The Joint Forum (made up of the Basel Committee on Banking Supervision, the International Organization of Securities Commissions and the International Association of Insurance Supervisors) launched a consultation on developments in credit risk management across the banking, securities and insurance sectors. The consultation document includes an analysis of responses to a survey conducted in 2013 which included supervisors and firms on credit risk management and four recommendations to supervisors: (i) supervisors should be cautious against over-reliance on internal models for credit risk management and regulatory capital; (ii) supervisors should be aware of the growth of risk-taking behaviors, for example, in the syndicated leveraged loan market, and the need for firms to have appropriate risk management processes; (iii) supervisors should be aware of the growing need for high-quality liquid collateral for margin requirements in derivatives trading; and (iv) supervisors should consider whether firms are accurately capturing CCP exposures as part of their credit risk management. Comments on the paper are requested by March 4, 2015.

View the Joint Forum consultation paper.

The European Securities and Markets Authority published its Feedback Statement on its consultation on the clearing obligation for non-deliverable forwards. ESMA confirmed that it has decided against moving forward, at this time, with mandatory clearing requirements for NDFs following the concerns raised by industry participants during the consultation which include: (i) the timing of entry into force of the proposed clearing obligation particularly when participants are currently dealing with implementing processes for compliance with the clearing obligation for interest rate swaps and credit default swaps; (ii) that only one EU CCP is authorized to clear NDFs; (iii) the lack of experience globally of NDF clearing; (iv) the importance of international consistency in implementation of the proposed clearing obligation; and (v) the lack of a consistent definition for FX derivatives across the EU. ESMA originally proposed regulatory technical standards for clearing NDFs with an implementation schedule beginning in Q4 2015. ESMA is of the view that more time is needed to properly consider those concerns, but stressed that its current position did not exclude the possibility of it proposing a clearing obligation for NDFs in future.

View ESMAs feedback statement.

The International Organization of Securities Commissions announced the launch of a project aiming to obtain greater understanding of the credit rating industry and certain other products or services available other than traditional credit ratings publicly disclosed by credit rating agencies. The project will consider products such as other ratings provided by credit rating agencies (for example, private, one-time or regional ratings), scoring, credit and rating assessments and research. Relevant parties are requested to respond to the request for information by March 23, 2015.

View the announcement.

The US Financial Stability Oversight Council (“FSOC”) adopted certain changes relating to the process of reviewing nonbank financial companies for systemically important financial institution (“SIFI”) designation to make the process more transparent and collaborative. Section 113 of the Dodd-Frank Wall Street and Consumer Protection Act (“Dodd-Frank Act”) enables the FSOC to identify a nonbank financial company for supervision by the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) and be subject to enhanced prudential standards. The changes belong in three categories: (i) improved communication and engagement with companies under consideration by the Council; (ii) better transparency with the public in regards to the designations process, while still protecting sensitive, nonpublic company information; and (iii) improved engagement during the FSOC’s annual reevaluations process.

View the FSOC supplemental procedures.

View the updated Frequently Asked Questions.

The European Commission published a report on the progress made by CCPs in developing technical solutions for the transfer by pension schemes of non-cash collateral as variation margin. Under the European Market Infrastructure Regulation pension schemes that meet certain requirements are exempt from the clearing obligation for a temporary period. The exemption was included in EMIR to provide CCPs with time to develop solutions for the transfer of non-cash collateral by pension schemes to meet variation margin calls. CCPs require highly liquid collateral, mostly cash, as variation margin, but pension schemes are not set up to hold large amounts of cash and would have to amend their business model at high costs to do so. The exemption period may be extended under EMIR to provide CCPs with further time to develop solutions. The Commission’s report assesses the progress made by CCPs to develop solutions and concludes that not enough progress has been made and that imposing the clearing obligation on pension schemes would adversely effect the retirement benefits of future pensioners. The Commission therefore intends to extend the exemption period for a further two years by adopting a Delegated Act.

View the Commission's report.

