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.

The European Banking Authority published technical advice to the European Commission under the Bank Recovery and Resolution Directive on the classes of arrangements to be protected in a partial property transfer. A partial property transfer occurs when some but not all of the assets, rights and liabilities of a failing firm are transferred to a new entity. Under the BRRD, the European Commission must adopt legislation that specifies which arrangements must be safeguarded to prevent linked liabilities, rights and contracts of a failing firm from being split in a partial property transfer. The EBA advises that a list of arrangements is not feasible because it would need to be exhaustive to capture the different legal frameworks in Member States, in particular, insolvency laws as well as any future developments. Instead, the EBA specifies the arrangements according to rules and definitions in a more specific way than the provisions of the BRRD itself. The criteria for whether an arrangement is within scope of the protection include the type, scope, economic purpose, the counterparties and the governing law of the arrangements. The EBA also recommends distinguishing between a core category of arrangements that should be protected in any event and others where the protection would depend on additional criteria and the specific circumstances. The EBA also advises that certain arrangements that would impair the feasibility of a partial property transfer resolution strategy should be excluded from protection. Finally, the EBA considers that where the BRRD text is unclear, resolution authorities should have the power to interpret the scope of the safeguards restrictively.

View the EBA’s advice.

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.

The Prudential Regulation Authority published a consultation paper on proposals to transfer additional parts of the PRA rules that are in the FS Handbook into the stand-alone PRA Rulebook. The PRA is 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 Financial Conduct Authority. The current consultation covers rules for financial conglomerates, third country groups, group risk systems and regulatory reporting. The consultation closes on November 13, 2015. It is expected that the new online PRA Rulebook will be available before the end of 2015.

View the consultation paper.
 

The US Commodity Futures Trading Commission issued a time-limited no-action letter, again extending relief to non-US swap dealers registered with the CFTC from certain transaction-level requirements under the Commodity Exchange Act. This extension builds on similar relief previously granted by the CFTC in 2014 and provides that the CFTC will not take an enforcement action against non-US swap dealers for failure to comply with the specified transaction-level requirements. Subject to the limitations laid out, the relief is effective until the earlier of September 30, 2016 or the effective date of any CFTC action with respect to relief for non-US swap dealers from certain transaction- level requirements.

View the CFTC 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.

The Prudential Regulation Authority and Financial Conduct Authority published near-final rules on the Senior Manager and Certification regime for UK branches of EEA and non-EEA banks and PRA-designated investment firms. The new rules for all UK firms and branches of non-UK firms come into effect on March 7, 2016. Firms must notify the regulators by February 8, 2016 as to which individuals will be senior managers under the new regime. The regulators cannot make final rules until related legislation has been passed later this year. However, to give non-UK firms as much time as possible to implement the required changes, the regulators have decided to publish the near-final rules now. Amongst the changes included in the near-final rules are: (i) replacement of the FCA Overseas Branch Senior Management function with a new Executive Director function and a new Other Local Responsibility function; (ii) revised FCA guidance on remote booking; and (iii) clarifications on when an individual located outside of the UK who is involved in the activities of the branch might need to become approved as a senior manager.

View the PRA’s Policy Statement.  

View the FCA’s Feedback Statement.

The European Securities and Markets Authority published four reports which make recommendations for improving the framework of the European Market Infrastructure Regulation. The reports provide ESMA’s input into the European Commission’s review of EMIR. ESMA makes the following recommendations, amongst others: (i) streamlining the process for determining clearing obligations; (ii) introduction of a mechanism to temporarily suspend the clearing obligation; (iii) removal of the frontloading requirement; (iv) reconfiguration of the exemptions for intragroup transactions; (v) replacement of the current system for equivalence determinations for third country CCPs with a system based on Regulatory Technical Standards which includes powers to deny or suspend the recognition of a third country CCP; (vi) clarification of when new activities and services are not covered by a CCP’s initial authorization; (vii) granting ESMA increased supervisory and enforcement powers over trade repositories; (viii) the identification of quasi-financial entities, for example, hedge funds or some alternative investment funds, to prevent confusion with other non-financial counterparties, such as corporates; (ix) further details on the rules for implementing the counter-cyclical tools adopted by CCPs for margins and collateral; and (x) clarification of the provisions on segregation and portability by RTS.

