ViewPoints, letters and consultations

This paper looks at how the global energy landscape has changed dramatically in just a few years, with Russia’s invasion of Ukraine in 2022 accelerating the desire of countries and government leaders around the world to balance energy security, reliability, affordability and decarbonization.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in Europe.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in Europe.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in Europe.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in the EU and the UK.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in Europe.

The Policy Spotlight explores BlackRock's perspective on the Basel III Endgame and G-SIB Surcharge Proposals, shedding light on their implications for global banking regulations. It delves into BlackRock's analysis of potential impacts and strategic considerations in response to these proposed regulatory changes.

In this Policy Spotlight we discuss the raft of regulatory changes in UK Defined Contribution (DC), how these changes will impact the design of default strategies, and where we see the market going in the next decade.

In this Policy Spotlight, we raise awareness of the GAAP accounting asymmetries that exist between investment products that provide substantially similar economic exposures: bonds held through fixed income ETFs and bonds held in an SMA. This paper is a continuation of our efforts to advocate for the modernization of the global bond markets for the benefit of investors.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in Europe.

In this Policy Spotlight, we examine the use of fractional investing in ETF savings plans, exploring the differences in ownership models and the implications for retail investor protection. This is in response to ESMA’s proposed guidance, which aims to clarify the requirements around the use of derivatives on fractions of shares within distribution models.

In December 2022, the U.S. Securities and Exchange Commission (SEC) proposed four separate rulemakings related to U.S. equity market structure. This policy spotlight provides a summary of BlackRock’s views on certain key provisions of the proposed rules.

In this ViewPoint, we take a closer look at key issues central to the European debate around increasing the resilience of MMFs. We challenge the hypothesis that the Low Volatility Net Asset Value (LVNAV) fund structure is prone to cliff edge risks and we comment on the debate around the calibration and composition of liquidity buffers. We also look beyond the events of March 2020, to the more recent experience of European MMFs, and make a number of recommendations that we believe can help further underpin MMF resilience.

In this discussion paper, we examine the impact of deviations from net asset value on daily money market fund flows across 11 large funds across three currencies from January 2, 2020-March 31, 2022. We find no evidence that fund flows are related to NAV deviations. Further, we find no empirical support for a non-linear (i.e., a “cliff”) relation of NAV deviations and flows driven by a destabilizing rush to exit by investors who perceive a first mover advantage.

In this Spotlight, we introduce a set of fundamental principles for policymakers, which we believe should form the basis for making public markets more inclusive and supportive of retail investors globally. We also make recommendations on market structure enhancements in line with these principles.

In this Policy Spotlight, we place open-ended bond funds into the wider context of the market ecosystem, providing recommendations to enhance not only fund liquidity management, but market structure and transparency.

In this Spotlight, we express support for a global baseline of climate-related disclosure standards to enable informed investment decisions and urge regulators to work with market participants and standard setters, like the ISSB, to continue developing industry-specific guidance.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in Europe.

In this Spotlight, we discuss why LMTs are used, the criteria and circumstances which lead managers to choose specific LMTs over others, and the constraints posed by specific fund structures, local regulation, operational issues, and market infrastructure.

In this Spotlight, we express support for a global baseline of climate-related disclosure standards to enable informed investment decisions and urge regulators to work with market participants and standard setters, like the ISSB, to continue developing industry-specific guidance.

In this discussion paper, we examine the impact of shocks on U.S. bond fund flows by sub-asset class and by type of investment vehicle. The time-series analysis we conduct shows that a risk-off shock to markets does not necessarily result in large bond fund outflows. Accordingly, we conclude that there is little evidence that bond funds are a source of systemic risk, particularly bond ETFs.

In this Policy Spotlight: CCP Margin Practices - Under the Spotlight, we review the COVID-19 market volatility and discuss our key recommendations for improving margining practices, as well as additional central clearing counterparties (CCP) resilience, recovery, and resolution recommendations.

In this Policy Spotlight: Swing pricing – Raising the bar, we set out our perspective on the principles that underpin swing pricing, why it is used, and the appropriate way to use it, before sharing views on best practises that should guide the swing pricing process, and offering recommendations on how to maximise its potential.

In this Spotlight, we draw on case studies of pension system reform around the world, and examine the demographic transformation informing retirement policy considerations in the Kingdom of Saudi Arabia. Our recommendations call on government and industry to work together to develop a range of long-term savings and retirement solutions, with a focus on workplace DC retirement savings plans, and appropriate private products and tools.

In this Spotlight, we draw on case studies of pension system reform around the world, and examine the demographic transformation informing retirement policy considerations in the Kingdom of Saudi Arabia. Our recommendations call on government and industry to work together to develop a range of long-term savings and retirement solutions, with a focus on workplace DC retirement savings plans, and appropriate private products and tools.

This ViewPoint summarises the key financial services policy developments impacting retail investors, institutional investors, and distributors in Europe.

This ViewPoint focuses on providing an update on LIBOR transition, information and recommendations on outstanding issues, and what to expect next as we move closer to LIBOR cessation.

This iShares whitepaper offers a look at never-before-released data on the characteristics of iShares bond ETF redemption basket data. With this data as the basis, the paper delivers insights into the importance of a robust primary market process and the central role it plays in maintaining market quality for the bond ETF ecosystem.

Addendum to ‘Lessons from COVID-19: Liquidity Risk Management is Central to Open-Ended Funds’

This ViewPoint reviews how large asset managers — those that operate at scale, with a diverse client base and a long term orientation — offer value to investors, businesses, and society, by connecting capital with investments in the companies that drive the economy. We shine a light on the role that asset managers play as stewards of investments, encouraging portfolio companies to deliver long-term value through sound governance.

This Spotlight examines the role of APs in ETF markets. It specifically examines their role and resilience during the March 2020 market events. APs' breadth and size should alleviate concerns that ETFs rely on too few APs.

In this ViewPoint, we discuss the evolving market ecosystem and examine how market infrastructure contributed to the short lived but intense liquidity crisis of March 2020.

In this ViewPoint, we examine the effect of stressed markets on open-ended funds, and bond funds in particular. We then review the liquidity risk management tools available to asset managers, and how they were deployed during March 2020. Finally, we offer recommendations to increase the effectiveness of liquidity risk management tools, thereby enhancing the resilience of mutual funds.

This paper considers processes that provide protection to existing mutual fund investors from the negative ‘dilution impact’ that occurs when a fund invests or disinvests in securities as a result of investor activity. In this paper, we discuss how our single‑priced UCITS and UCI funds address the issue, through our development of the technique known as swing pricing.

