The Financial Conduct Authority published two guides which set out its new approach to classification of firms for conduct supervision. Firms will now be classified as either flexible or fixed portfolio firms according to their size, market presence and customer footprint. Fixed portfolio firms require the highest level of supervision and are the smaller of the population of firms. The guides summarize the FCA's approach that will apply to the two different kinds of firms. The revisions aim to help the FCA to take a more sector-based approach to identifying risk and engaging more widely with market representatives.

View the guide for fixed portfolio firms.

View the guide for flexible portfolio firms.

The Federal Reserve Bank of New York announced that Sarah Dahlgren stepped down as head of the Financial Institution Supervision Group. James Hennessy was named interim head of the Financial Institution Supervision Group.

The Board of Governors of the Federal Reserve System announced the appointment of Federal Reserve Bank of Chicago’s Senior Vice President, Todd Aadland, as its Payments Security Strategy Leader.  Mr. Aadland will lead the initiative to address fraud risk and improve the safety, security and resiliency of the payment system.

View the press release.

The US Commodity Futures Trading Commission Chairman Timothy Massad announced that Eric J. Pan will be the CFTC’s new Director of the Office of International Affairs. Mr. Pan was previously the Associate Director for Regulatory Policy in the US Securities and Exchange Commission’s Office of International Affairs.  At the SEC, he oversaw international regulatory policy and represented the SEC in IOSCO and the Financial Stability Board.  
 
Chairman Massad also announced the retirement of CFTC employee Phyllis Dietz who served as Acting Director of the Division of Clearing and Risk and named Jeffrey Bandman as Acting Director of the Division of Clearing and Risk.

View the press release.

The US Securities and Exchange Commission announced the designation of Robert Cohen and Joseph Sansone as co-chiefs of the Division of Enforcement’s Market Abuse Unit.  The Market Abuse Unit is a national specialized unit that focuses on complex insider trading issues as well as other market trading misconduct and abuse.

View the press release.

The UK Payment Systems Regulator has announced the full membership of the new Payments Strategy Forum. Ruth Evans was appointed chair of the Forum in July this year. The 21 new members, apointed for an initial period of two years, are comprised of individuals who are advocates for consumers, retailers, small and medium-sized businesses, corporations and government, as well as individuals from credit unions, e-money firms and high street banks that are experienced providers of payment services. The Forum has been established to set strategic priorities for the development of innovative payment systems.
 
View the PSR announcement.

The Board of Supervisors of the European Banking Authority announced that Andrea Enria and Adam Farkas, Chairperson and Executive Director of the EBA respectively, would continue in their positions for a further five-year term from 2016 to 2021.  
 
View the EBA announcement.

The Financial Conduct Authority announced the launch of the new Financial Services Register, which aims to make it easier to locate a firm, individual or collective investment scheme or exchange that is regulated by the FCA or Prudential Regulation Authority. Firms that the regulators believe are providing regulated products or services without the necessary authorization are also included in the register for the first time, flagged in red. The Mutuals Public Register and Regulated Covered Bonds Register do not form part of the new register and can be searched separately.

View the new Financial Services Register.
 

The Legal Entity Identifier Regulatory Oversight Committee published proposals for a process for collecting data on parents of legal entities within the Global Legal Entity Identifier System. The LEI ROC is proposing to require entities that have or obtain an LEI to report their ultimate accounting consolidating parent and direct accounting consolidating parent, with the information to be published on the Global LEI System. LEIs are principally used by trade repositories to record derivatives transactions against particular legal entities. This initiative should therefore assist regulators in understanding the overall exposures of corporate groups. It is intended that the process would be phased in, according to priorities yet to be identified, with implementation starting near the end of 2015. The consultation closes on October 19, 2015.
 
View the consultation paper.

The G20 Finance Ministers and Central Bank Governors issued a communiqué highlighting the actions required to achieve the goals of the G20 for this year. The group endorses the Organisation for Economic Cooperation and Development Principles on Corporate Governance, welcomes the progress made on the principles on SME financing and aims to finalize remaining elements of the global financial reform agenda this year. In addition, the OECD published a report prepared by the Financial Stability Board on corporate funding structures and incentives. The report sets out: (i) the growth and differences across countries and regions in nonfinancial corporate debt since the financial crisis; (ii) insights into the incentives that are influencing these trends; (iii) associated financial stability concerns; (iv) the role of macroprudential policies; and (v) potential action and next steps that could be taken, such as the use of macro prudential tools to moderate the risks of corporate leverage growth.

View the communiqué.