View the ESMA reports.

The UK Payment Systems Regulator published final guidance on its concurrent competition powers and on its approach to market reviews. The PSR has concurrent competition powers with the Competition and Markets Authority. The final guidance on the PSR’s powers and procedures under the Competition Act 1998, known as the CA98 Guidance, explains how the PSR will use its concurrent competition powers for participation in payment systems within the UK, in particular the enforcement processes it will follow and how they relate to its other powers and duties. The final guidance on the PSR’s powers and procedures for market reviews, market studies and market investigation, known as its Markets Guidance, explains the PSR’s powers to carry out market reviews, how the PSR will choose which powers to use, how the PSR will carry out market reviews and studies, including its approach to disclosure and use of information and how the PSR will make market investigation references.

View the CA98 Guidance.

View the Markets Guidance.

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 7, 2015, the Comptroller of the Currency Thomas J. Curry gave a speech at a conference sponsored by the Federal Home Loan Bank of Chicago, entitled "Leading Toward the Future; Ideas and Insight for a New Era." In that speech, Mr. Curry discussed the ways in which innovation can benefit the financial system, the crucial role banks play in spurring such innovation, and efforts the OCC is undertaking to better comprehend the benefits and risks of innovative products and services. Mr. Curry noted that the OCC must develop a robust process in order to evaluate new approaches and encourage responsible innovation, while ensuring appropriate risk management and compliance with laws and regulations.

View the press release.

The International Organization of Securities Commissions published its final report on post-trade transparency in the Credit Default Swaps market. The report discusses the impact of mandatory post-trade transparency in the CDS market generally, including the disclosure of price and volume of individual transactions. The report states that member jurisdictions should take further steps, including adopting legislation or implementing other legal powers where necessary, to enhance post-trade transparency in the CDS market.

View the report.

The European Banking Authority published final translations of certain of its Guidelines which are required under the Bank Recovery and Resolution Directive. The Guidelines are on: (i) the interpretation of the different circumstances in which a firm will be considered as failing or likely to fail; (ii) the minimum list of “critical” services or facilities that are necessary to enable a recipient to operate a business transferred to it; (iii) the asset separation tool, which provides guidance on the assets that may be transferred to an asset management vehicle (known as a “bad bank”); and (iv) the sale of business tool, which specifies how national regulators can deviate from standard marketing requirements for the sale of a business under resolution, if that failure presents a material risk to financial stability.

View the Guidelines on failing or likely to fail.

View the Guidelines on critical services.

View the Guidelines on asset separation tool.

View the Guidelines on the sale of business tool.
 

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.

The European Commission issued a press release dated July 24, 2015 announcing its intention to amend the draft Implementing Technical Standards on additional monitoring metrics for liquidity reporting under the Capital Requirements Regulation. The draft ITS set the amount and quality of capital that a bank must hold to absorb losses and also sets a general liquidity requirement for banks. The main amendment to the draft ITS concerns the removal of the “maturity ladder” template and its related instructions. This template lists the maturity of liquid assets as well as the expected timing of cash inflows and outflows for firms according to 22 timelines ranging from overnight to over 10 years. The amendment will ensure that the draft ITS aligns with the definition of “liquid assets” in the Commission’s Delegated Regulation on the liquidity coverage requirement for banks which includes the liquidity coverage ratio and the liquidity buffer. The Commission also intends to amend the proposed date of application of the draft ITS from July 1, 2015 to January 1, 2016.

View the press release.