In this ViewPoint, we analyze operational challenges faced by the asset management industry during COVID-19, explore how the industry has responded to these challenges, and outline a series of recommendations to further bolster operational resilience.

This deck is a companion to our ViewPoint titled "Lessons from COVID-19: Overview of Financial Stability and Non-Bank Financial Institutions".

This ViewPoint summarizes key takeaways from our series of ViewPoints on "Lessons from COVID-19", considers the implications of the COVID-19 crisis across capital markets, and outlines policy recommendations.

In this Policy Spotlight, we note the sharp uptick in ‘fallen angel’ bonds being downgraded from Investment Grade to High Yield resulting from economic shutdown measures, a trend likely to continue. We provide context on market developments, emphasizing the importance of flexibility many investors have to hold downgraded securities in dampening cliff-edge effects.

In this Policy Spotlight, we discuss how index providers’ decisions to delay fixed income index rebalancing during March 2020 helped to preserve market liquidity, avoid central bank interventions from being undermined, and prevent unnecessarily large transaction costs for end-investors.

In this Policy Spotlight, we provide an update to our August 2019 spotlight on US BBB Bonds in light of the first broad credit downgrade cycle resulting from COVID-19 and lower oil prices.

In this ViewPoint, we explore how ETFs were a source of stability during the first part of 2020 amidst unprecedented market volatility by providing price transparency and liquidity. While ETFs generally functioned well during the COVID-19 crisis, we also offer recommendations for how the ETF ecosystem can be further strengthened.

In this ViewPoint, we make a holistic assessment of European short-term markets during the March market turmoil. We identify three key components of the short-term market ecosystem: market structure, banks as intermediaries, and money market funds. In each pillar, we examine the challenges that arose and make recommendations for improvements to enhance financial stability.

In this ViewPoint, we explore various aspects of the U.S. municipal bond market ecosystem during the COVID-19 Crisis, the Federal response to provide assistance to municipalities, and the approach to liquidity risk management of municipal bond funds. We provide recommendations to further enhance the liquidity risk management toolkit for municipal bond fund managers and improve price discovery for investors.

In this ViewPoint, we make a holistic assessment of U.S. short-term markets during the March market turmoil. We identify three key components of the short-term market ecosystem: market structure, banks as intermediaries, and money market funds. In each pillar, we examine the challenges that arose and make recommendations for improvements to enhance financial stability.

This ViewPoint explores the growth of global market-on-close activity, the key drivers behind this trend, and the benefits that the closing auction provides.

In this ViewPoint, we highlight a relatively easy step policy makers can take that would expand choice for 403(b) plan sponsors in selecting investment vehicles and could result in cost savings for plan participants.

This ViewPoint focuses on providing a status update on LIBOR transition, information on upcoming milestones, BlackRock’s transition planning, and other information to serve as a reference and guide for clients, industry participants, and stakeholders during the next critical steps of transition from LIBOR.

This white paper, written by BlackRock and 18 other buy- and sell-side firms, puts forth 20 principles on CCP resilience, recovery, and resolution.

This ViewPoint summarises the key financial services policy developments impacting European retail investors, institutional investors, and distributors.

In this ViewPoint, we analyze the ownership of companies in the MSCI Europe index and examined the proxy voting of their 30 largest institutional shareholders.

In this ViewPoint, we examine financial regulatory reforms over the past decade, with a focus on the asset management sector. In addition, we look ahead and identify several areas that merit additional study from a systemic risk perspective.

This white paper, written by BlackRock and 8 other buy- and sell-side firms, puts forth 20 principles on CCP resilience, recovery, and resolution.

In this ViewPoint, we set out a vision for a recast of the European Capital Markets Union agenda and put forward our recommendations for building deeper, better-connected capital markets in Europe.

In this ViewPoint, we leverage insights from BlackRock’s Global Investor Pulse study on long-term savings and investment trends, to put forward our recommendations for the development of a Standard Riester product, within the framework of Germany’s three-pillar pension system.

This short paper answers ten frequently asked questions about ETFs. Topics include various impacts of ETFs and index investing on markets, ETF market size, and the defining features of ETFs.

This Policy Spotlight addresses some theoretical flaws with the 'common ownership' theory. Namely, we show why the theory is misapplied to diversified portfolios and why it contradicts with CEO incentives. Thus, we conclude that any policy responses being considered are premature and would cause harm to investors.

This Policy Spotlight sets the record on the role of shareholders in the process of setting executive compensation. We show that rather than shareholders, Boards of Directors, Board Compensation Committees, and compensation consultants are the relevant players in setting executive compensation. ‘Say-on-pay’ votes merely give shareholders the ability to express their views on compensation, not dictate it.

In this Policy Spotlight, we show that the evidence does not support claims that index investing increases asset correlations or blunts stock price signals. Index investing and ETFs support price discovery and serve as 'shock absorbers' during market stress events.

In this Policy Spotlight, we show that the data does not support the notion that the largest index fund managers determine proxy vote outcomes, as this is not mathematically possible in the vast majority of cases. While shareholder proposals are more controversial and are determined with much smaller margins, we show that the variation in asset managers’ voting records negates claims of multi-firm voting blocs that can ‘swing’ vote outcomes.

This Policy Spotlight dispels the notion that index fund managers own an outsized share of global equity markets. We provide profiles on various types of equity asset owners, including their size, strategy, and value proposition to show that shareholders are not a monolith.

In this Policy Spotlight, we give an overview of some of the key players that influence how public companies are run: from corporate management, to boards of directors, to shareholders, to compensation consultants. We estimate that in the U.S. alone, there are over 28,000 individuals with significant influence over U.S. companies.

This ViewPoint considers the key trends of technological advances and new regulations that have driven changes in equity market structure in recent years. With these in mind, we put forward principles that we believe should inform future regulation and offer a series of recommendations for US and EU market structure.

BlackRock is known as one of the largest asset managers globally, but our size says little about our structure, risk profile, history, culture, or how we function today. In this ViewPoint, we provide an overview of our organization and discuss the factors that differentiate the asset management industry more generally, and BlackRock specifically, from other financial institutions.

BlackRock is known as one of the largest asset managers globally, but our size says little about our structure, risk profile, history, culture, or how we function today. In this ViewPoint, we provide an overview of our organization and discuss the factors that differentiate the asset management industry more generally, and BlackRock specifically, from other financial institutions.