The European Securities and Markets Authority published its final technical advice on delegated acts under the new Market Abuse Regulation. The European Commission requested the advice from ESMA to assist it in developing the required Delegated Acts under MAR. ESMA’s advice covers: (i) clarification of the indicators of market manipulation; (ii) minimum thresholds for the exemption of certain participants in the emission allowance market from the requirement to publicly disclose inside information; (iii) ways for determining the relevant national regulator for notification of delays in public disclosure of inside information; (iv) clarification on the enhanced disclosure regime for managers’ transactions; and (v) reporting of
infringements. The European Commission must adopt Delegated Acts on these issues so that they enter into force 24 months after MAR entered into force, which was on July 2, 2014.

View ESMA advice.

The UK Financial Conduct Authority published its review of the regulatory regime for crowdfunding. The document sets out the FCA’s approach to regulating loan-based and investment-based crowdfunding platforms, including the new rules introduced in March 2014. The FCA does not, at this stage, intend to amend its rules or approach to supervision of the market but will undertake a full review of the crowdfunding market and regulatory framework in 2016.

View the FCA review document.

The European Securities & Markets Authority published a call for evidence on the impact of the EU Credit Rating Agencies Regulation on the credit rating industry and the development of markets for structured finance instruments. ESMA is seeking evidence of how the Credit Rating Agencies Regulation is achieving the objectives of stimulating competition between credit rating agencies, improving the choice of credit rating agencies available and minimizing conflicts of interests in the industry. The evidence received will be analyzed by ESMA in its development of technical advice to the European Commission as required under the Credit Rating Agencies Regulation. Evidence is required by March 31, 2015 and ESMA must provide its advice by September 2015.

View documents relating to call for evidence.

The SEC named David Grim as Acting Director of the Division of Investment Management, replacing Norm Champ.

HM Treasury published the outcome to its consultation on the leverage ratio framework. The Financial Policy Committee previously recommended that HM Treasury enable the FPC to give directions to the Prudential Regulation Authority to set leverage ratio requirements and buffers for PRA-regulated institutions. HM Treasury’s consultation paper sought views on how to implement the FPC’s recommendations and grant the FPC such powers of direction, and also included draft legislation. The FPC stated that the directions should include a power for the FPC to set a minimum leverage ratio requirement, a supplementary leverage ratio buffer to apply to global systemically important banks and major UK institutions, as well as a countercyclical ratio buffer. The outcome sets out the Government's position in light of the consultation responses, stating that the Government believes the FPC is well-placed to consider the level of leverage in the UK financial system which is prudent, whilst the systm continues to conribute to economic growth. The Government also intends to grant the FPC a power to set supplementary ratio buffers. As for the countercyclical ratio buffer, the Government states that the FPC is required to act proportionally when exercising this power, and that this requirement to act proportionally justifies the granting of this power to the FPC.

View the Outcome.

The UK Government announced that it would be proceeding with the recommendations of the UK Bank of England’s Financial Policy Committee to give the FPC powers of direction over the housing market and the leverage ratio for UK banks. The new powers will enable the FPC to direct the Prudential Regulation Authority and Financial Conduct Authority to require regulated lenders to place limits on residential mortgage lending (owner-occupied only) and direct the PRA to set: (i) a minimum leverage ratio requirement; (ii) a supplementary leverage ratio buffer that will apply to globally systemically important banks and other major domestic UK banks and building societies, including ring-fenced banks; and (iii) a countercyclical leverage ratio buffer. Draft legislation providing for the new FPC powers has been put before the UK Parliament. On February 4, 2015, the FPC published draft policy statements detailing the specific tools, the firms subject to the requirements, timelines for implementation, how the tools might affect financial stability and economic growth, how the FPC intends to take decisions over setting the countercyclical leverage ratio buffer and the proposed calibration of the tools.

View the announcement here.

View the FPC papers.

The European Securities and Markets Authority published an Opinion on the draft of Regulatory Technical Standards on the clearing obligation for itnerest rate swaps under the European Market Infrastructure Regulation. The draft RTS specify details such as the class of OTC derivatives that should be subject to the clearing obligation and the dates from which the clearing obligation takes effect. ESMA’s Opinion follows on from the Commission’s recent communication to ESMA of its intention to endorse the draft RTS with amendments. The amendments proposed by the Commission include postponing the starting date of the frontloading requirement (which is the obligation to clear OTC derivative contracts after a central counterparty has been authorized under EMIR and before the date of application of the clearing obligation), clarifying the calculation of the threshold for investment funds and excluding non-EU intragroup transactions from the clearing obligation. In the Opinion, ESMA addresses the changes made by the Commission to the RTS and, in articular, states that the processes that would exempt non-EU intragroup transactions from the clearing obligation are not appropriate. ESMA states that it can provide technical advice on the issue if requested, so that an alternative solution can be found and delays to the implementation of the clearing obligation can be avoided.