The European Commission announced that it had adopted legislation which, once it comes into force, will make it mandatory to clear certain OTC interest rate swaps through CCPs. The obligation will apply to fixed-to-float IRS, known as plain vanilla IRS derivatives, float-to-float swaps, known as basis swaps, forward rate agreements and overnight index swaps which are denominated in euro, pounds sterling, Japanese yen or US dollars. The legislation is now subject to scrutiny by the European Parliament and the Council of the European Union. Mandatory clearing of these derivatives contracts represents the first mandatory clearing obligation under the European Market Infrastructure Regulation. It is expected that the European Securities and Markets Authority will in the near future propose mandatory clearing obligations for other types of OTC derivatives.

View the announcement.

View the Shearman & Sterling client note, "EU Clearing Obligation for Interest Rate Swaps Looms".

The US Securities and Exchange Commission adopted final rules under Dodd-Frank providing for the registration of security-based swap dealers and major security-based swap participants. Under the final rules, security-based swap dealers and major security-based swap participants, collectively referred to as SBS Entities, will be granted conditional registration status after filing an application with the SEC and providing certain senior officer certifications, pending the SEC’s review of the application. The SEC will then review the application to either grant ongoing registration or institute proceedings to deny registration to the SBS Entity. The registration process requires the submission by an SBS Entity of information about its business activities, structure and background as well as information about their control affiliates. Although the final rule will become effective 60 days after publication in the Federal Register, the compliance date for the final rules will depend on the timing of implementation of certain other security-based-swap-related final rules.

Additionally, on August 5, 2015, the SEC issued proposed rules, which would provide a process for a registered SBS Entity to apply to the SEC for an order permitting the SBS Entity to continue effecting security-based swaps through an associated person who is subject to a statutory disqualification. The SEC may issue an order granting such relief if it would be consistent with the public interest to permit such a person to be engaged in effecting security-based swaps notwithstanding the statutory disqualification. Comments on the proposed rule are due 60 days after publication in the Federal Register.

View the press release.
 

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

The Prudential Regulation Authority published new waivers for firms on the notifications required for depositor protection. The recent changes require firms to notify all depositors of the limit change from £85,000 to £75,000 by September 1, 2015 and provide the Information Sheet to depositors between January 1 and July 1, 2016. The PRA’s preference is that firms send out the notification of changes to all depositors by September 1, 2015 and do not send out the Information Sheet or exclusions notification before January 1, 2016. However, to relieve some of the burden on firms, the PRA will allow firms to send the deposit limit change notification by September 1, 2015 to any depositor who is no longer covered by the depositor protection scheme and any depositor who holds aggregate eligible deposits of over £50,000 and either: (i) make the required systems or other changes to ensure that no Information Sheets or exclusions notifications are sent to depositors prior to January 1, 2016; or (ii) amend the Information Sheet to the new limit of £75,000 and send it with the exclusions notification on account opening and as an annual mailing between now and July 1, 2016.

View the modification by consent.

The European Securities and Markets Authority published its technical advice to the European Commission under the Regulation on improving securities settlement in the European Union and on central securities depositories, known as CSDR. The technical advice will be considered by the Commission in its preparation of delegated acts which it is required to pass under the CSDR. The technical advice is on penalties for settlement fails and on the substantial importance of a Central Securities Depository. Under CSDR, there is an obligation to settle instructions on the intended settlement date and a daily cash penalty applies for any failed settlement. ESMA’s technical advice is on the parameters for calculating the basic amount of the cash penalty, including the circumstances which may justify an increase or a reduction in the basic penalty amount. An EU passport is provided for under the CSDR which allows an EU-registered CSD to provide its services in any EU member state. Cooperation arrangements are required to be established between the home and host member states for the supervision of the CSD, in particular where the activities of the CSD are of “substantial importance for the functioning of the securities markets and the protection of investors” in the host member state. The Commission’s delegated act is required to set out which operations of a CSD could be considered of substantial importance.

View the technical advice.