BlackRock is known as one of the largest asset managers globally, but our size says little about our structure, risk profile, history, culture, or how we function today. In this ViewPoint, we provide an overview of our organization and discuss the factors that differentiate the asset management industry more generally, and BlackRock specifically, from other financial institutions.

This Policy Spotlight examines the data used for asset managers’ airline holdings in research on ‘common ownership’ and the relevance of index inclusion rules.

This ViewPoint summarises the key financial services policy developments impacting European retail investors, institutional investors, and distributors.

In this ViewPoint, we take stock of the progress to date in regards to establishing central clearing in global derivatives markets. We make a number of recommendations to develop central clearing further, and we restate the case for end-investor protections. We consider how clearing could evolve over the medium and longer term.

In this ViewPoint, we consider the regulatory landscape that drives the provision of conflicting standards for cost disclosure. After setting out how costs and charges are incurred in investment portfolios, we compare the advantages and drawbacks of the commonly used Spread and Slippage methodologies, seeking to inform a common disclosure standard.

In order to strengthen retirement security for millions of Americans, we recommend a comprehensive approach that focuses on (i) expanding access to employer-sponsored retirement savings plans; (ii) increasing individual participation in retirement plans; and (iii) improving retirement outcomes through decumulation. In this paper, we outline straightforward policy actions that Congress and the Administration could take to advance these goals and make it easier for millions of Americans to plan for a secure retirement.

German language edition.

In light of recent congressional action to advance legislation that would roll back the SEC’s money market fund reforms, it is timely to assess the impact and effectiveness of these reforms. In this ViewPoint, we review the circumstances during the 2008 financial crisis that ultimately led to the SEC’s adoption of MMF reforms and consider the impact of these reforms. We believe the SEC should conduct a study of the effects of MMF reform before determining whether rule changes are necessary or appropriate. A roll back of the rules is not advisable without first studying the effects of MMF reforms and the implications of any potential changes.

Japan has one of the world’s highest average life expectancy at 83.7 years, but its healthcare, social security and welfare systems were designed for a society where people lived to just 70 or 80. In order to ensure adequate retirement income for all, there is urgency to supplement the public pension systems with private defined contribution plans (DC) plans and develop appropriate decumulation solutions as well as tools and technology to help people navigate the retirement planning process. In this ViewPoint, we examine Japan’s current pension system, identify areas for improvement and conclude with recommendations for the Japanese government and industry to work together to develop solutions.

This ViewPoint summarises the key financial services policy developments impacting European retail investors, institutional investors, and distributors. Important themes include financial stability, development of the European Capital Markets Union, sustainable finance, implementation of MiFID II; as well as other key issues such as retirement and taxation.

This ViewPoint examines ETF trading during the February 2018 equity market sell-off and volatility spike.

German language edition.

As policy makers are reviewing whether post-crisis regulatory reforms properly balance the objective of mitigating systemic risk without impeding economic growth, it is important to distinguish market-based finance from shadow banking. The current lack of a clear distinction can hinder regulators’ ability to fully monitor and address risk in the financial system. In this ViewPoint, we lay out a framework for differentiating shadow banking from market-based finance using a continuum that corresponds to risks, with a focus on the manner in which activities are funded and whether or not there is access to official sector backstops.

Many Americans are at risk of having limited access to retirement plans and insufficient retirement savings, particularly individuals who work for small firms. One way to encourage small employers to offer retirement plans is to make it easier for these firms to establish and maintain open multiple employer plans. In this ViewPoint, we discuss recent legislative proposals that would enable small businesses to more easily offer open multiple employer plans.

The International Financial Reporting Standards (IFRS) 17 is a complex set of accounting principles that are expected to materially impact liability measurement and profit recognition for insurance companies. We believe this is very welcome, as the current standard (IFRS 4) needs overhauling and the new standards could enhance global comparability of financial information. However, the intended objectives of IFRS 17 may not be met in full due to the complexity of implementing the new standards in a relatively short timeframe. In this ViewPoint, we outline the history and scope of international standards, describe the potential benefits of IFRS 17, and highlight possible unintended consequences on insurers, analysts and investors.

German language edition.

Index investing has profoundly changed the way investors seek returns, manage risk, and build portfolios. Although the benefits of index investing for the investor are widely recognized, recent commentary has focused on its role in capital markets. In this ViewPoint, we outline some of the key elements of the debate, focusing on index investing in relation to company stocks and the equity markets. We also examine the development of theories around common ownership, building on our March 2017 ViewPoint entitled “Index Investing and Common Ownership Theories."

In this ViewPoint, we first examine the underlying causes of the current retirement savings gap in the UK. We then look at the challenges and opportunities for individuals looking to save for retirement, and conclude with key recommendations for the Government and industry to work together to develop a range of solutions that help individuals plan more effectively for their retirement.

German language version.

In this ViewPoint, we leverage behavioural and attitudinal insights from BlackRock’s Global Investor Pulse survey to examine long-term savings and investment trends in Germany. We begin by briefly setting the scene with a snapshot of the widely-acknowledged demographic factors. We then examine current barriers to achieving adequate retirement income, and conclude with recommendations for Government and industry to work together to develop a range of solutions.

This ViewPoint discusses the path forward for US housing finance reform from where we are now. We review how the housing markets have evolved and how the GSEs and their programs have changed. We expand on our guiding principles for reforming housing finance: the need for a clearly defined government role, transparency at all levels, and a framework to attract private capital. We discuss the GSE reform proposals that have been made in the context of these guiding principles, and we suggest ways to attract private capital to return to the mortgage markets.

Index funds have made broadly diversified portfolios accessible to even the smallest investor, and have become a powerful force for the democratization of investment. Recently, however, certain research literature has sought to link index investing to higher prices for consumer products and services, and has called for dramatic policy changes that could eliminate their tremendous value to investors. In this ViewPoint, we outline the benefits of index investing, the limitations of some of the research literature, and conclude by describing why some of the policy recommendations proposed would harm the average investor.

German language version

In this ViewPoint, we explain how shares are created and redeemed in ETFs. This process, known as ETF primary trading, facilitates inflows and outflows from the underlying portfolios of these mutual funds. We discuss authorized participants (APs), market makers, and the distinct roles they play in ETF primary trading. We also consider the possibility of an AP stepping back from its role and explain the expected impact on ETFs and markets.