View the Opinion.

The Prudential Regulation Authority published a consultation paper proposing transitional provisions and new rules to the PRA Rulebook, and amendments to the PRA Handbook arising out of rules previously proposed in the Depositor Protection and Policyholder Protection consultation papers published by the PRA in October 2014. The measures proposed under the consultations aim to minimize any possible adverse impact that could be caused to UK financial stability through the failure of a PRA-deposit taker, dormant account fund operator or PRA-authorized insurer. It also aims to ensure an effective compensation system to eligible depositors, dormant account holders and policyholders. The consultation includes new rules on compensation arrangements related to dormant account protection as well as a statement of policy on the PRA's expectations of the Financial Services Compensation Scheme when dealing with dormant accounts. The consultation period ends on February 27, 2015.

View the consultation paper.

Robert E. Rice, Chief Counsel to the US Securities and Exchange Commission (“SEC”) Chair Mary Jo White, announced he will leave the SEC at the end of February.

The CFPB proposed amendments to its mortgage rules to better accommodate responsible lending by small creditors, particularly in rural and underserved areas. If the rules are finalized as proposed, a greater number of financial institutions would be able to offer certain types of mortgages in rural and underserved areas. Among other things, the amendments would: (i) expand the definition of a small creditor; (ii) include mortgage affiliates in the calculation of smallcreditor status; (iii) expand the definition of “rural” areas; and (iv) provide grace periods for small creditor status. The proposed rules will be open for public comment until March 30, 2015.

View the proposal.

The Board of Governors of the Federal Reserve System (“Federal Reserve Board”) issued a proposed rule expanding the applicability of the Small Bank Holding Company Policy Statement (“Policy Statement”) and reducing reporting requirements for certain bank holding companies and savings and loan holding companies. The Federal Reserve Board further adopted an interim final rule excluding savings and loan companies with less than $500 million in consolidated assets that meet certain qualitative requirements in the Policy Statement from regulatory capital requirements.

View the Interim Final Rule.

View the Policy Statement.

The European Commission stated in a press release that it had launched plans to establish a Capital Markets Union by holding an orientation debate at the College of Commissioners. The establishment of the single market for all 28 EU member states will aim to lower the costs of funding within the EU, remove barriers to cross-border investment and increase sources of funding for businesses. In a separate press release dated January 30, 2015, the European Commission stated that a consultation on the CMU will be launched on February 18, 2015, and that a plan of action will be released during the third quarter of 2015.

View the press release.

View the other press release.

The Basel Committee on Banking Supervision issued its final standard for revised Pillar 3 disclosure requirements. The revised requirements aim to enhance the transparency of the approaches taken by banks in calculating their minimum regulatory capital requirements and allow market participants to access key information and compare banks’ disclosures of risk-weighted assets. In aiming to improve the comparability and consistency of disclosures, new templates are introduced, and five guiding principles for disclosures have been agreed. The disclosures should be: (i) clear; (ii) comprehensive; (iii) meaningful to users; (iv) consistent over time; and (v) comparable across banks. The new requirements will supersede the existing Pillar 3 requirements from the end of 2016.

View the final standards.

The International Organization of Securities Commissions published its final report on risk mitigation standards for non-centrally cleared OTC derivatives, setting out nine standards to help strengthen the non-centrally cleared OTC derivatives market. The standards include risk mitigation techniques relating to trade confirmation, valuation with counterparties, dispute resolution and cross-border transactions, and aim, amongst other issues, to enhance legal certainty over the terms of non-centrally cleared OTC derivatives transactions and shorten the amount of time it may take to resolve disputes.

View the final report.

Erin Schneider was named Associate Regional Director in the San Francisco Office of the SEC.

The FDIC announced the release of the second in a series of three technical assistance videos intended to help bank employees meet regulatory requirements. These videos address compliance with certain mortgage rules issued by the CFPB. The first video, released on November 19, 2014, covered the Ability to Repay and Qualified Mortgage Rule, and the second video covers the Loan Originator Compensation Rule. The third video, expected to be released in February, will cover mortgage servicing rules. The servicing rules address servicers’ obligations to consumers.

