President Donald J. Trump nominated J. Christopher Giancarlo to serve as Chairman of the US Commodity Futures Trading Commission. The nomination of Mr. Giancarlo, who has been a Commissioner of the CFTC since 2014 and has been serving as acting CFTC Chairman since January 20, 2017, was widely expected. In speeches at various industry conferences, Acting Chairman Giancarlo has detailed his agenda for the CFTC, calling for reinterpretation of the CFTC’s regulatory mission to pursue the core goals of (i) fostering economic growth, (ii) enhancing U.S. financial markets and (iii) “right-sizing” its regulatory footprint. In pursuit of these goals, the agenda calls for an agency-wide review of CFTC rules, regulations and practices in order to make them simpler and less burdensome. In addition, the agenda advocates revising the swaps trading rules in order to allow market participants to have greater flexibility in choosing the manner of trade execution. In his remarks, Acting Chairman Giancarlo also called for greater engagement by the CFTC with its overseas regulatory counterparts on the basis of “cross-border comity, not uniformity.”

View the text of the speech.

Charlotte Hogg has formally offered her resignation to the Bank of England, which was publicly accepted on March 14, 2017. Ms. Hogg held the positions of both Deputy Governor Markets & Banking and Chief Operating Officer. She joined the Bank in 2013 and assumed the additional position of Deputy Governor on March 1, 2017. Ms. Hogg's resignation follows information being made public through hearings of the House of Commons Treasury Select Committee noting that Ms. Hogg failed to correctly disclose a conflict of interest relating to her brother holding a senior executive position at Barclays. As a consequence, during Ms. Hogg's tenure she was not compliant with the Bank's Code of Conduct which Ms. Hogg had assisted in drafting. The Treasury Select Committee has also announced that the Bank is reconfiguring reporting lines and internal structures with a view to safeguarding the governance of the Bank's Code of Conduct, Compliance and disciplinary processes.

View the letter of resignation.

View the Bank of England's response.

View the Treasury Committee second report on the appointment of Ms. Hogg.
 

President Trump met with community bankers at a National Economic Council "listening session" at the White House. President Trump discussed the February 3, 2017 Executive Order, “Core Principles for Regulating the United States Financial System,” and how excessive regulation is threatening US community banking. According to a White House readout, President Trump promised to work to tailor the nation’s regulatory framework so that it accounts for the unique challenges faced by community banks.

Following the meeting, US House Financial Services Committee Chairman Jeb Hensarling released a statement noting that it is “encouraging to have a president who is listening to the concerns of community bankers who have been buried under an avalanche of burdensome regulations as a result of Dodd-Frank. Republicans on the Financial Services Committee are eager to work with the President and his administration this year to fulfill the pledge to dismantle Dodd-Frank and unclog the arteries of our financial system so the lifeblood of capital can flow more freely and create jobs.”

Read the White House readout.

Read the Statement from Representative Hensarling.

The CFTC announced that Daniel J. Davis has been named the agency’s General Counsel, effective immediately.

View the CFTC press release.

The CFTC announced that Daniel J. Davis has been named the agency’s General Counsel, effective immediately.

View the CFTC press release.

The European Commission launched a new portal through which feedback can be provided on proposed EU legislation and initiatives. The portal is part of the Commission’s Better Regulation agenda. The portal is intended to provide individuals and stakeholders with the opportunity to provide input on new EU legislation from the preparation phase through to proposals for new laws and evaluations of how existing laws are performing.

View the European Commission’s portal.
 

The European Commission has published a request to the European Securities and Markets Authority for technical advice on possible delegated acts under the Prospectus Regulation. The Prospectus Regulation has been agreed but is yet to be published in the Official Journal of the European Union. It will enter into force 20 days after publication and apply two years after publication - currently expected to be June 2019. The Prospectus Regulation will replace the existing Prospectus Directive and sets out the requirements for a prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. The Prospectus Regulation aims to simplify the rules and administrative obligations for companies wishing to issue shares or debt on the market and reducing the costs of preparing a prospectus, thus fostering cross-border investments in the single market, while at the same time still enabling investors to make informed investment decisions.

Read more. 