As banking reforms come to completion, some policy makers are considering extending the perimeter of macroprudential regulation beyond banking to asset management. This has sparked a debate about system-wide stress testing, including stress tests across mutual funds and stress tests of asset managers. In this ViewPoint, we outline challenges to implementing system-wide stress testing and survey macroprudential tools that have been contemplated.

This ViewPoint focuses on the Asian bond market size, liquidity and ownership of local-currency (LC) markets. Given its increasing size and importance, the structure of the Chinese bond market is highlighted in a separate section. We outline the key parameters of the foreign (FC) markets in the region and review the rise in importance of bond ETFs as additional source of liquidity to bond investors and the potential for development of this market segment in Asia. We offer several policy recommendations to help stimulate further growth in Asia’s fixed income markets.

This ViewPoint serves as a summary of the key financial services policy developments impacting retail and institutional investors and distributors in Europe in 2016, and provides a look ahead to 2017. Key themes remain ensuring global financial stability, and stimulating growth by reducing barriers to the flow of cross-border capital in Europe. New policy measures increasingly reflect cost transparency, digitalisation, long-termism, and environmental, social and governance (ESG) factors.

The dialogue on bond market liquidity has largely focused on a few key trends: (i) the decline in broker-dealer inventories, (ii) the decline in bond turnover (trading volume as currently measured divided by outstanding debt), (iii) the increase in corporate bond issuance, and (iv) the growth of bond mutual funds. While the data cited are factually accurate, these isolated data points do not present a complete picture of bond market participants or innovations that are supplementing traditional means of obtaining market liquidity. This ViewPoint is intended to inform discussions about bond market liquidity by integrating data we have known about for a long time (e.g., bond ownership by pensions and insurers) with newer data that highlights structural changes to bond market liquidity. Based on our synthesis of the new data with the old, we make a number of observations to provide a more comprehensive foundation for the dialogue on bond market liquidity.

In this ViewPoint, we make several observations and recommendations with respect to the resiliency, recovery, and resolution of central clearing counterparties.  We highlight that efforts to protect the financial system from the distress or failure of a CCP must also endeavor to protect the ultimate customers of CCPs: end-investors, such as retail savers and pension funds.  To fully achieve the risk reducing goals of central clearing, the resilience of CCPs is paramount.  In addition to focusing on CCP resiliency, financial stability would be better served by a globally consistent regime that requires each CCP to have a recovery and resolution plan that can prevent its potential failure from impacting market stability.

The 2016 U.S. election campaign has been unique in many ways, but the underlying dynamics are not. What are the implications of rising populism? The BlackRock Investment Institute breaks it down.

This ViewPoint explores the role of third party vendors in the asset management industry and catalogues a broad range of vendors that help asset managers conduct key functions. All asset managers, including both external and in-house managers, use some third party services. In addition to third party vendors, there are a variety of financial market infrastructures that all market participants rely on, including exchanges, central clearing counterparties, electronic trading and affirmation platforms, and trade messaging systems such as SWIFT. These financial market infrastructures are the spinal cord of financial markets. This paper offers some recommendations regarding guidance that should be provided to purchasers of services and suggests a framework for approaching the analysis of the providers of these services.

This ViewPoint reviews the landscape for digital advice, including the different business models present today, and the existing regulation of digital advice. Digital advisors incorporate computer-based technology into their portfolio management processes – primarily through the use of algorithms designed to optimize various elements of wealth management from asset allocation, to tax efficiencies, to product selection and trade execution. Digital advice is subject to the same regulatory requirements as traditional financial advice, including supervision by the SEC and FINRA in the US, the FCA in the UK, and equivalent authorities in other jurisdictions. That said, appropriate regulatory supervision is important, making it helpful for regulators to explore best practices in digital advice while recognizing that business models and technology will continue to evolve over time. In this ViewPoint, we suggest that regulators focus on five key areas: (i) know your customer and suitability, (ii) algorithm design and oversight, (iii) disclosure standards and cost transparency, (iv) trading practices, and (v) data protection and cybersecurity.

This ViewPoint is a continuation of previous BlackRock publications addressing market liquidity, focusing this time specifically on euro denominated debt, and integrating European data around trading and ownership. We begin by sizing the euro corporate bond market and move on to discuss secondary market liquidity. We then look at ownership of euro area debt, as well as evaluate the implications of the European Central Bank’s (ECB) corporate bond buying programme on euro corporate bond ownership and liquidity, the rise of bond Exchange Traded Funds (ETFs) in Europe as a source of bond market liquidity.

Financial market transparency, delivered through appropriately detailed and timely reporting, underpins well-regulated and robust markets where risks are monitored and properly understood. In this ViewPoint we analyse fund data and transaction reporting regimes in the United States and Europe Union, comparing the aims objectives, remit and reporting requirements of both, and identify a number of challenges faced by regulators and firms. We conclude with policy recommendations regarding how data could be requested and reported in a more streamlined, consistent manner, and encourage global securities markets standard setters to take on this difficult and complex issue by establishing an international working group to study global reporting.

This ViewPoint sets out our views on environmental, social, and governance (ESG) issues from the perspective of a fiduciary investor acting on behalf of asset owners. We define different ways that investors can integrate ESG factors in the investment process, outline our views on how ESG factors contribute to long-term value, and describe the current landscape of ESG disclosure initiatives across organizations and regulatory bodies. There are a number of challenges associated with assembling and evaluating ESG information. To address these challenges, we provide recommendations for policy makers to establish a framework that enables stakeholders and market participants to develop detailed ESG standards and best-practice guidelines.

This ViewPoint explores the diversity of US bond funds and the diverse range of investments made by funds within each category. We then review data on investor flows in the largest categories of bond funds to analyze investor behavior in response to historical market stress events. We observe different flow patterns in various categories of bond funds during these periods of market stress, which suggests that bond fund investors do not treat all bond funds as a single asset class, even during times of market stress. Based on this analysis, we conclude that any macro stress test that is unable to capture the diversity of bond funds and incorporate performance of different fixed income asset classes is unlikely to produce results that are reflective of potential market dynamics, particularly if such models assume that all bond fund shareholders react in the same way in response to market stress. Stress testing of individual funds should be incorporated into mutual funds’ liquidity risk management programs.

This ViewPoint explores the Federal Housing Finance Agency’s Single Security Initiative. This initiative proposes to make the securities issued by Fannie Mae and Freddie Mac fungible, and thereby consolidate the liquid forward market in agency mortgages. We consider the benefits and challenges of the Single Security proposal and recommend steps to protect investors and facilitate market acceptance. We make a number of key observations and recommendations for a Single Security.