View the first video.

View the second video.

HM Treasury published the Financial Services and Markets Act 2000 (Regulation of Auditors and Actuaries) (PRA Specified Powers) Order 2015 together with an explanatory memorandum. The Order gives effect to enforcement powers previously granted to the Prudential Regulation Authority over auditors and actuaries under the Financial Services Act 2012. The PRA was not able to use these powers until HM Treasury granted effect to those powers under this Order. The Order allows the PRA to apply dissuasive sanctions such as monetary fines or disqualification measures on auditors and actuaries that breach PRA rules or statutory duties. The PRA intends to issue further guidance on the use of these enforcement powers following a consultation. The Order enters into force on February 20, 2015.

View the Order.

View the Explanatory Memorandum.

The Bank of England announced the appointment of two new directors to its executive team. Alex Brazier is appointed as Executive Director for Financial Stability, Strategy and Risk from March 16, 2015 and will also be a member of the Financial Policy Committee from April 1, 2015. Sam Wood is appointed as Executive Director for Insurance Supervision from April 7, 2015.

The US Consumer Financial Protection Bureau (“CFPB”) issued a compliance bulletin on the treatment of confidential supervisory information (“CSI”). The bulletin is intended to remind persons in possession of confidential information, including confidential supervisory information, that they may not, except for certain exceptions, disclose confidential information to third parties. The bulletin defines CSI, reviews certain disclosures of CSI and discusses in detail that private confidentiality and non-disclosure agreements do not alter the legal restrictions on the disclosure of CSI.

View the bulletin.

A letter from the Chair of the Supervisory Board of the Single Supervisory Mechanism at the European Central Bank, addressed to the management of significant banks, discussing the practices that apply in the new supervisory setting of the SSM was published by the ECB. The ECB assumed its new prudential supervisory role for banks in the Eurozone under the SSM in November 2014. The SSM creates a new system of financial supervision, under which the ECB directly supervises 120 significant banking groups, and sets and monitors supervisory standards for other Eurozone banks by working more closely with national regulators. The letter states that written clarification has been requested by banks on the processes and practices that apply within the new supervisory framework. The Board recognizes that a broad variety of practices relating to the supervision of significant banks exist across member states, and confirms that the existing process under the SSM Regulation will apply until further notice. In the meantime, the ECB will proactively assess the merits of
various other approaches.

View the ECB letter.

The Global Legal Entity Identifier Foundation announced the launch of its new website. GLEIF was created by the Financial Stability Board and established the Legal Entity Identifier, a 20-digit alphanumeric code which is a common standard and a unique key made public that is to be used unambiguously to identify legal entities in the course of various activities such as financial transactions across different markets, products and regions.

View the new Website.

Michael Brickman was named Deputy Comptroller for Special Supervision at the Office of the Comptroller of the Currency.

The Federal Reserve Bank of New York announced the appointment to its Community Depository Institutions Advisory Council of Martin K. Birmingham, president and chief executive officer of Five Star Bank and Financial Services Inc. in Warsaw, New York.

The US Federal Reserve issued "Strategies for Improving the US Payment System" which introduces a plan for collaborating with payment system stakeholders. The plan aims to enhance the efficiency of the US payment system and caters to large and small businesses, emerging payments firms, card networks, payment processors, consumers and financial institutions. The paper outlines the Federal Reserve’s intent to create a task force to identify a more effective approach to safer and faster payment capabilities. To further clarify the details on payment system improvement the Federal Reserve will host a webcast at 1:00 PM Eastern Time on January 29, 2015. The webcast will share views on the Federal Reserve’s vision for the future US payment system and plans for collaborating with stakeholders to achieve shared goals. In addition, a subsequent series of FedForum teleseminars on February 4 and 10 will present an overview of the strategies and a question-and-answer session.

Access to the webcast.

Registration for the FedForum events.

View the US Federal Reserve paper.