The US Federal Reserve Board announced the appointment of Ann Misback as its Secretary, effective April 2, 2017.  The Office of the Secretary supports the Federal Reserve Board by providing essential corporate secretary services, including the planning and execution of Federal Reserve Board meetings, as well as related support services.

Ms. Misback succeeds Robert deV. Frierson, who has served as Secretary since July 2012.

View the Federal Reserve Board press release.

The US Department of Labor proposed to extend the applicability dates of the fiduciary rule and related exemptions, including the Best Interest Contract Exemption, from April 10, 2017 to June 9, 2017.

Read more.
 

The SEC adopted rule and form amendments to make it easier for investors and other market participants to find and access exhibits in registration statements and periodic reports that were originally provided in previous filings. The final rules will take effect on September 1, 2017.

The amendments will require issuers to include a hyperlink to each exhibit in the filing’s exhibit index.  Currently, someone seeking to retrieve and access an exhibit that has been incorporated by reference must review the exhibit index to determine the filing in which the exhibit is included, and then must search through the registrant’s filings to locate the relevant filing.

View the final rule.

The SEC published a request for public comment on disclosures called for by Industry Guide 3 - Statistical Disclosure by Bank Holding Companies. Stating that the financial services industry has changed drastically since Guide 3 was originally published, the SEC is soliciting public input on whether Guide 3 continues to elicit the information that investors need for informed investment and voting decisions.  The SEC also seeks comment on whether there are new types of disclosures about the activities of bank holding companies that investors would find important.

The request for comment is published on the SEC website and in the Federal Register.  The comment period will remain open until May 8, 2017.

View the request for comment.

The European Commission published a White Paper on the future of Europe. The White Paper outlines possible drivers of change and scenarios in which the current 27 member states could evolve by 2025. The White Paper reviews possible changes that could occur over the next decade, such as the impacts of new technologies on societies and jobs, doubts about globalization, security concerns and the rise of populism. The White Paper outlines a non-exhaustive list of five possible scenarios by which the EU could evolve, entitled: (i) Carrying On; (ii) Nothing But the Single Market; (iii) Those Who Want More Do More: (iv) Doing Less More Efficiently; and (v) Doing Much More Together. The White Paper forms part of the Commission’s contribution to the Rome Summit. Following the Summit, the Commission, the European Parliament and interested Member States will host a series of “Future of Europe Debates” across Europe.  

View the press release. 

View the Annex summarizing the scenarios.

View the White Paper.

The Financial Conduct Authority launched a consultation on proposed changes to the availability of information in the UK equity IPO process. The consultation follows the discussion paper published by the FCA in April 2016. The FCA's view is that diverse and independent information is not available early enough in the IPO process. To address this issue, the FCA is proposing to amend the order in which the approved prospectus and connected research is made available to investors and to ensure that analysts from firms not supporting the IPO are provided with access to the issuer's management. In particular, the FCA is proposing that an approved prospectus or registration be published and unconnected analysts have access to the issuer's management before any connected research is released. In addition, the FCA is proposing to clarify, through supplemental guidance, that it would regard any interaction between analysts and issuers or their representatives to be participation in investment banking pitching efforts until the firm has accepted a mandate to carry out underwriting or placing services for the issuer and the firm's position in the syndicate has been determined.

The consultation closes on June 1, 2017. The FCA expects to publish a policy statement setting out the final changes, if any, before the end of 2017.

View the consultation paper.

View the discussion paper.

The Financial Conduct Authority has published a letter addressed to the CEOs of firms operating a loan-based crowdfunding platform about concerns that the platforms may be facilitating loans to lending businesses that do not have the requisite regulatory permissions. According to the FCA, a lending business that borrows through a platform and then lends that money to others may be carrying on the regulatory activity of "accepting deposits". If the lending business does not have the regulatory permission to accept deposits, it would be in breach of UK legislation and may be committing a criminal offense. The FCA's view is that a loan-based crowdfunding platform that facilitates this type of behaviour is "acting in a manner inconsistent with [the FCA's] expectations for regulated firms" and may be in breach of regulatory requirements, in particular, breaching the FCA's Principles on treating customers fairly, the threshold conditions and business model requirements. Firms operating loan-based crowdfunding platforms have been asked to assess whether they are facilitating the relevant behaviour, and if so, to desist and consider the appropriate steps that should be taken to avoid facilitating such actions in the future. The FCA also requests the CEOs provide, by March 6, 2017, the details of the firms that they have concluded are accepting deposits without the requisite permission.