The SEC has laid out an agenda for modernizing the regulation of US registered mutual funds and investment advisers, which includes initiatives for collecting additional data to enhance the SEC’s existing data analytics, finalizing rules for the use of derivatives in mutual funds, introducing liquidity risk management standards and stress testing for funds, and addressing the transition of client assets in the event of an asset manager winding down. BlackRock supports the modernization of rules governing mutual funds and their advisers, and we have commented on specific aspects of the rules proposed thus far. In this ViewPoint, we discuss each of the SEC's proposals and we lay out some guiding principles for considering the proposals as an integrated package.

This ViewPoint is the 2015 edition of our overview and analysis of key EU regulatory developments affecting the European financial markets and investors. Topics covered range from investment products, investor protection and distribution through to market structure and taxation.

In this ViewPoint, we describe the current environment for infrastructure investing and propose a holistic policy framework that recognizes investors’ requirements for investing in infrastructure.  This policy framework is built on four key principles: (i) providing certainty to investors, (ii) focusing on transparency, (iii) determining funding structures that align the interests of investors and public authorities and (iv) developing a stable and consistent regulatory environment.  This paper also discusses some of the existing regulatory barriers to infrastructure investment and provides suggestions to address them.

This ViewPoint reviews key federal retirement initiatives and several state proposals in the US that aim to increase retirement savings. We offer suggestions on how the federal government can eliminate unnecessary obstacles small employers face in establishing and maintaining ERISA plans and we discuss state-based programs intended to increase coverage for private sector employees. We recommend moving forward with achievable changes to facilitate both public and private sector retirement solutions. All solutions should make it easier for employers to establish a plan or IRA program, encourage and facilitate continuous and increasing levels of retirement savings starting at an early age, and support well-designed investment programs.

This ViewPoint examines the events of August 24, discusses lessons from that day, analyzes the breakdown in the arbitrage mechanism for many US-listed ETPs based on US equities, and provides recommendations to refine trading mechanisms and “guard rails” to enhance the resiliency of the US equity market structure. 

This ViewPoint defines the different concepts that have been referred to as “liquidity” that are often conflated, highlights some of the ways that asset managers are already adapting, and provides recommendations for actions to improve the market ecosystem.  Our recommendations take a three-pronged approach: (i) market structure modernization, (ii) enhance fund “toolkit” and regulation, and (iii) evolution of new and existing products, which includes embracing products that can help market participants address the challenges of today’s market environment such as bond ETFs.

This ViewPoint examines securities lending, explaining the respective roles of lenders, lending agents, and borrowers.  This paper describes how concerns raised regarding securities lending practices and associated risks, including the selection of counterparties, collateralization of loans, use of cash collateral and cash reinvestment vehicles, the uses of non-cash collateral and rehypothecation, and borrower default indemnification are addressed.  This ViewPoint also explains the mechanics of securities lending, the risks involved, and how these risks are managed.

The OECD's Base Erosion and Profit Shifting (BEPS) is the international community’s attempt to curb aggressive tax planning. In this ViewPoint, we explain that the proposed rules may inadvertently affect cross-border investment flows, thereby reducing the ability for capital markets to contribute to economic growth and the investment opportunities of end-investors. We suggest recommendations consistent with the BEPS project's main goals while minimizing potentially adverse side effects on commingled investment vehicles.

The Capital Markets Union project, announced in July 2014 by EU Commission President Juncker, seeks to remove barriers to the free flow of capital in Europe, and increase the role that market-based finance plays in intermediating capital to European companies, projects and governments. In this ViewPoint, we set out our thinking in the areas we believe are fundamental to its success.

On December 16, 2014, President Obama signed into law sweeping changes to the rules governing multiemployer pension plans as part of the Omnibus Budget and Continuing Resolution spending bill. In a major policy shift, the Multiemployer Pension Reform Act of 2014 enables multiemployer plans to reduce benefits for all participants, including retirees, if essential to avoid plan insolvency. This ViewPoint outlines the challenges the legislation is intended to help solve, summarizes the legislation's key provisions and analogous approaches states are adopting to address public pension plan funding shortfalls, and explores potential implications for the future.

This ViewPoint is the 2014 edition of our overview and analysis of key EU regulatory developments affecting the European financial markets and investors. Topics covered range from investment products and investor protection, through to market structure, investment allocation and taxation.

This publication examines the behavior of bond markets and fixed income ETFs during the recent period of significant asset flows following the news of Bill Gross’s departure from PIMCO on September 26, 2014. Our analysis demonstrates that ETFs helped defuse uncertainty and facilitated orderly and stable markets. We believe this experience is an illustrative case study of how fixed income ETFs provide liquidity, price transparency, and fair allocation of costs amidst periods of market stability, as well as during periods when markets are challenged with uncertainty or significant asset flows.

This ViewPoint reviews how the corporate bond market is structured and identifies several issues with the current market structure for corporate bonds. The paper also provides recommendations for reform.

This ViewPoint examines the liquidity risk management practices of bank loans, high yield and emerging markets debt mutual funds. Our analysis of historical data over several market cycles and our experience in the markets shows that the concerns expressed by policy makers have not arisen in the past.

This ViewPoint examines and compares the structural features of several fund types across a wide range of jurisdictions and identifies a number of existing regulations that serve to mitigate “run risk” and protect investors.

In this paper, we trace the role that investment technology plays throughout the asset management process, highlighting the fact that a core function of asset management technology is to support data management and information processing.

This ViewPoint is the fifth in a series on housing finance policy. In this paper, we review the status of the housing market and a number of the legislative, regulatory, and policy initiatives underway.

This paper explains the distinctions between asset owners, asset managers, and intermediaries and highlights the impact that post-financial crisis monetary policies and financial regulatory reforms have had on the investment decisions of asset owners. The paper also explores the current regulatory paradigm for funds to establish a framework for potential solutions and identifies several recommendations.

This ViewPoint outlines the expectations of savers to address their long-term financial needs and the current regulatory changes affecting distribution and advice in Europe.

This paper outlines key market structure issues from an investor perspective and provides recommendations for improving investor confidence.

This ViewPoint outlines risks associated with central clearing counterparties (CCPs) and provides recommendations on how to mitigate these risks.