The International Swaps and Derivatives Association published a proposed recovery and continuity framework for CCPs. The framework focuses on losses caused to a CCP by the default of one of its clearing participants and not on other losses that a CCP may incur due to, for example, liquidity shortfalls or non-default losses. CCPs are already required to prepare recovery and resolution plans in many jurisdictions. The ISDA recovery and continuity framework sets out proposals for: (i) recovery measures that should be available to a CCP which include portfolio auction of a defaulting clearing member's portfolio, limited cash calls, loss-allocation mechanisms and consideration of a partial contract tear-up to assist a CCP to re- establish a matched book; (ii) transparency and timing requirements so that recovery measures are clearly defined in the clearing rule book, providing clearing members with certainty about the maximum time frame for the default management process to run before it is considered to have failed as well as the applicable legal construct, source and utilization of resources; (iii) considerations for the use of recovery measures beyond pre-funded resources such as cash calls or loss allocation to clearing members; (iv) requirement for CCPs that offer several clearing services to segregate those services so that there is limited recourse between the services to limit contagion; (v) considerations for either partial or full contract tear-up if measures to re-establish a matched book fail; (vi) compensation by the CCP to clearing members for loss allocation or partial contract tear-up measures through pro-rata shares in the CCP's claims against the estate of defaulting clearing members and future CCP revenues or profits; and (vii) conditions for entry into resolution of a CCP.
 

The European Banking Authority published draft amended final Regulatory Technical Standards on prudent valuation of fair-valued positions under the Capital Requirements Regulation. The draft RTS, initially published in March 2014, specified the conditions under which prudent valuation requirements should be applied and introduced a methodology to calculate additional valuation adjustments in the form of two approaches: the simplified approach and the core approach. The revised draft RTS contain small amendments replacing all occurrences in Articles 9 and 10 of the word "volatility" to the word "variance." This affects institutions using the core approach only, and relaxes the calibration of the volatility test, giving more flexibility in the implementation of the prudent valuation framework. The EBA suggests that the calibration of the volatility test should be revised within the first two years of implementation.

View the revised RTS.

The UK’s Prudential Regulation Authority published an updated version of its supervisory statement on the approach it will take under the Capital Requirements Regulation on credit risk treatments of exposures to third country counterparties, and for recognized exchanges. Initially, the supervisory statement set out the approach that was to be taken by the PRA on certain credit risk treatments under the CRR, where relevant third country equivalence determinations had not yet been made by the European Commission. It also set out the individual markets and exchanges that qualified as recognized exchanges under the CRR in the absence of a determination by the European Commission. Further to the binding decision of the European Commission that came into effect on January 1, 2015 (which published the names of third countries that apply supervisory and regulatory arrangements at least equivalent to those applied in the EU), the section in the supervisory statement dealing with this topic no longer applies and has therefore been deleted.

View the updated supervisory statement.

View the European Commission’s Decision.

The CFPB announced the addition of several new members to leadership positions.

• Anthony Alexis will serve as the CFPB’s Assistant Director of Enforcement.
• Leandra English is returning to the CFPB to serve as the Deputy Chief Operating Officer.
• Agnes Bundy Scanlan is joining the CFPB to serve as the Northeast Regional Director of Supervision Examinations.
• Jeffrey Sumberg is joining the CFPB to serve as the Chief Human Capital Officer.

The Basel Committee on Banking Supervision published its second progress report on the adoption by banks of its Principles for effective risk data aggregation and risk reporting. The Principles are to be implemented by global systemically important banks by 2016, and aim to strengthen risk data aggregation and risk reporting at banks so that risk management and decision-making practices are improved. The report details the progress that G-SIBs have made and the measures that they have taken to comply with the Principles. Fourteen out of the thirty-one G-SIBs have stated that they will not be able to comply with the principles by the 2016 deadline. The report also states that national regulators are recommended to apply the Principles to domestic systemically important banks (known as D-SIBs) from three years after they have been identified as such.

View the report.

A Delegated Regulation correcting the Regulation on notification of significant net short positions in sovereign debt (which supplements the Short Selling Regulation) was published in the Official Journal of the European Union. The amended article of the Regulation originally only referred to the notification threshold on significant net short positions in shares, but should also have referred to the notification threshold on significant net short positions in sovereign debt. The correcting Delegated Regulation rectifies this omission, to avoid legal uncertainty. The Delegated Regulation enters into force on February 12, 2015.

View the Delegated Regulation.

