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Major banking stocks moved higher in the last four trading days reflecting optimism in the market. Though regulatory probes are ongoing, steps taken to conclude litigation issues by banks related to their past business conduct has helped regain investors’ confidence and reduce legal burden of banks as well.

Moreover, the much anticipated interest rate hike, which is to be decided at the FOMC meeting during Sep 16–17, also seems to be a driving factor for the banking stocks. Primarily, a higher rate will alleviate some pressure on banks’ top-line.

Banks are also modifying their work culture and getting electronically inclined as per clients’ preferences, which was also prominent in the last four trading days. Notably, JPMorgan Chase & Co. JPM has exited open outcry trading on the London Metal Exchange (“LME”) and the company’s transfer from Category 1 to Category 2 membership, which permits only electronic and telephone trading, was announced by the exchange.

 (Read the last Bank Stock Roundup for Sep 4, 2015)

Recap of the Week’s Most Important Developments:

1. The Commodity Futures Trading Commission (“CFTC”) is investigating JPMorgan over the sale and use of proprietary products for its private-banking clients. The CFTC is probing whether JPMorgan made proper disclosures to its private banking clients at the time of steering them toward in-house investment products. The regulator is also probing Highbridge Capital Management LLC, an investment firm owned by JPMorgan (Read more: After SEC, CFTC to Probe JPMorgan for 'Product Steering').

2. Massachusetts’ chief securities regulator has announced an investigation against The Bank of New York Mellon Corporation BK following a technical glitch at the custodian bank last month. The technical error threw at least 46 investment companies into disarray and in effect impacted hundreds of funds and billions of dollars of assets. In an official statement, Secretary of Commonwealth William Galvin enquired from BNY Mellon and six mutual fund providers about the technology failure in fund accounting that affected individual investors. The firms were asked to outline the actions taken to minimize damage suffered by investors depending on BNY Mellon NAVs for trades (Read more: BNY Mellon under Probe: After-Effects of Technical Glitch?).

3. BNY Mellon and American International Group, Inc.’s AIG attempts of recovering hundreds of millions of dollars related to foreign tax credits suffered a setback after the U.S. court dismissed their arguments. Both the firms had disputed claims of the transactions being short of economic substance made by the federal government.