View the principles of corporate governance.

View the progress report on principles on SME financing.

View the report on corporate funding structures and incentives.

The Financial Conduct Authority launched a new website for its Handbook of rules and guidance. The Prudential Regulation Authority launched its new website for the new PRA Rulebook. 

View the new FCA website.

View the new PRA website.

View the FCA announcement.

View the PRA announcement.

On August 19, 2015, the SEC named Shelly Luisi the Associate Director in the Division of Corporation Finance. In her new role, Ms. Luisi will oversee the Disclosure Standards Office, which conducts research and assesses the Division of Corporation Finance program created to selectively review public-company filings. She begins her new role in September.

View the press release.

The European Commission published the 2015 Management Plans for the Directorate-General of Economic and Financial Affairs (ECFIN) and the DG for Financial Stability, Financial Markets and Capital Markets Union (FISMA) which replaces the financial services directorates of the DG for Internal Market and Services (which ceased to exist in 2014). These DGs provide specialized services to the European Commission as departments of the Commission. The Management Plans include the mission statements, objectives and strategies. ECFIN’s objectives include to foster jobs, growth and investment and to promote prosperity beyond the EU. FISMA’s objectives include to ensure that the EU financial sector is adequately supervised, stable, transparent and is conducive to growth and jobs, that effective investor protection is applied through the use of strict conduct and disclosure rules, and that the banking, insurance and pension sectors are stable and resilient due to adequate prudential, supervisory and resolution regimes.

View the ECFIN Managament Plan.

View the FISMA Management Plan.

The European Stability Mechanism announced the appointment of Juan Rojas as Head of Economics and Market Analysis.

View the ESM press release.

On August 14, 2015, Commissioner Mark P. Wetjen announced his resignation from the US CFTC, effective August 28, 2015. During his time as Commissioner, Mr. Wetjen played a significant role in implementing the Dodd-Frank Act, including the implementation of the first trading mandate for interest rate and credit default swaps.

View the press release.

On August 13, 2015, Amrit Sekhon was named the OCC’s Deputy Comptroller for Capital and Regulatory Policy from October 4, 2015. Mr. Sekhon joined the OCC in 1998 and most recently served as Director for Capital Policy, overseeing the implementation of the Dodd-Frank capital and leverage rules. In his new role, Mr. Sekhon will be the key advisor to Comptroller Curry on domestic and international policies on bank capital. He will further serve as the OCC’s representative for Basel Committee meetings.

View the press release.

On August 11, 2015, the OCC assigned Greg Coleman the role of Deputy Comptroller for Large Bank Supervision. Mr. Coleman joined the OCC in 1989 and became a commissioned national bank examiner in 1994. In his new role, Mr. Coleman joins three other Deputies for Large Bank Supervision and the Deputy Comptroller for International Banking Supervision in overseeing the large complex financial institutions subject to supervision by the OCC.

View the press release.http://www.occ.gov/news-issuances/news-releases/2015/nr-occ-2015-112.html

On August 6, 2015, Stephen W. Warren was named Chief Information Officer at the US Office of the Comptroller of the Currency. He will join the OCC on September 6, 2015.

Linda Cunningham was named the first Chief Risk Officer at the US Office of the Comptroller of the Currency.

The Prudential Regulation Authority published a Policy Statement which sets out further rules that have been migrated from the joint Financial Conduct Authority/PRA Handbook to the PRA’s Rulebook. The PRA began reshaping the materials inherited from the Financial Services Authority to create a Rulebook which contains PRA rules only and follows the split of the FSA into the PRA and the FCA. The Policy Statement includes rules on passporting, regulatory reporting and reverse stress testing and final Supervisory Statements on: (i) the aggregation of holdings for the purpose of the prudential assessment of controllers; (ii) the internal capital adequacy assessment process or ICAAP and the supervisory review and evaluation process or SREP; (iii) guidelines for completing regulatory reports (entering into force on 1 January 2016); and (iv) internal governance. The Supervisory Statements set out the PRA’s expectations of firms in the relevant areas. The PRA has postponed publishing a Rulebook part and a related Supervisory Statement for internal governance of third-country branches because of the impact that the final rules under the Senior Managers Regime for third-country branches will have on those rules and its Supervisory Statement. The PRA intends to launch its online Rulebook before the end of 2015.

View the Policy Statement.
 

Christopher Woolard has been appointed to the FCA Board as Director of Strategy and Competition for a three year term as of August 1, 2015.