The European Banking Authority published a consultation paper including draft Regulatory Technical Standards on the procedures for excluding a firm’s transactions with Non-Financial Counterparties established in non-EU countries from the own funds requirements for Credit Valuation Adjustment risk under the Capital Requirements Regulation. A firm’s transaction with a NFC is excluded from the own funds requirements for CVA risk under the CRR, whether or not the NFC is established in the EU. This is the case as long as transactions do not exceed the clearing threshold specified in the European Market Infrastructure Regulation. As NFCs established in non-EU countries are not subject directly to EU regulation, the draft RTS clarify that firms are responsible for: (i) taking the necessary steps to identify all NFCs under this exemption and calculating accordingly their own funds requirements for CVA risk; (ii) ensuring that exempt counterparties established outside the EU would qualify as NFCs if they were established in the EU; and (iii) ensuring that counterparties calculate the clearing threshold according to the relevant provisions in EMIR and do not exceed those thresholds. The draft RTS align the treatment of NFCs established in a non-EU country with the treatment of NFCs established in the EU. Comments are due by November 5, 2015.

View the consultation paper.

The European Commission published a report on its assessment of the appropriateness of the rules governing the levels of application of the prudential requirements under the Capital Requirements Directive and the Capital Requirements Regulation, together CRD IV. In the EU, subject to certain exceptions, the supervision of a banking group which includes several banks or investment firms is undertaken at the level of the entire banking group (so called consolidated supervision) as well as at the individual level. The outcome of the assessment is that the Commission does not think that it is appropriate to propose amendments to the rules at this time as consideration needs to be given to the impact of the Single Supervisory Mechanism, implementation of the liquidity coverage requirement and the application of the Bank Recovery and Resolution Directive. 

View the report.

The US Office of the Comptroller of the Currency issued a bulletin clarifying its expectations regarding the extent to which national banks and federal branches or agencies of foreign banks may make or take delivery of a physical commodity to hedge commodity derivatives risks. Among other things, the bulletin includes guidance on the calculation required to determine whether physical hedging activities are a nominal portion of risk management activities. Pursuant to the OCC bulletin, physical hedging positions are considered "nominal" if the bank’s commodity position is no more than 5 percent of the notional value of the bank’s derivatives that: (i) are in that particular commodity; and (ii) allow for physical settlement within 30 days. The guidance also reiterates the OCC’s expectation that a bank, prior to engaging in physical commodity hedging activities, should submit to the OCC a detailed plan for such activities and receive from the OCC a prior written supervisory nonobjection.

View the OCC bulletin.

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.
 

The UK government announced the launch of the Financial Advice Market Review which will be led by HM Treasury and the Financial Conduct Authority and include a separate expert advisory panel made up of leading individuals from financial services providers, financial advisors and consumer representatives. The review will assess the current regulatory and legal framework for the provision of financial advice and guidance to consumers and its effectiveness in ensuring access to the information, advice and guidance for consumers. The review will gather a broad range of initial evidence and then conduct the assessment on narrower terms according to where the advice gap is most evident. The initial evidence gathering will request examples of problems in obtaining advice in investments, savings, pensions and retirement income products, mortgages, consumer credit and general insurance. A consultation is expected to begin around the start of Q3 2015 and proposals are expected to be produced before the Budget is announced in 2016.

View the terms of reference.

The UK Payment Systems Regulator published an update on the work it has done to ensure that access, direct or indirect, to payment systems is fairer and also identified next steps to be taken. The PSR has introduced new access and reporting rules for operators and has imposed a disclosure obligation on the four main sponsor banks providing indirect access. The PSR will continue to work with operators and sponsor banks to help them adapt to the new regulatory requirements and will publish the findings from its review of their compliance reports later in 2015. The PSR launched a market review into the supply of indirect access to market systems and aims to publish an interim report on the review by January 2016 and a final report by May 2016.

View the report.
 