Policymakers are keen to stimulate securitisation markets in the European Union in order to increase the range of financing opportunities available. This ViewPoint seeks to provide a brief overview of securitisation and highlights its benefits for companies, investors, banks and the economy. It also identifies some of the misuses of securitised instruments and the degree to which industry practice and regulation have addressed concerns and recommends guiding principles to stimulate the re-emergence of healthy securitisations.

This paper surveys the US retirement landscape, looking at existing savings programs and changing demographics, and offers ideas for reinforcing the retirement system in the United States.

This ViewPoint is the fourth in a series on housing finance policy. The paper reviews the status of the housing market and a number of legislative, regulatory, and policy initiatives underway.

Headlines can be captivating, but rarely tell the whole story. Such has been the case recently as it relates to the municipal bond market, particularly in the immediate wake of Detroit's history-making bankruptcy filing. This paper fact checks some of the more pervasive perceptions, and offer insight and advice for wary investors.

In this ViewPoint we explain how investors use credit ratings, suggest several reform objectives for credit rating agencies, and we review the reforms contemplated in the Franken Amendment of Dodd-Frank in the context of these objectives. In addition, we address other regulatory initiatives, including those designed to reduce reliance on credit ratings.

This ViewPoint provides a detailed overview of Exchange Traded Products with a focus on Exchange Traded Funds (ETFs). The paper explains some common misconceptions about the structure of ETFs and index investing. It also identifes several principles that we believe can help maximize the utility of ETFs and minimize the potential for any unintended consequences for investors and financial markets.

Recent media reports have focused on the legality of certain aspects of the Financial Transaction Tax and led some to believe that the proposal is now dead. The idea continues to attract strong support from some proponent countries and the European Commission. In this ViewPoint, we explain why and how the FTT proposal will be very damaging to end-investors, in particular long-term savers and pensioners, and express our strong objection to the FTT on our clients' behalf.

This ViewPoint is the 2013 edition of our analysis of key EU regulatory developments affecting the European financial sector, markets, businesses and investors. Topics covered range from investor protection, investment products, through to taxation, market structure and asset allocation.

The fiscal condition of state governments continues to improve nearly five years after the onset of the financial crisis. While challenges remain in the current environment of slow economic growth, states have taken the necessary actions to balance budgets and to ensure full and timely payment on debt obligations. In fact, the vast majority of states were successful in balancing their fiscal year 2013 budgets on or ahead of the July 1, 2012, start. This report reviews the progress states have made in balancing budgets in this post-Great Recession environment.

Financial benchmarks are under review by multiple regulators around the world as a result of the allegations of manipulation of LIBOR that have surfaced. We commend the efforts to learn more about financial benchmarks, as they are used by a wide range of investors and market participants. As the discussions proceed, however, we caution regulators to carefully evaluate what types of reforms may benefit investors and which may impose unintended harm. This paper outlines the key differences between rate benchmarks and market benchmarks (commonly called market indices), and advocates prudent reform that is in the best interests of investors and financial markets.

This ViewPoint underlines the importance of enhanced risk disclosure by banks in restoring trust in the banking system. This paper outlines the key principles and recommendations for enhanced risk disclosure set out in the Enhanced Disclosure Task Force (EDTF) report, published in October 2012, that BlackRock helped co-author.

The advent of exchange traded products (ETPs) focused on fixed income has been swift and surprising. We break down the ratings and sector composition of these funds – as well as the most commonly held bonds.

Behind the Bond Boom ETP Q4 2012 (International Version)

Behind the Bond Boom ETP Q4 2012 (US Version)

The advent of exchange traded products (ETPs) focused on fixed income has been swift and surprising. We break down the ratings and sector composition of these funds – as well as the most commonly held bonds.

A fundamentally important pillar of the current regulatory reform effort centers on achieving consistent and predictable frameworks for the recovery and resolution of failing financial institutions and, in particular, banks. This ViewPoint summarizes some of the current proposals for recovery and resolution of financial institutions around the world. It sets out a number of key questions about the process for investors and the unintended consequences for the investability of banks if these questions are left unanswered. Finally, it makes a number of recommendations, based on common principles underpinning the global regulatory focus on these issues, on how to address investor concerns with resolution authority.

Housing was a central protagonist in the 2008 financial crisis and remains an important touchstone for the US economy today. Encouragingly, recent market trends are positive in residential housing: home price indices are rising, sentiment is improving and mortgage rates are at all-time lows. Still, it is clear there is much work to be done to restore not only the US housing market, but the financing mechanisms that helped the sector thrive for decades. In this ViewPoint, we review some of the programs and proposals related to housing finance, and identify important issues for attracting investors to those assets that support this vital economic sector.

The UK Retail Distribution Review (RDR) will abolish the commissions received by financial advisers for selling products and replace them with fees for advice to be agreed with the client upfront. The FSA's main objective in RDR is to improve consumers protection when purchasing investment products. This ViewPoint examines whether RDR is likely to meet this objective and what the potential pitfalls may be as well as the challenges that may remain once the new rules are fully in place by the end of next year.

We detail scenarios, risks and investment opportunities before and after the US elections, with a focus on the “fiscal cliff.”

The US election and "fiscal cliff" of tax hikes and spending cuts are looming large in global financial markets adding to uncertainty for investors and policymakers alike. This paper considers a number of scenarios for the US elections as well as risks and investment opportunities before and after the elections. (US Version)

When Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, it set an ambitious schedule for the implementation of reforms. While much attention has been given to the number of missed deadlines for new rules, mandatory clearing for interest rate swaps and index credit default swaps now has real deadlines and industry participants are in various stages of preparedness. Even though some rules remain in the proposed stage, market participants should develop their plans to meet this requirement. This paper focuses on those necessary steps, with an emphasis on what the clearing mandate means for institutional investors in the US markets.

Policymakers globally continue to grapple with the regulation of Money Market Funds in the wake of the 2007/2008 financial crisis. A seemingly simple product has challenged some of the best regulatory, industry and academic minds, and consensus on a proposal for additional reforms still appears to be elusive. We at BlackRock have been deeply engaged in these discussions and - like others - have worked on numerous proposals for reform based on the lessons learned in 2008. In this paper, we propose a path forward that takes into account the various concerns and objections that have been raised in past discussions.

This ViewPoint considers if European corporate debt markets can withstand the challenges they currently face from the current macro-economic conditions coupled with an intense period of regulatory change. The Review of the Markets in Financial Instruments Directive (MiFID) in Europe could herald an unprecedented shift in how fixed income market makers would be obliged to report to regulators and to the market. In this paper, we focus on whether the current reform of European fixed income market structure would bring added value for end-investors or if the costs of proposed reforms exceed their potential benefits. In conclusion, we provide recommendations to address the public policy intentions behind the reforms whilst protecting the fixed income markets from increased liquidity pressure.