The US Commodity Futures Trading Commission ("CFTC") issued no-action relief for CFTC Regulations 1.10 and 1.17, respectively. The relief pertains to certain introducing brokers ("IB") regarding net capital and financial reporting requirements. The no-action relief allows foreign-domiciled IBs to file audited and unaudited form 1-FR-IBs, utilizing local accounting principles in effect where the IB is located in lieu of US Generally Accepted Accounting Principles or International Financial Reporting Standards.

View the CFTC Staff Letter.

The US Office of the Comptroller of the Currency released a list of Community Reinvestment Act ("CRA") performance evaluations that became public during the period of December 1, 2014 through December 31, 2014. The CRA requires each federal bank regulatory agency to assess each federally insured institution's record of helping to meet the credit needs of its entire community, consistent with safe and sound lending. The list only includes national banks, federal savings associations and insured federal branches of foreign banks. The possible rating categories are as follows: outstanding, satisfactory, needs to improve and substantial noncompliance. Of the thirty evaluations made public, two were rated outstanding and twenty-eight were rated satisfactory.

View list of evaluations.

The UK Department of Energy & Climate Change published its response to the consultation to strengthen the regulation of wholesale energy markets through criminal offences together with draft legislation to implement new criminal sanctions for insider dealing and market manipulation. The new sanctions will give more power to the relevant regulators (in Great Britain, Ofgem and in Northern Ireland, the Northern Ireland Authority for Utility Regulation) to address market abuse in the wholesale energy markets. The new powers implement the EU Regulation on Energy Market Integrity and Transparency requirement for Member States to create penalties for breach of REMIT that are proportionate, effective and dissuasive. REMIT applies to spot trading in the electricity and natural gas market. The DECC consider that criminal sanctions are more dissuasive than civil sanctions alone. UK legislation implementing the civil sanction regime came into force on June 29, 2013. The DECC acknowledges that it may be necessary to review the UK criminal sanctions regime to align the penalties with UK financial markets legislation for similar offences.

View the DECC response.

View the draft legislation.

The Financial Conduct Authority issued its Finalized Guidance on retail investment advice, which aims to explore and clarify the barriers and boundaries affecting market development. The guidance follows on from the FCA's two consultations on the topic and focuses on what may constitute a personal recommendation for retail investments. The guidance also discusses how firms should communicate with customers so that required information is passed on to customers in an accessible and understandable format, and deals with the concept of regulated advice, generic advice, focused advice and personal advice, and well as what amounts to investment advice under Markets in Financial Instruments Directive.

View the Finalized Guidance.

The Council Implementing Regulation specifying uniform conditions for implementing the obligation of the Single Resolution Board to calculate the contributions of individual institutions to the Single Resolution Fund under the Single Resolution Mechanism was published in the Official Journal of the European Union. The Single Resolution Fund is intended to be used following exercise of resolution powers, for example as a shareholder for a "good bank" created on a good bank/bad bank split. It will be contributed to by banks potentially subject to the resolution regime. The Single Resolution Mechanism applies to banks in Eurozone and to banks in EU Member States participating in the Single Supervisory Mechanism. The Regulation will apply from January 1, 2016 or such time as the available financial means of the Single Resolution Fund, as set out under the Single Resolution Mechanism, are met.

View the Regulation.

The FDIC issued a proposed rule amending regulations related to “Fair Credit Reporting.” The three proposed amendments are as follows: (i) rescinding and removing the provisions of FDIC’s Part 334; (ii) rescinding and removing 12 CFR Part 391 Subpart C and amending 12 CFR Part 334 of the FDIC’s existing Rules and Regulations; and (iii) amending the definition of “creditor” in the Red Flag Identity Theft rule to implement the Red Flag Program Clarification Act of 2010. Overall, the revisions would streamline FDIC rules and eliminate unnecessary regulations.

View the Federal Register notice.

The US Federal Deposit Insurance Corporation (“FDIC”) issued a proposed rule revising certain provisions of the Securitization Safe Harbor rule regarding the treatment of financial assets transferred in the process of a securitization or participation in a FDIC receivership. The rule, if finalized as proposed, would clarify the retention of economic interest in the credit risk of securitized financial assets. The amendment would be effective on the same timeline as the credit risk retention rule adopted under Section 15G of the Securities Exchange Act.

View the Federal Register notice.