Megan Butler, Executive Director of International Banks Directorate at the Bank of England, will undertake a one year secondment as Director of Supervision—Investment, Wholesale & Specialists at the FCA, as of September 1, 2015. Sarah Breeden, Director of Overseas Banks Division will act as Executive Director of International Banks Directorate during Ms. Butler’s absence.

The Federal Reserve Board announced the appointment of Federal Reserve Bank of Chicago Senior Vice President Sean Rodriguez as the Faster Payments Strategy Leader. Mr. Rodriguez will chair the Federal Reserve’s Faster Payments Task Force, comprised of more than 300 payment system stakeholders interested in improving the speed of authorization, clearing, settlement and notification of various types of personal and business payments.

The European Securities and Markets Authority announced the new members of its Consultative Working Group for the Investor Protection and Intermediaries Standing Committee. The new chair of the Committee is Jean-Paul Servais, Chair of the Belgian Financial Services and Markets Authority. The Committee is responsible for work on investor protection in the provision of investment services and activities by investment firms and banks, including the conduct of business rules, distribution of investment products, investment advice and suitability, and for providing technical advice and draft technical standards to the European Commission on relevant issues under the Markets in Financial Instruments Directive.

The International Organization of Securities Commissions published its Thematic Review of the implementation on the timeliness and frequency of disclosure to investors according to Principles 16 and 26 of the IOSCO Objectives and Principles of Securities Regulation. Thirty‑seven jurisdictions participated in the review. Principle 16 relates to issuers and states that there should be full, accurate and timely disclosure of financial results, risk and other information material to the decisions of investors. The review found that there are differences on the type of information that must be disclosed and the timing of the disclosures: listed issuers are more often subject to disclosure requirements compared to other issuers, and disclosure deadlines for listed issuers are tighter. Principle 23 relates to Collective Investment Schemes and states that regulation should require necessary disclosure to evaluate the suitability of a CIS for a particular investor and the value of the investor’s interest in the scheme. The review found that timely disclosure requirements on value, risk reward profile and costs of CISs were found to be in place for all jurisdictions.

View the Review. 

The Bank of England announced the appointment of David Thorburn and Dr Norval Bryson as independent members of the Board of the Prudential Regulation Authority, effective September 1, 2015.

The UK Banking Standards Board announced the appointment of Saker Nusseibeh, CEO of Hermes Investment Management, to its Board from September 2015.

The Markets Committee of the Bank for International Settlements announced that the Foreign Exchange Working Group has been established. The objective of the FX Working Group is to strengthen code of conduct standards and principles in FX markets through the establishment of a single global code of conduct and related principles to ensure increased adherence to the code.

View the announcement.

The Basel Committee and the International Organization of Securities Commissions published final criteria for identifying simple, transparent and comparable securitizations. The aim of the criteria is to assist parties to a securitization to assess the risk involved across similar products, although they do not serve as a substitute for investor due diligence. The criteria are non-exhaustive and non-binding.

View the final criteria.

The Financial Conduct Authority announced that Antonio Simoes, Chief Executive Officer for HSBC in the UK, will become Chair of the FCA Practitioner Panel from August 1, 2015. Mr. Simoes will succeed Alison Brittain, former Group Director of Retail at Lloyds Banking Group.

The UK Government launched a consultation on proposed amendments to the governance and regulatory architecture in line with the announcement made alongside the Queen’s speech in May about a new Bank of England Bill. The proposals include ending the subsidiary status of the Prudential Regulation Authority by bringing it within the BoE and calling it the Prudential Regulation Committee. The PRA’s functions would transfer to the BoE and the PRC would have the responsibility for exercising them, retaining the independence of the PRA to make rules, policies and supervisory decisions. The new PRC would be set up on the same basis as the Monetary Policy Committee of the BoE. Other proposals include: (i) formalizing the working relationship established between HM Treasury and the BoE for coordination in a financial crisis and the development of resolution strategies for banks and large investment firms; (ii) adjusting the statutory status of the Financial Policy Committee from a sub-Committee of the Court of Directors of the BoE to a Committee of the BoE in line with the MPC; (iii) transferring responsibility for setting the BoE’s financial stability strategy from the Court of the BoE to the FPC; and (iv) decreasing the size of the Court and including the new Deputy Governor position for Markets and Banking. The consultation is open until September 11, 2015.

View the consultation paper.

President Barack Obama announced his intent to nominate Dr. Kathryn M. Dominguez to serve on the Board of Governors of the Federal Reserve System. Dr. Dominguez is a Professor of Public Policy and Economics in the Gerald R. Ford School of Public Policy and the Department of Economics at the University of Michigan.