View the FCA's letter.

The White House withdrew the nominations of Brian Quintenz and Christopher Brummer to be commissioners of the US CFTC. The CFTC is currently operating with two commissioners.  The full Commission consists of five commissioners appointed by the President, with the advice and consent of the Senate, to serve staggered five-year terms.

View the US Senate website noting the nominations withdrawn.

HM Treasury published its response to its late 2016 consultation on amending the definition of regulated advice under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to bring it in line with the definition of "investment advice" set out in the Markets in Financial Instruments Directive. HMT is proceeding with the change as consulted on and will lay draft legislation before Parliament to give effect to the change. The Financial Conduct Authority published a statement about the change, setting out what the change will mean for firms advising on investments or providing a personal recommendation.

Read more.

The European Commission published a report on accelerating the Capital Markets Union by addressing national barriers to capital flows. The report is addressed to the European Parliament and the Council of the European Union. It focuses on issues that may impede investors' cross-border operations throughout the investment cycle. The report identifies what it sees as the main barriers to investment and sets out a suggested roadmap for Member States to address these barriers, most of which are actionable in 2017. The issues identified in the report include marketing requirements, administrative arrangements, regulatory fees for cross-border marketing, different approaches to crowdfunding, residence requirements, insufficient financial literacy, differences in insolvency regimes and withholding tax relief. Member States are invited to agree on the actions set out in the roadmap although the Commission may also consider whether any legislative proposals are appropriate.

Member States have also been invited to identify other barriers in CMU-relevant areas, such as national reporting requirements imposed in addition to existing EU legislation, barriers to the online distribution of investment funds, obstacles for smaller institutional investors ineligible for a passport under the Markets in Financial Instruments Directive and challenges involved in the distribution of retail financial products.

View the Commission's report.

President Trump signed the Enforcing the Regulatory Reform Agenda executive order that will establish a task force and regulatory reform officer at each US federal agency, appointed by agency heads. The purpose of these new roles will be to enforce the President’s agenda going forward, including the President’s previous executive order that requires agencies to repeal two rules for every new rule that they issue. The task forces are responsible for reviewing existing regulations within 90 days to determine if any can be repealed or amended.

View the Executive Order.

The US SEC published information and guidance for investors and the financial services industry on the use of robo-advisers, which are registered investment advisers that use computer algorithms to provide investment advisory services online. Because of the unique issues raised by robo-advisers, the SEC’s Division of Investment Management issued a Guidance Update for robo-advisers that contains suggestions for how they can meet their disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940. Robo-advisers, as registered investment advisers, are subject to the substantive and fiduciary obligations of the Advisers Act. The Guidance Update notes that there may be a variety of means for a robo-adviser to meet its obligations to clients under the Advisers Act, and that not all of the issues addressed in the Guidance Update will be applicable to every robo-adviser.

Read more.

US House Financial Services Committee Chairman Jeb Hensarling and the other 33 Republican members of the Committee sent a letter to US Board of Governors of the Federal Reserve System Chair Janet Yellen. Although Chair Yellen had stated in recent testimony that the Federal Reserve Board would abide by President Trump’s January 30, 2017 regulatory freeze, the letter further urged the Chair to refrain from proposing or adopting any new rules, absent an emergency, until the Senate confirms a Vice Chairman for Supervision of the Federal Reserve Board. The letter stated that if the Federal Reserve Board proceeded with adopting rules prior to the confirmation of a Vice Chairman, the lawmakers would work to “ensure that Congress scrutinizes the Federal Reserve’s actions - and, if appropriate, overturns them - pursuant to the Congressional Review Act.”

View the letter.
 

