believes that certain qualitative and quantitative factors should be included in the FSOC’s decision making process moving forward. SIFMA also believes that the FSOC should address whether non-bank financial institutions should be designated as systemically significant.
Additionally, SIFMA submitted two comment letters with respect to implementation of the so-called Volcker Rule, which bans proprietary trading as well as and investments in hedge funds and private equity by federally insured financial institutions.
Our focus here is to help Treasury determine what qualifies as proprietary trading, and thus subject to the ban, and what is outside of the prohibition.
We have also provided thoughtful commentary and analysis to the SEC’s study and likely rulemaking with respect to a uniform fiduciary standard of care for retail investors.
Early last week we released a study conducted by Oliver Wyman that assessed how customer choice, product access and affordability of advisory services would be impacted should a uniform fiduciary standard not take into consideration the different types of business models financial advisers work under.
In the next two weeks, SIFMA will be submitting comment letters on the FDIC’s notice on orderly liquidation authority, the CFTC’s rule on swap reporting, and the SEC’s proposed rule on executive compensation based on deadlines established under Dood/Frank.
To learn more about all of these topics, I urge you to visit our newly redesigned, and user friendly website: www.sifma.org. There you will be able to search by issue topic to find all of the relevant information, including comment letters, press releases, and other resources.
Before introducing our next session, I’d like to take a minute to thank our sponsors for helping us put on today’s event. You can see them on the screen now. We appreciate your continuing support.
Now, I’d like to introduce our incoming Chairman of the Board: John Taft who is CEO of RBC Wealth Management U.S.
John has spent nearly 30 years in the industry working at various financial institutions, including Piper, Jaffray & Hopwood, Vintage Mutual Funds, the Clifton Group and Dougherty Summit Securities.
Prior to becoming CEO, John served as head of Asset Management and Products for RBC’s U.S. and International division and as CEO of Voyageur Asset Management.
John has been an active member within SIFMA, having previously served as Chair of the Private Client Steering Committee. During the beginning stages of the regulatory reform debate John helped lead SIFMA’s support of a new federal fiduciary standard to govern both investment advisors and broker dealers who provide personalized investment to retail investors.
As Chairman of SIFMA’s board, John will continue that leadership role on the issues I’ve already discussed and many more our industry will face over the next year.
Ladies and gentlemen will you please help me welcome, John Taft.