The UK Government announced the appointment of new external members to the Financial Services Trade and Investment Board, the body created in 2013 to ensure that Britain's position as a global finance centre is strengthened. The new external members are: (i) Helena Morrissey, CEO, Newton and Chair, The Investment Association; (ii) Inga Beale, CEO, Lloyd’s of London; (iii) John McFarlane, Chairman, Barclays, and incoming Chairman, TheCityUK; and (iv) Nathan Bostock, CEO, Santander UK.

The FCA announced that Chief Executive Martin Wheatley would be standing down from September 12, 2015. Mr. Wheatley will continue to act as an advisor to the FCA Board until January 31, 2016, particularly on the implementation of the recommendations of the Fair and Effective Markets Review.

The EBA published final guidelines on product oversight and governance arrangements for financial institutions as manufacturers of retail banking products and for distributors of retail banking products – mortgages, personal loans, deposits, payment accounts, payment services and electronic money. The guidelines will apply from January 3, 2017 to all products brought to market after that date as well as to existing products that are significantly changed after that (the EBA does not clarify the meaning of "significantly changed"). The guidelines are addressed to EU national regulators and financial institutions and require the establishment of product oversight and governance arrangements for the design, bringing to market and review of retail banking products over their lifecycle. The guidelines supplement the EBA’s 2011 guidelines on internal governance but do not cover the suitability of products for individual consumers.

View the final guidelines.

View the guidelines on internal governance.
 

The UK Payment Systems Regulator announced that Ruth Evans had been appointed as chair of the Payments Strategy Forum and would take up her role on July 27, 2015. The Payments Strategy Forum will be responsible for identifying and developing initiatives that the industry can work together to deliver innovation. A call for members of the Forum was also issued on the same day as the announcement.

The Board of IOSCO published a report titled SME Financing through Capital Markets, which provides recommendations for regulators to facilitate capital-raising by Small and Medium Enterprises in emerging markets. The report recognizes the obstacles facing SMEs in accessing market-based financing, and examines some of the successful measures applied by regulators to aid SMEs in accessing capital markets. Successful regulatory frameworks and measures include establishing separate equity and fixed income markets with regulatory requirements tailored to SMEs, establishing market advisor and market-making systems and introducing alternative methods of financing such as private equity, venture capital and securitization. The IOSCO Board will have a roundtable on the issue of SME access to market-based finance at its next meeting in Toronto in October 2015.

View the report.

George Osborne, Chancellor of the Exchequer, wrote to Mark Carney, Governor of the Bank of England, specifying the remit and recommendations for the FPC in the coming year. Once a year, the Chancellor is required to set out the economic policy of the Government and make recommendations to the FPC about matters that the FPC should consider as relevant to BoE’s financial stability objective and the FPC’s responsibility for achieving that objective. In the letter, the FPC is requested to consider a broad range of risks to the UK financial system, including identifying, monitoring and addressing systemic non-financial risks such as cyber risks. The Chancellor’s recommendations included that the FPC: (i) should support the Government’s strategy for making the UK’s financial services sector the best regulated and most competitive in the world, including taking into account the promotion of competition and innovation in all sectors of the industry and retaining the UK’s position as a leading international financial center; (ii) should consider whether there is a risk of public funds being required and should seek to minimize such risks; and (iii) should note in its public documents how it has had regard to the policy settings and forecasts of the Monetary Policy Committee.

View the letter.

The FCA announced that it has appointed Jonathan Davidson as its new Director of Supervision for retail and authorizations beginning in the third quarter of 2015.

The European Banking Authority published an Opinion on the establishment of a European framework for qualifying securitizations. The Opinion is addressed to the European Commission, which issued a call for advice in January 2014 to identify the most appropriate characteristics in relation to categories of underlying assets and certain structural and transparency features for “high-quality” transactions. The EBA was asked to assess whether it would be appropriate to grant preferential treatment to high-quality securitizations, so as to boost EU securitization markets. The Opinion makes five recommendations, namely to: (i) conduct an all-inclusive review of the regulatory framework for securitizations and other investment products such as covered bonds and whole loan portfolios; (ii) create a framework for qualifying securitizations; (iii) establish criteria defining qualifying term securitizations; (iv) establish criteria defining qualifying asset-backed commercial paper securitizations; and (v) re-calibrate the Basel Committee on Banking Supervision 2014 securitization framework applicable to qualifying securitization positions. The Opinion states that these recommendations on the implementation of a qualifying securitization framework should be reconsidered subject to any progress made by the Basel Committee on Banking Supervision and International Organization of Securities Commission on the definition of a simple transparent and comparable securitizations framework. An accompanying report on qualifying securitization was also published by the EBA and describes the analysis carried out in order to reach the recommendations.