The Financial Conduct Authority has published a consultation paper proposing amendments to the Listing Rules of the FCA's Handbook. The FCA is proposing to, among other matters, (i) clarify the premium listing eligibility requirements and introduce new technical notes and additional guidance to give more context to the rules; (ii) introduce a new concessionary route to premium listing for certain property companies that cannot meet the track record requirements so that a property valuation report may be used to assess the company's eligibility for a premium listing; (iii) introduce new technical notes on the concessionary routes; (iv) amendments to the profit test within the class tests which are used to determine which governance requirements a premium listed issuer must comply with for certain large transactions; and (v) in the context of reverse takeovers, reversing the assumption of insufficient information being available to the market where a target issuer cannot provide that information so that the assumption will be that the market can operate smoothly on the basis of information that listed companies make publicly available as part of their disclosure of inside information requirements under MAR.

The FCA's discussion paper on the review of the effectiveness of the UK primary markets should be read in conjunction with the consultation paper. Responses to the FCA's proposed rule changes are requested by May 14, 2017. The FCA intends to publish its final rules in a Policy Statement in the second half of 2017.

View the consultation paper. 

View the discussion paper. 

The Financial Conduct Authority launched its review into the effectiveness of primary markets by publishing a discussion paper on the UK primary markets landscape. The FCA is seeking views on how the UK primary capital markets can meet the needs of investors and operate effectively. It includes an overview of the UK's primary markets, how the listing regime fits in, the FCA's regulatory role and key trends in the UK's primary equity markets. 

Read more.

H.R. 1018 was introduced in the US House of Representatives which would alter the current governance structure of the Bureau of Consumer Financial Protection. Like a comparable bill that was introduced in the US Senate (S. 105), H.R. 1018 would replace the role of director of the Bureau with a 5-person commission. Other notable provisions that members of the commission will serve staggered terms, and that no more than 3 members can be from a single political party.

On February 17, 2017, H.R. 1031 was introduced in the US House of Representatives which seeks to repeal the Bureau of Consumer Financial Protection. A corresponding version of the bill, which calls for the Bureau to be eliminated by repealing title X of Dodd-Frank, was introduced in the US Senate (S. 370).

View H.R. 1031.

View H.R. 1018.

Steven T. Mnuchin was sworn in to serve as the 77th Secretary of the US Treasury. In this role, Secretary Mnuchin will be the principal economic advisor to President Trump on domestic and international financial, economic and tax issues. Secretary Mnuchin succeeds Jacob J. Lew, who served in the position under President Obama.

View Treasury’s press release.

Daniel K. Tarullo submitted his resignation as a member of the US Federal Reserve Board, effective on or around April 5, 2017. He has been a member of the Federal Reserve Board since January 28, 2009.

View copy of Tarullo’s resignation letter.

HM Treasury announced that Charlotte Hogg had been appointed Deputy Governor for Markets and Banking at the Bank of England, effective March 1, 2017. Ms. Hogg will take over the role in addition to continuing her current role as Chief Operating Officer of the Bank of England. Ms. Hogg is replacing Minouche Shafik, who is taking up the role of Director at the London School of Economics in September 2017.

View the news release.

The US Federal Reserve Board announced that Scott G. Alvarez, general counsel, will retire later in 2017, after nearly 36 years of service to the Federal Reserve Board. The Federal Reserve Board will begin a search for his successor.

View the Federal Reserve Board press release.

President Trump signed an executive order setting forth “core principles” in the regulation of the US financial system and directing the Treasury Secretary to review and report back to the President within 120 days on the extent to which current government policies promote those principles and recommendations for actions to promote them. The core principles include the following: “prevent taxpayer-funded bailouts”; “foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry”; “enable American companies to be competitive with foreign firms in domestic and foreign markets”; “advance American interests in international financial regulatory negotiations and meetings”; and “restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.”

View Shearman & Sterling publication on the Trump executive order.

View executive order text.

President Trump issued a Presidential Memorandum requiring the US Department of Labor to reconsider its proposed “fiduciary rule,” which subjects many of the investment recommendations from financial advisors to retail retirement clients to ERISA’s fiduciary standards and remedies. The Memorandum directs the Department of Labor to prepare an updated economic and legal analysis of the rule to determine whether, among other things, it may adversely affect the ability of Americans to gain access to retirement information and financial advice.

Read more.