The European Banking Authority published a call for evidence under the Capital Requirements Regulation on Small and Medium Enterprises and the related capital reduction for loans to SMEs, also known as the Supporting Factor. The Supporting Factor allows banks to counterbalance the rise in capital resulting from the capital conservation buffer. Under the CRR, banks should use the capital relief produced through the Supporting Factor exclusively to provide an adequate flow of credit to SMEs in the European Union. The call for evidence aims to collect views from stakeholders and the industry to contribute to the report to the European Commission on lending trends and lending conditions for SMEs, as well as the potential risks associated with SMEs in the context of capital reduction. The final report on SMEs and the Supporting Factor will be published by the EBA in the first quarter of 2016. Responses to the call for evidence are due by October 1, 2015.

View the call for evidence.

An Amending Regulation which amends the Regulation with Implementing Technical Standards on instructions, templates and definitions for the supervisory reporting of institutions under the Capital Requirements Regulation was published in the Official Journal of the European Union. The amendments do not include any substantive changes to the original Regulation and relate only to the replacement of templates in the annexes of the Regulation. The changes aim to enhance precision in the submission, definitions and instructions relating to the supervisory reporting of institutions.

View the Amending Regulation.

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 Prudential Regulation Authority published a Policy Statement which includes final rules which will allow depositors affected by the recent change in level of deposit protection to adjust to the new limit without loss of interest or incurring any penalties. The PRA announced on July 3, 2015 that the existing £85,000 level of deposit protection will change to £75,000 after December 31, 2015. Depositors that are contractually tied into products with balances above £75,000, either currently or at product maturity, will be able to request, until December 31, 2015, to withdraw funds between the old and new limits. Firms are prohibited from requiring a depositor making such a request to close an entire account unless the funds are placed into a new product with similar terms. A firm must return funds to a depositor within the earlier of two months of the request or by January 31, 2016. The PRA also published a revised Supervisory Statement on depositors and dormant account protection which now includes the PRA's expectations of firms regarding the definition of "affected person", notification requirements, withdrawal of affected funds and the charges, penalties and loss of interest.

View the Policy Statement.

View the amended rules.

View the revised Supervisory Statement. 

The European Securities and Markets Authority published a consultation paper on draft Regulatory Technical Standards for European Long-Term Investment Fund Regulation. An ELTIF is a new kind of fund vehicle which aims to contribute to financing the sustainable growth of the European Union's economy through targeting long-term investment.  To achieve this aim, ELTIFs are subject to various rules concerning the types of assets in which they can invest. For example, an ELTIF should invest at least 70% of its capital in “eligible investment assets” (which are generally illiquid).  ELTIFs are EU AIFs managed by authorized AIFMs and are therefore additionally subject to the AIFMD rules. The draft RTS aim to determine amongst other things: (i) the characteristics of the facilities made available to retail investors such as those for making subscriptions, payments to unit or shareholders, or repurchasing or redeeming units or shares; (ii) given that an ELTIF may not use financial derivative instruments except where it solely serves the purpose of hedging risks inherent to other investments of an ELTIF, the criteria for establishing the circumstances in which financial derivative instruments solely serve hedging purposes; and (iii) the circumstances in which the life of an ELTIF is considered to be sufficient in length. ELTIFs are expected to increase the volume of non-bank finance for companies investing in the European Union.

View the consultation paper.

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 European Securities and Markets Authority published its Advice to the European Commission, Parliament and Council on the potential extension of the EU passport to non-EU countries under the Alternative Investment Fund Managers Directive. It also published its Opinion on the functioning of the EU passport under the AIFMD and on the operation of the National Private Placement Regime. Under current rules, non-EU Alternative Investment Fund Managers and EU AIFMs of non-EU Alternative Investment Funds are only able to market their funds into member states when permitted by the relevant NPPR. ESMA has now assessed six non-EU jurisdictions: Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the US. ESMA's Advice states that there are no obstacles for extending the passport to Guernsey and Jersey AIFs and AIFMs. The same applies to Switzerland, pending certain amendments to the Swiss Federal Act on Stock Exchanges and Securities Trading. ESMA states that there is currently a lack of evidence for an appropriate assessment to be made in respect of Hong Kong, Singapore and the US, though it will complete its assessment of these jurisdictions as soon as possible. An assessment of other jurisdictions will also be undertaken. ESMA's Opinion states that some issues have been identified related to the use of the EU passport, including divergent approaches to marketing rules. The Opinion concludes that there is insufficient evidence to show that either the passport or NPPR have raised any major issues in the functioning and implementation of the AIFMD framework. ESMA recommends that a further Opinion on the functioning of the passport and the NPPR is prepared after a longer period of implementation has elapsed in all Member States.