View the Opinion.

The UK Competition and Markets Authority announced that it appointed Dr. Michael Grenfell to its board as the new Executive Director for Enforcement.

View the press release.

The European Securities and Markets Authority published Q&As on anti‑money laundering and terrorist financing in investment‑based crowdfunding platforms. The Q&As aim to encourage common supervisory approaches and consistent application of anti‑money laundering and terrorist financing rules to investment‑based crowdfunding platforms. The Q&As deal with questions related to the treatment of investment‑based crowdfunding under the Anti‑Money Laundering Directive, the differences in risk profiles of platforms operating inside or outside a regulatory regime or within the scope of MiFID, and how to mitigate risks.

View the Q&As.

The European Securities and Markets Authority published final draft implementing technical standards and Regulatory Technical Standards on requirements for: (i) the authorization of investment firms, including template forms; (ii) requirements for passport notification, including template forms and procedures; (iii) information for registration with ESMA of third country firms; (iv) the format of information to be provided by third country firms to their EU clients on the submission of disputes to the jurisdiction of a court or arbitral tribunal in a Member State; and (v) cooperation between national regulators including the exchange of information. ESMA is required to prepare the ITS and RTS under the Markets in Financial Instruments Regulation and Directive, which will apply from January 3, 2017. ESMA will provide the remaining technical standards to the European Commission before the end of 2015. 

View the report.

The Board of Supervisors of the European Securities and Markets Authority has appointed the following individuals as chairs of its standing committees: (i) Lourdes Centeno to chair the Review Panel; (ii) Hannelore Lausch to chair the Corporate Reporting Standing Committee; (iii) David Lawton to chair the Market Data Standing Committee; (iv) Elizabeth Roegele to chair the Secondary Markets Standing Committee; (v) Jean-Paul Servais to chair the Financial Innovation Standing Committee; and (vi) Martin Wheatley to chair the Investor Protection and Intermediaries Standing Committee. 

View the press release.

The Financial Conduct Authority issued an interactive discussion paper to start a debate and encourage firms to deliver smarter communications to consumers in more effective ways. The discussion paper states that for a market to perform well, engaged and informed consumers are needed. The FCA recognizes that some methods of communication can overwhelm, confuse and even deter consumers from making effective choices about financial products and services. The FCA is committed to ensuring that firms operate with due regard for their consumers, that communications are not misleading and that communications are transmitted in a clear and fair way. The FCA also published research alongside the discussion paper. Responses to the discussion paper are due by September 25, 2015.

View the discussion paper and research.

The Payment Systems Regulator issued a call for input on card payment systems. The PSR seeks views on issues related to payment systems in the UK and in particular on interbank payment systems. The PSR is interested in hearing about the impact of new EU regulations which introduce new rules and implement caps on interchange fees, and the effect that these regulations might have on the way in which the UK card payment systems operate. The call for input also wishes to obtain views on general trends within card payment systems and gather information on how the interests of service users are considered in decision making. Responses to the call for input are due before July 31, 2015. 

View the call for input.

The Prudential Regulation Authority and the Financial Conduct Authority launched a consultation on proposals to reform the Credit Unions Sourcebook in the Handbook. The PRA intends to replace the current Credit Unions Sourcebook that was inherited from the Financial Services Authority with a new Credit Unions Rulebook in the PRA Rulebook which will focus on the safety and soundness of credit unions and will reflect the now broader range of financial services offered by credit unions. The FCA intends to replicate many of the provisions of the Credit Unions Sourcebook. The consultation closes on September 30, 2015. 

View the consultation.

The Federal Reserve Board announced that Brian F. Madigan will become the new secretary of the Federal Open Market Committee and deputy director of the Federal Reserve Board’s Division of Monetary Affairs.

View the Federal Reserve Board press release.

The International Organization for Securities Commissions issued a press release further to its recent annual conference, reporting that important organization and policy issues have been discussed, including IOSCO’s strategic direction to 2020 as well as its action plans. IOSCO aims to reinforce its position as a global reference for securities regulation and aims to implement 43 new initiatives encompassing six priority areas: (i) research and risk identification; (ii) standard setting and developing guidance; (iii) implementation monitoring; (iv) capacity building; (v) co-operation and information exchange; and (vi) collaboration and engagement with other international organizations.

View the press release.