The US Senate Finance Committee approved the nomination of Steven Mnuchin to serve as Secretary of the Treasury, overruling an attempt by Senate Democrats to stall the nomination vote by boycotting the committee hearing by temporarily suspending committee rules that require at least one Democratic committee member to be present to conduct business. The full US Senate is expected to vote on his nomination the week of February 6th.

View results of the Senate Finance Committee vote.

Representative Patrick McHenry (R-NC) issued a letter to Federal Reserve Chair Janet Yellen, calling on the Federal Reserve to cease negotiating “binding” international financial regulatory standards in such forums as the Financial Stability Board and the Basel Committee “until President Trump has had an opportunity to nominate and appoint officials that prioritize America’s best interests.” Rep. McHenry serves as Chief Deputy Whip in the US House of Representatives and as Vice Chairman of the Financial Services Committee of the US House of Representatives.

View text of Rep. McHenry’s letter.
 

The Chief Operating Officer of the US Securities and Exchange Commission, Jeffrey Heslop, announced that he will depart the agency in February. Kenneth Johnson, SEC Chief Financial Officer, will become the Acting COO.

Acting Chairman of the US Commodity Futures Trading Commission Giancarlo announced that the CFTC’s General Counsel, Jonathan L. Marcus, is leaving the agency. Mr. Marcus joined the agency in 2011 as Deputy General Counsel for Litigation, and was promoted to General Counsel in 2013. Robert A. Schwartz, currently the Deputy General Counsel for Litigation and Adjudication, will become the Acting General Counsel.

On January 27, 2017, Acting Chairman Giancarlo announced several additional staff changes at the Commission:

-            Amir Zaidi has been appointed to lead the Division of Market Oversight.

-            Vincent McGonagle has been named as the Acting Director for the Division of Enforcement.

-           Jeffrey Bandman will step down from his role as Acting Director of the Division of Clearing and Risk to become an advisor on issues related to Financial Technology (FinTech). John Lawton, a 36-year employee of the Commission, has taken over as Acting Director of the Division of Clearing and Risk.

House Financial Services Committee Chairman Jeb Hensarling (R-TX) issued a statement in which he criticized the Dodd-Frank Wall Street Reform and Consumer Protection Act for institutionalizing big bank bailouts. He noted that Republicans on the Financial Services Committee are eager to work with President Trump and the new administration to replace the Dodd-Frank Act with his draft legislation, The Financial CHOICE Act. Additionally, Chairman Hensarling announced subcommittee assignments for Republican members on the House Financial Services Committee.

View statement.

View the subcommittee assignments.

The FCA published a consultation paper on proposed changes to the client money distribution rules in the Client Assets Sourcebook of the FCA Handbook - CASS 7A - as a result of the special administration regime review. The client money rules govern how client assets are to be distributed by an insolvency practitioner managing a failed investment firm. The proposals focus on rule changes following the introduction in early January 2017 by the Government of draft regulations to improve the regime in line with the Bloxham Report's recommendations, i.e. The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017, the Amending SAR Regulations.

Read more. 

The Bank of England and Financial Services Act 2016 (Commencement No 4 and Saving Provision) Regulations 2017 came into force. The Regulations set March 1, 2017 as the date on which certain provisions of the Bank of England and Financial Services Act 2016 will apply, including, those provisions which will transfer the functions of the Prudential Regulation Authority to the Bank of England. Those functions will be exercised through the Prudential Regulation Committee. 

View the Regulations. 

Trump Administration Chief of Staff Reince Priebus issued a memorandum to the heads of executive departments and agencies instituting a temporary freeze of regulations that have not yet become effective in order to allow for review of such regulations by the President’s appointees or designees. The memorandum, issued on the day of President Trump’s inauguration, contains an exception for “emergency situations or other urgent circumstances relating to health, safety, financial or national security matters.” The memorandum is somewhat unclear as to its applicability to independent regulatory agencies such as the US financial regulators including the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Read more.