View the Opinion and Advice.

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 US Federal Financial Institutions Examination Council, a formal interagency body that prescribes reporting standards for financial institutions, of which the US Board of Governors of the Federal Reserve System, the US Office of the Comptroller of the Currency and the US Federal Deposit Insurance Corporation (the "agencies") are members, approved for publication a proposal to extend, with certain revisions (including revisions to the officer declaration requirement), the Foreign Branch Report of Condition (FFIEC 030 and FFIEC 030S).

The FFIEC 030 collects information regarding the structure and geographic distribution of assets, liabilities and off-balance-sheet data of foreign branches of insured US banks and savings associations. The FFIEC 030S (the Abbreviated Foreign Branch Report of Condition) collects financial data items for smaller, less complex branches. Included in the proposed revisions is an amendment to the officer declaration requirement. Currently, the report must be signed by an officer who states that the report is true and correct to the best of his or her belief. The amendments would make explicit a requirement that the officer who signs the declaration must be an officer of the parent US institution, and the new form of declaration would state not only that it is true and correct to the best of the officer’s knowledge and belief, but also that the report has been prepared in conformance with FFIEC instructions. Other amendments would reduce the required information if the single-country consolidation option is elected and add a field on the cover page for the institution to indicate whether the branch meets the criteria for annual or quarterly filing. The proposal would be effective as of the December 31, 2015 report date. Comments are due by September 28, 2015.

View the proposal.

The Financial Conduct Authority published the results of its thematic review into the oversight and control of financial benchmark activities. The review assessed the extent to which firms had responded to concerns and issues highlighted in recent benchmark enforcement cases, whether firms had implemented appropriate oversight and controls to manage the risks involved in their benchmark activities and the understanding within firms of the International Organization of Securities Commissions' Principles for Financial Benchmarks. The review found that all of the 12 banks and broking firms involved in the review had taken steps to change their approach to benchmark activities but that work was still required by all the firms and includes six key messages for firms involved in benchmark activities, which are: (i) firms need to ensure that they identify all of the activities which constitute benchmark activity or could affect a benchmark; (ii) senior management in firms need to act quickly to implement improvement plans; (iii) firms need to strengthen their governance and oversight of benchmark activities; (iv) further work is required on identifying and managing conflicts of interest; (v) robust controls need to be established for in-house benchmarks; and (vi) firms exiting benchmark activities need to give due consideration to the wider impact of their actions. The report sets out good and bad practices that were observed at the firms assessed by the FCA. The FCA expects those firms that were provided feedback during the review to act to make the necessary improvements and for all firms and users of benchmarks to consider the key messages and results of the review.

View the report.

The International Organization of Securities Commissions published a report which sets out the findings of its review on the progress by countries in adopting legislation, regulation and policies for derivatives market intermediaries as set out in the IOSCO “International Standards for Derivative Market Intermediary Regulation.” The Standards cover the scope of regulatory reform, registration requirements, capital standards for non-prudentially regulated DMIs, conduct of business standards, business supervision standards and recordkeeping standards. The review found that most jurisdictions are in the process of implementing legal frameworks which cover the same areas as the Standards and recommends that an implementation assessment need not be undertaken before the end of 2016.

View the Report.