On July 6, 2012, President Obama signed into law the Moving Ahead for Progress in the 21st Century Act ("MAP-21, or "The Highway Bill"). In addition to transportation funding, this bill also includes two important provisions for corporate pension plans - (i) allows companies to make lower pension contributions for the next few years; and (ii) raises premiums paid to the Pension Benefit Guaranty Corporation ("PBGC"). This paper explains the implications of these provisions for corporate pension plans.

The recent issues surrounding LIBOR highlight two key, yet separate issues: alleged manipulation of LIBOR during the precrisis period, and the alleged underreporting of LIBOR due to the stigma issues at the height of the 2008 credit crisis. The conflation of these two distinct issues have cast doubt on the credibility of the LIBOR rate setting process. Lost in the noise is the importance of reforming this process to regain the confidence of market participants. This paper highlights the need for industry-wide benchmarks and makes specific suggestions for reforms of the LIBOR rate setting process to help it regain credibility.

While the political alignment of a government has had little discernible impact on market performance, policy does. Economic positions, such as tax policy, have in the past influenced how financial markets behave. For investors looking to handicap the impact of November�s elections, we believe there are three policy prisms through which to judge the outcome: potential for avoiding the "fiscal cliff," impact on tax policy, and the extent to which the outcome raises or lowers the likelihood of dealing with longer-term imbalances, specifically the unsustainable nature of the current entitlement system and the growing dysfunction of the US tax code.

This ViewPoint gives a detailed explanation of central clearing requirements for OTC derivatives in the European Union and shows the implications for European pension plans.

This ViewPoint gives a detailed explanation of the Credit Valuation Adjustment risk charge under the Capital Requirement Directive IV (CRD IV) and shows the implications for European pension plans.

Policy makers face currently the significant challenge of instituting regulatory reform that addresses weaknesses in the regulatory environment without stifling key drivers of growth, such as investment in bonds and equities that can help provide income in retirement for individuals. This ViewPoint provide a broad overview and analysis of a number of current regulatory initiatives that have the greatest impacts on end-investors.

In the wake of the financial crisis, securities lending has come under review by regulators in various jurisdictions. In this ViewPoint, we describe securities lending transactions, assess the risks involved, and respond to a series of questions posed by regulators. We also provide a number of recommendations for improving securities lending practices.

The JOBS Act, short for Jumpstart Our Business Startups Act, was signed into law by President Obama on April 5, just weeks after it won bipartisan approval in both the House and the Senate. The law redefines provisions around IPOs, expands permissible advertising for private investment products and facilitates access to startup capital. As an investment manager and a fiduciary for individual and institutional investors, we believe the JOBS Act encourages capital formation while incorporating important protections. In this ViewPoint, we summarize the key components of the law and offer an investor's perspective.

ViewPoint - Reform of Credit Rating Agency Regulation in Europe: An End-investor Perspective - Apr 2012

Money market funds have been a topic of discussion - and often vehement disagreement - among regulators and market participants since the 2008 financial crisis and historic "breaking of the buck" by the Reserve Primary Fund. At this juncture, given regulators' stated intention to move forward with structural reform, it is important to identify a proposal that preserves MMFs and is acceptable to as many industry participants as possible. The model expected to be put forth by the SEC provides the option of either: i) a stable-NAV MMF with capital buffers plus redemption restrictions or ii) a floating-NAV MMF. In this paper, we examine the merits and implications of these ideas. We also consider the case for whether regulators have already done enough.

Much has happened over the past decade to reshape the economic landscape. The greater sophistication and more complex structure of financial markets, rapid technological developments, and the increase in third-party intermediated distribution models have enhanced the opportunities available to investors. In this ViewPoint, we look at how to rebuild investor confidence in the light of European proposals to update consumer regulation of financial services. We consider how to preserve investor choice and make specific recommendations to improve the regulation of product providers and distributors.

In this ViewPoint, we provide background on the history and structure of ETFs, summarize recent concerns that have been raised by regulators, and recommend five reforms that would improve the marketplace for ETFs. We explicitly support uniform standards on labeling, transparency, disclosure, and reporting that would reduce systemic risk, improve investor protection, and help ensure that investors understand precisely the risks and attributes of the products that they are purchasing.

Proposals related to further structural reform of money market funds remain highly topical today. In this ViewPoint, we review the objectives and constraints surrounding additional reform, focusing specifically on capital solutions. As change is considered, care must be taken to ensure that the reforms, both individually and collectively, achieve the objective of protecting investors without inadvertently destabilizing financial markets.

Equity Market Trading in Europe: The Case for Refinement Over Revolution

Enhanced regulation of the commodity derivatives markets has been on the agenda of elected officials for some time. In this ViewPoint, we provide historical background on commodity derivatives market regulation, examine the Commodity Futures Trading Commission's (CFTC's) current proposal, and assess the ways in which the new regulatory regime could impact investors.

The events of 2008, including the historic "breaking of the buck" by the Reserve Primary Fund in September of that year, brought to light both idiosyncratic (fund-specific) and systemic (industry-wide) risks associated with money market funds, and gave rise to several reform measures designed to enhance the stability of that segment of the market. The Dodd-Frank Act subsequently instructed the SEC to make certain additional changes to money fund regulations. One recent proposal resulting from this mandate addresses the use of NRSRO ratings by fund advisors. In this ViewPoint, we assess the SEC proposal, highlighting our belief that while advisors must conduct independent credit evaluations, ratings provide useful preliminary screens in the evaluation process.

The Foreign Account Tax Compliance Act (FATCA), enacted into law last year with a January 2013 effective date, is an attempt to address tax evasion by US taxpayers by directing global financial firms, including non-US ones, to identify the underlying ownership of assets they hold. The financial impacts for investors could be quite severe. In this ViewPoint, we explore the potential implications and make a series of recommendations for the development of fair and administrable rules.

The AIFMD is one of the most radical, politicized, and controversial directives reshaping fund management and marketing regulation in the EU. The impetus behind the Directive was to prevent hedge funds posing risk to European financial stability, though the scope is far wider than just hedge funds and private equity. Although the final text of the AIFMD is far better than the original Commission proposal, we are continuing to engage at Level 2 (implementation measures) with trade associations and regulators on behalf of our clients. Investors should continue to have access to best-in-class funds wherever such funds are domiciled or managed.