The European Commission launched a public consultation on the Capital Markets Union program and how it could be updated and completed, building on the initiatives that the Commission has presented so far, as part of the mid-term review. The mid-term review of the CMU action plan is scheduled for June 2017. The CMU Action Plan was published in September 2015 and set out priorities for putting in place the building blocks of a CMU by 2019. The Commission also published a Communication in September 2016 reaffirming its commitment to the CMU, calling for an acceleration of reform and outlining steps to increase the rate of completion. The Commission has completed 15 of the initiatives set out in the Action Plan (approximately half), including making progress on core legislative initiatives such as the proposed Prospectus Regulation and Securitization Regulation. Several more initiatives are expected to be launched in the coming months, including a proposal for simple efficient and competitive personal pensions, promotion of the FinTech sector with an appropriate regulatory environment and sustainable finance. 

Read more.

The CFTC designated Commissioner J. Christopher Giancarlo per seriatim as Acting Chairman of the agency. Mr. Giancarlo joined the CFTC on June 16, 2014 after being unanimously confirmed by the US Senate on June 3, 2014, to serve as a Commissioner of the CFTC. Commissioner Giancarlo succeeded Timothy Massad who had served as Chairman since June 5, 2014.

View CFTC press release.

The CFTC announced that Division of Enforcement Director Aitan Goelman will leave the agency on February 3, 2017. A successor has not yet been named.

View CFTC press release.

The SEC announced that General Counsel Anne K. Small will leave the agency later this month. Upon Ms. Small’s departure, Sanket Bulsara, Deputy General Counsel for Appellate Litigation, Adjudication, and Enforcement, will become the Acting General Counsel.

View SEC press release.

The OCC launched the agency’s new web-based Central Application Tracking System (CATS). The system will assist authorized national banks, federal savings associations and federal branches and agencies with drafting, submission and tracking of licensing and public welfare investment applications and notices. CATS also allows OCC analysts to receive, process and manage those applications and notices. CATS replaces e-Corp and CD-1 Invest, the current OCC electronic filing systems.

The OCC plans to roll out institutions’ access to CATS in three phases. The first phase includes banks that are frequent electronic filers with the OCC. The second and third phases of the roll-out of CATS are scheduled to begin in spring 2017. OCC staff will notify institutions regarding the date of their access to CATS several weeks before such access is available.

View OCC bulletin regarding the new system.
 

The US House of Representatives passed H.R. 78, the SEC Regulatory Accountability Act, sponsored by Rep. Ann Wagner (R-MO). The Act would require the US Securities and Exchange Commission to justify the costs and benefits of a proposed regulation prior to its issuance of the same. In addition, before issuing a regulation, the SEC would also be required to do the following: (i) identify the nature and source of the problem its proposed regulation is meant to address; (ii) identify and assess available alternatives; and (iii) ensure that any regulations are consistent and written in plain language. The legislation also contains language requiring the SEC to conduct a retrospective review of its regulations every five years and to perform post-adoption impact assessments of major rules.

View text of the bill.

The UK Government published draft legislation to amend the Special Administration Regulations, i.e. The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017, the Amending SAR Regulations. The purpose of the draft legislation is to improve the return of client money when an investment firm fails. The changes are in line with the Bloxham Report's recommendations which aim to minimize the market impact of a failed firm's entry into special administration. The draft Amending SAR Regulations amend the scope of the SAR Regulations to include firms that manage an alternative investment fund or Undertakings for the Collective Investment of Transferable Securities or who act as a trustee or depositary for an AIF or UCITS. The Amending SAR Regulations will make the transfer of client assets from a failing firm to another financial institution easier because restrictions on transfers will be removed, including removing any restriction affecting what can or cannot be assigned as well as any requirement to obtain client consent. The draft Amending SAR Regulations also improve the bar date mechanism and provide for continuity of services for the safe custody of client assets. The draft Amending SAR Regulations are subject to Parliamentary scrutiny. They are expected to come into force in February 2017.

View the Amending SAR Regulations.

View the Bloxham report.

The European Commission announced the membership composition of the High-Level Expert Group on sustainable finance. The purpose of the Expert Group is to provide recommendations for a comprehensive EU strategy on sustainable finance as part of the Capital Markets Union. The Commission will draw on such recommendations when determining how to integrate considerations of sustainability into the EU’s rules for the financial sector. The Group’s advice will outline how the EU should design appropriate and proportionate financial policies, incentives and signals for financial institutions, corporate capital-raisers and markets to direct capital towards sustainable finance and to take operational steps to protect the stability of the financial system from risks related to the environment. The Group will start meeting as of January 2017. An interim report is expected around the middle of the year and a final report in December 2017.
 