The Prudential Regulation Authority published: (i) a Policy Statement on assessing capital adequacy under Pillar 2; (ii) a Statement of Policy on the PRA’s methodologies for setting Pillar 2 capital; (iii) a Supervisory Statement on Pillar 2 reporting; and (iv) a Supervisory Statement on the Internal Capital Adequacy Assessment Process that must be undertaken by firms and the Supervisory Review and Evaluation Process conducted by the PRA. The documents are applicable to banks, building societies and PRA-designated firms. Pillar 2 aims to ensure that firms have sufficient capital to cover potential risks not sufficiently addressed in the prescriptive Pillar 1 requirements. The Pillar 2 framework enters into force on January 1, 2016. The PRA's Policy Statement on assessing capital adequacy under Pillar 2 contains feedback received on its consultation paper of January 2015 on proposals to enhance transparency and accountability in setting Pillar 2 capital requirements. The Policy Statement explains that firms must carry out an ICAAP in accordance with the PRA's rules and it is not sufficient to only replicate the PRA's methodologies as the ICAAP is the responsibility of a firm's management body.

View the Policy Statement.

View the Statement of Policy.

View the Supervisory Statement on Pillar 2 reporting.

View the Supervisory Statement on the ICAAP and SREP.

The European Banking Authority launched a consultation on proposed guidelines for cooperation agreements between deposit guarantee schemes. Under the recast Deposit Guarantee Schemes Directive, designated authorities or deposit guarantee schemes must enter into written cooperation agreements. The proposed guidelines set out the objectives and minimum content of such cooperation agreements as well as a multilateral framework cooperation agreement which deposit guarantee schemes or designated authorities could adhere to unless they enter into bilateral agreements which go beyond the level of detail required by the framework agreement. In addition, the EBA proposes a sequence and timing framework governing when an EU host deposit guarantee scheme pays depositors of an EU branch of a non-EU headquartered firm. The consultation is open until October 29, 2015.

View the consultation paper.

The European Banking Authority published a table setting out metrics to identify Global Systemically Important Institutions in the EU. The table sets out the size, interconnectedness, substitutability, complexity and cross-jurisdictional activity of the largest 37 banks in the EU whose leverage ratio exposure measure exceeded €200 billion in 2014. This information is disclosed annually by the EBA. G-SIIs are subject to higher capital requirements and their identification as G-SIIs is the responsibility of their national regulator. A higher capital requirement applies one year after the publication by the national regulator of a bank’s scoring result, allowing the bank sufficient time to adjust to the new buffer requirement. 

View the EBA press release and chart.

The European Systemic Risk Board published two reports on issues to be considered in the review of the European Market Infrastructure Regulation which the European Commission is responsible for conducting by August 17, 2015. The first report is on the efficiency of margining requirements to limit pro-cyclicality and the need to define additional intervention capacity in the area, focussing on margins and haircut setting for CCPs because the technical standards on margin for uncleared derivatives are not yet final. The second report considers the wider ambit of EMIR. In the reports, the ESRB makes several recommendations to the European Commission for the improvement of EMIR, including: (i) binding guidance on the three options available to a CCP for taking into account potential pro-cyclicality of margin requirements; (ii) a less flexible framework for calibrating collateral haircuts; (iii) that CCPs should be required to prepare an overall tolerance for pro-cyclicality policy and be subject to more granular transparency requirements for pro-cyclicality; (iv) a further review of EMIR in 2018; (v) a swift process for removal or suspension of mandatory clearing requirements; (vi) the replenishment of default funds and the skin-in-the-game design under EMIR and at an international level; and (vii) broader access rights for national regulators to trade repository data.

View the first report.

View the second report.

The Financial Conduct Authority has published final guidance for firms on risks to customers from performance management. The guidance applies to all firms with staff that deal directly with retail customers. The guidance is intended to assist firms in ensuring that the risk of misselling from performance management is managed and to monitor performance management, looking for indicators of undue pressure to identify poor practices. The FCA will reconsider the guidance once the Markets in Financial Instruments Regulation and Directive, known as MiFID II, come into effect on January 3, 2017.

View the guidance.

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.