While it took months to sift through the data to determine what actually happened on May 6th - and we still do not know for certain what triggered the Flash Crash - the lesson of the event was clear from the beginning: better rules are needed to help protect investors, and to reflect the tremendous evolution that has occurred in the markets in recent years. What has happened since the Flash Crash to reform markets to reduce the risk of a similar event?

Municipal bond markets continue to make headlines, but has default risk been overestimated? In this ViewPoint, we examine the current risks - particularly as they relate to public pension plans obligations - and investment opportunities.

In this ViewPoint, "UCITS IV Key Investor Information Document: The Challenge of Providing Clear Product Disclosure" we provide background on the Key Investor Information Document (KIID), which will replace the existing simplified prospectus. Following the financial crisis, there was a strong drive to provide clearer product information to investors. The KIID identifies the key elements of a fund, helping investors to understand the nature and risks of the fund in order to make more informed investment decisions.

During the financial crisis, the insurance industry, which is currently regulated at the state level by commissioners, came under scrutiny. In this paper, "Financial Regulatory Reform: Important Developments for Insurance Companies," we explore how recent developments, including the establishment of the Federal Insurance Office, may impact the industry in the future.

The Regulated Investment Company (RIC) Modernization Act of 2010, which was signed into law on December 22, 2010, makes changes to a number of technical rules related to the tax treatment of RICs. Prior to the enactment of this legislation, the statutory framework governing RICs had not been meaningfully updated since the passage of the Tax Reform Act of 1986. In this paper, we summarize the major provisions of the Act, highlighting areas of notable improvement.

In this paper, "Getting Housing Finance Back on Track," we recommend a set of guiding principles to be considered when evaluating US housing finance policy. We also assess the options presented in "Reforming America's Housing Finance Market - A Report to Congress," which was released by the US Treasury Department and US Department of Housing and Urban Development on February 11, 2011.

In this paper, "Regulatory Developments in Europe", we review key regulatory developments affecting the European financial sector, the markets, businesses and investors. We also consider the implications- including opportunities- that could arise from the new legislation, enacted at both the European and national levels, with a number of US legislative initiatives also set to impact the European financial industry in the relative short term.

In this paper, "The New Regulatory Regime for Money Market Funds: A Window into the Mark-to-Market NAV," we review some of the factors that influence the mark-to-market NAV and its characteristic daily fluctuations. Ultimately, we believe that the new regulatory regime will prove beneficial to investors by supplying them with more detailed information on fund managers' investment philosophies and approaches to risk management.

In this paper, we review several proposals outlined in the "Money Market Fund Reform Options" report issued by the President's Working Group on Financial Markets. While the proposed solutions are many, we believe the goal of the investment community and policymakers is one and the same: reduce systemic risk without damaging money market mutual funds' important role as a source of value to investors and funding to the short-term capital markets.

Although several months have passed since the Flash Crash occurred, uncertainty remains on the trigger or triggers for the sudden U.S. equity free fall (and recovery) on the afternoon of May 6. However, the lesson of the event is clear: better rules are needed to protect investors, and to reflect the tremendous evolution that has occurred in the markets in recent years. In this ViewPoint, "Understanding the 'Flash Crash,'" we explore what happened on May 6, how it affected investors, and what can be done to lessen the likelihood of similar market disruptions in the future.

The adoption of recent regulatory proposals in the U.S. could have a dramatic impact on the mutual fund industry. In this ViewPoint, "Mutual Funds in the Spotlight: Is a Paradigm Shift Necessary or Desirable?," we assess the potential implications of the proposals and recommend an approach that promotes investor protection without undermining the solid foundation on which mutual funds have thrived.

In the wake of the financial crisis, legislators and regulators around the world have initiated a variety of proposals aimed at reducing the systemic risks posed by OTC derivatives. In this ViewPoint, "OTC Derivative Market Reforms: An Investor Perspective," we summarize current proposals, offer our views on their effectiveness, and highlight issues that should be addressed before new rules take effect.

In this ViewPoint, "Fin Reg and Beyond: Global Implications for Investors," we discuss current and pending financial regulatory reform. We summarize various studies, proposals, and legislative changes in the U.S. and Europe and describe the likely impacts for investors.

In this ViewPoint, "Financial Regulatory Reform: Reform Arrives in the Boardroom," we examine the corporate governance provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act that alter dynamics between investors and shareholders.

In this ViewPoint, "The Rise of UCITS III," we examine recent regulatory changes in Europe that have allowed regulated mutual fund structures to deploy enhanced investment powers, enabling leverage, paving the way for the use of derivatives, and making absolute return products available to the retail investor.

One recommendation, among a series of regulatory reform proposals, is that money market funds - known and appreciated for their stable NAV structure - assume a floating NAV structure. In this ViewPoint, "Money Market Mutual Funds: The Case Against Floating the Net Asset Value," we suggest that such a change would not simply alter the nature of a single investment vehicle, but would have far-reaching implications and negative consequences for the entire financial system.

Following the U.S. Congress conference committee's approval of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we highlight the major provisions of the bill and analyze their likely impacts.

U.S. Congress and regulatory agencies have been considering various measures to strengthen the regulatory framework governing the financial services industry for over a year. The past month has seen a flurry of activity and clarity is beginning to emerge on a number of fronts. Although firm decisions have yet to be made, and current proposals may change considerably before they are finalized, we share our thoughts on a number of issues that could have a broad impact across companies, products, and markets in this ViewPoint, "Financial Services Regulatory Reform: A Discussion of Proposed New Rules and Legislation."

In this ViewPoint, "Money Market Funds: A Proposal for a Capitalized Special Purpose Entity," we examine both the role of money market funds and the ways in which idiosyncratic risk and systemic risk can be significantly mitigated, resulting in a beneficial outcome for issuers, investors, and the financial system.

While we support efforts to improve the regulation and oversight of the OTC derivatives market, we want to ensure that new restrictions on these important financial instruments address existing risk concerns without creating unintended negative consequences.

The credit crisis and its aftermath have fundamentally changed mortgages and the mortgage-backed securities market, and have threatened to make U.S. homeownership significantly less affordable. As a fiduciary for investors and a major investor in the mortgage sector, we are concerned that the current U.S. policy approach is not achieving its objectives and may have long-term, negative implications for both homeowners and capital markets.