The EU Implementing Regulation which amends the Regulation laying down Implementing Technical Standards on supervisory reporting of institutions regarding asset encumbrance, single data point model and validation rules under the Capital Requirements Directive and Capital Requirements Regulation, together known as CRD IV, was published in the Official Journal of the European Union. The amendments include changes on: (i) the format and frequency of reporting on asset encumbrance on an individual and consolidated basis; (ii) first reporting reference dates; and (iii) validation rules. The Implementing Regulation enters into force on February 10, 2015.

View the Implementing Regulation.

The Basel Committee on Banking Supervision published its work program for 2015 and 2016. The program is based around four themes: (i) policy development; (ii) the balance between simplicity, comparability and risk sensitivity across the regulatory framework; (iii) monitoring and assessing implementation of the Basel framework; and (iv) improving the effectiveness of supervision. The Basel Committee’s work program states its objectives, which include restoring confidence in capital ratios, continuing to revise existing methods of measuring risk-weighted assets, assessing the role of stress testing, reviewing the regulatory treatment of sovereign risk as well as assessing the interaction of reform policies overall.

View the report.

The US Securities and Exchange Commission announced that Norm Champ, Director of the Division of Investment Management, will leave later this month after five years serving in senior leadership positions.

The Federal Reserve Bank of New York announced following appointments to its Board of Directors:
 

• Emily K. Rafferty, president of the Metropolitan Museum of Art, has been re-appointed a Class C director.
• Paul P. Mello, president and chief executive officer of Solvay Bank, has been re-elected a Class A director representing Group 3 which consists of banks with capital and surplus of less than $30 million.
• Terry J. Lundgren, chairman and chief executive officer of Macy’s Inc., has been re-elected by the Group 3 shareholders as a Class B director representing the interests of the public.

The Consumer Financial Protection Bureau finalized two minor modifications to the "Know Before You Owe" mortgage disclosure rules. The changes, which were originally proposed in October 2014, identify when consumers will receive updated disclosures after locking in an interest rate and address how consumers receive information regarding certain construction loans. Under the finalized rule, creditors are required to provide a revised loan estimate within three business days after a consumer locks in a floating interest rate, as opposed to the original rule which required a revised loan estimate on the date a rate was locked. The second change creates a space on the loan estimate form where creditors could include language informing consumers that they may receive a revised loan for a construction loan that is expected to take more than 60 days to settle. The rule will be effective on August 1, 2015.

View the final rule.

The Prudential Regulation Authority published a consultation paper on assessing Pillar 2 capital adequacy under the Capital Requirements Regulation and the Capital Requirements Directive, together known as CRD IV. Pillar 2 aims to ensure that firms have sufficient capital to cover potential risks not sufficiently addressed in the prescriptive Pillar 1 requirements. The consultation paper sets out proposed changes to the current framework, rules and supervisory statements, focusing on: (i) new proposed methodologies for determining Pillar 2A capital (which aims to strengthen the relationship between an institution’s risk profile, risk management and risk mitigation systems); (ii) the buffer and the form it would take; (iii) governance and risk management; and (iv) disclosure. The consultation period closes on April 17, 2015. The PRA plans to publish its policy statement and final rules together with a supervisory statement in July 2015. It is expected that the new rules would apply from January 1, 2016.

View the consultation paper.

The Delegated Regulation on ex ante contributions to resolution financing arrangements supplementing the Bank Recovery and Resolution Directive was published in the Official Journal of the European Union. The Delegated Regulation deals with issues including the determination of annual contributions, risk adjustments and annual contributions of small institutions. The Delegated Regulation enters into force on February 6, 2015.

View the Delegated Regulation.

The following Delegated Regulations supplementing the Capital Requirements Regulation and the Capital Requirements Directive, together known as CRD IV, were published in the Official Journal of the European Union:

1. Delegated Regulation on the liquidity coverage requirement for credit institutions covering matters such as stress scenarios, the composition of the liquidity buffer and the general requirements for liquid assets. This Delegated Regulation will enter into force on February 6, 2015.

2. Delegated Regulation on the leverage ratio covering matters such as the calculation of the leverage ratio and the exposure value of derivatives. This Delegated Regulation entered into force on January 18, 2015.

View Delegated Regulation 1

View Delegated Regulation 2