View the announcement.

The European Banking Authority published recommendations for harmonizing the EU framework for covered bonds. For banks investing in covered bonds that meet certain criteria, the Capital Requirements Regulation sets preferential risk weights to be applied. The recommendations are set out in a report which builds on the EBA's 2014 Report on EU covered bond frameworks and capital treatment. The aim of the recommendations is to ensure that only financial instruments which comply with certain harmonized structural, credit risk and prudential standards are capable of being covered bonds, and as such have access to the special regulatory and capital treatment provided. Harmonizing the EU framework on covered bonds is part of the Capital Markets Union initiative launched by the European Commission in September 2015

Read more.

Over the past month, President-elect Donald Trump has made several selections for key administration posts. Notably, President-elect Trump said he would nominate Steven Mnuchin to serve as Treasury Secretary. Mnuchin was the Trump campaign’s national finance chair. He is also a former Goldman Sachs Partner and led the investor group that acquired the failed IndyMac Bank from the FDIC and operated it as OneWest Bank. While serving as campaign finance chair, Mnuchin outlined some of the economic priorities of the Trump administration: in August he said that a Trump administration would be “focused on lowering business taxes, making sure that US corporations are competitive around the world, bringing back cash from all around the world that’s sitting offshore.” President-elect Trump has also chosen Wilbur Ross as Commerce Secretary, a businessman who has not held any previous public office.

The Council of the European Union announced that it had reached an agreement with the European Parliament on prospectuses for the issuing and offering of securities. Finalization of the agreement comes after the provisional agreement reached on December 7, 2016. The draft Prospectus Regulation is part of the EU's Capital Markets Union plan. The proposed Prospectus Regulation will replace the current EU Prospectus Directive, revising the regime for companies to raise money on public markets or by public offer to potential investors. The aim is to simplify the rules and administrative obligations for companies wishing to issue shares or debt on the market and reducing the costs of preparing a prospectus, thus fostering cross-border investments in the single market, while at the same time still enabling investors to make informed investment decisions. Some compromise has been reached in the final agreement, such that no prospectuses will be required for capital raisings and crowdfunding projects up to EUR1 million. It has also been agreed, among other things, that the threshold beyond which the issuance of a prospectus is mandatory be increased from €5 million to €8 million in capital raised. Below that threshold, issuers can raise capital in accordance with rules set for local growth markets. The Council expects Parliament to approve the regulation at first reading, with the final text then to be submitted for adoption by the Council.  

View the Council's press release.

You may like to view our client note on the European Commission's proposal for a Prospectus Regulation.

The Joint Committee of the European Supervisory Authorities launched a consultation paper on the use of big data by financial institutions. The ESAs are the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority. Big data refers to the collection, processing and use of high volumes of different types of data from various sources, using IT tools and algorithms. Big data is used to reveal patterns or correlations, to generate new ideas or solutions or to more accurately predict future events. The objective of the consultation is for the ESAs to better understand the impact of the increased use of big data on the financial industry and to assess whether any supervisory or regulatory actions are needed. The ESAs do not consider that the existing EU legislation on data protection, competition, consumer protection and sectoral financial services regulations explicitly addresses big data. The discussion paper seeks feedback on whether there is sufficient flexibility in the existing legislation to cover big data, whether there are any gaps and how the existing legislation impacts the use of big data by the financial services sector. Responses to the consultation are requested by March 17, 2017. The ESAs expect to publish their decision on next steps, if any, before the end of 2017. 

View the Discussion Paper. 

The International Organization of Securities Commission published its final Report outlining Guidance on reporting in compliance with its Principles for Financial Benchmarks. The purpose of the Guidance is to increase the consistency and quality of reporting by Benchmark Administrators on their compliance with the Principles, which were published in July 2013. The Principles outline a set of recommended practices that should be implemented by Benchmark Administrators and Submitters. The Report follows a survey of 29 benchmarks conducted by IOSCO, to identify any relevant challenges and issues, on topics such as the status of their implementation of the Principles and the number of benchmarks they administered. IOSCO developed the Guidance on the feedback received.  

View the Report.

View the Principles.