The European Banking Authority published its opinion on lending-based crowdfunding, recommending that the applicability of existing EU law to the activity be clarified. The EBA considers that such clarification is necessary to avoid regulatory arbitrage across the EU and to ensure a level playing field as EU Member States have adopted different approaches to regulating lending-based crowdfunding. The opinion is addressed to the European Commission, the European Parliament and the EU Council.

View the EBA opinion

The Federal Reserve Board extended until April 3, 2015 the comment period for its proposed rule to implement capital surcharges for global systemically important banks. Comments were originally due by March 2, 2015. The Federal Reserve Board extended the comment period to allow relevant parties more time to analyze the proposed rule and prepare comments. The proposal would establish a methodology to identify if a firm is a G-SIB as well as establish the size of a firm’s risk-based capital surcharge. The rule is expected to strengthen the capital positions of these financial institutions and if finalized as proposed, would be higher than international standards.

View the The Federal Reserve Board press release

View the The Shearman & Sterling Publication on the G-SIB Surcharge proposed rule

The European Securities and Markets Authority published the results of its peer review of supervision and enforcement of the best execution provisions in the Market in Financial Instruments Directive by national regulators. Investment firms are required to provide best execution for their clients when executing their client’s orders. ESMA’s review found that implementation of the best execution provisions in MiFID I varied across the EU. To address the issue, ESMA recommends several improvements, including: (i) prioritization of best execution by national regulators; (ii) the allocation of supervisory resources; and (iii) the adoption of a proactive approach to monitoring compliance with best execution requirements, including through onsite inspections. ESMA intends to work with national regulators to give effect to the recommendations.

View the peer review

The European Banking Authority published an Opinion addressed to the European Commission on Credit Valuation Adjustment. The Opinion deals with several aspects of the calculation of own funds requirements for CVA risk. Sixteen recommendations are listed in the Opinion, including: (i) clarifying by means of an amendment to the Capital Requirements Regulations that exchange-traded derivatives are included in the scope of CVA risk charge; (ii) harmonising the treatment of securities financing transactions in the EU; and (iii) clarifying the standardised method for CVA. The Opinion was published by the EBA simultaneously alongside a Report and Review on CVA and the application of CVA charges to non-financial counterparties established in a third country under the CRR. The documents have now been submitted for consideration by the European Commission.

View the Opinion

View the Report and Review

Secondary legislation was enacted which amends the Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013. The amending regulations correct the original legislation and ensure that the special resolution regime under the Banking Act 2009 applies to UK-based CCPs regardless of whether or not they are authorized under the European Market Infrastructure Regulation, from March 18, 2015 until such time as the CCP becomes authorized. The amending regulations come into force on March 18, 2015. The special resolution regime under the Banking Act 2009 will apply to all EMIR authorized CCPs upon that authorization.

View the amending regulations

The Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, as members of the Financial Literacy and Education Commission (“FLEC”), together with the Financial Crimes Enforcement Network for the US Department of the Treasury, jointly issued guidance to encourage federally insured depository institutions to offer youth savings programs to develop the financial aptitude of young people. The guidance also provides answers to frequently asked questions related to the establishment of these programs. The guidance does not create any new regulatory policy or establish new industry expectations. This effort is consistent with the “Starting Early for Financial Success” focus of the FLEC. Congress created FLEC in 2003 to improve financial capability and education in the United States.

View the guidance

The US Consumer Financial Protection Bureau issued a proposal to suspend for one year credit card issuers’ obligations to submit their credit card agreements to the CFPB. The suspension is intended to give the CFPB time to develop a simplified and automated electronic submission system. In designing the new system, the CFPB intends to introduce improved reporting formats and faster posting of information. Credit card agreement submissions that would otherwise be due to the CFPB by the first business day on or after April 30, July 31, and October 31 of 2015, and January 31, 2016 would be suspended. Credit card issuers would resume submitting credit card agreements on a quarterly basis starting on April 30, 2016. During the temporary suspension period, the CFPB will collect consumer credit card agreements from the largest card issuers’ public websites and post the agreements to its online consumer credit card agreements database.

View the proposed rule

UK legislation implementing part of the EU Regulation on Settlement and Central Securities Depositories was enacted. The Financial Markets and Insolvency (Settlement Finality) (Amendment) Regulations 2015 amend relevant UK legislation to reflect the change brought in by the EU Regulation that requires national regulators to notify the European Securities and Markets Authority of any designation of a payment or securities settlement system. In the past, such notifications were made to the European Commission. The UK designated national regulators for these purposes are the Bank of England and the Financial Conduct Authority.

View the UK legislation

The Prudential Regulation Authority and Financial Conduct Authority published a joint consultation paper on: (i) the approaches to non-executive directors in banking and certain insurance firms; and (ii) the application of the presumption of responsibility to senior managers in banking firms. The consultation revises the proposed approach of the regulators to NEDs in UK banks, PRA-designated investment firms as well as certain insurance firms, such that only certain specified NEDs are subject to pre-approval and inclusion in the Senior Managers Regime. The specified NEDs would be: (i) chairman; (ii) chair of the risk committee; (iii) chair of the audit committee; (iv) chair of the remuneration committee; (v) chair of the nomination committee; and (vi) senior independent director. This narrows down the scope of the SMR, the new system that aims to better define the lines of responsibility at financial institutions so that senior individuals in banks can be held to account more easily. The paper also consults on a draft PRA supervisory statement, with the aim of clarifying the responsibilities of NEDs that are in scope of the SMR and explaining how the presumption of responsibility will be applied in cases of non-compliance with regulatory requirements. The consultation closes on April 27, 2015.

View the consultation.

The Prudential Regulation Authority and Financial Conduct Authority jointly proposed measures seeking to formalize procedures for whistleblowing in the banking and insurance sectors. The proposals aim to encourage employees to blow the whistle when misconduct is suspected without fear of personal repercussions. The proposed new rules include: (i) ensuring that whistleblowing procedures are in place; (ii) encouraging employers to inform employees that they are able to blow the whistle; and (iii) ensuring that whistleblowers are protected from victimization. The consultation closes on May 22, 2015.

View the consultation.

UK legislation was enacted to bring additional benchmarks within the UK regulatory perimeter. The additional benchmarks are ISDAFIX, Sterling Overnight Index Average, also known as SONIA, Repurchase Overnight Index Average, also known as RONIA, WM/Reuters London 4 p.m. Closing Spot Rate, London Gold Fixing, LBMA Silver Price and ICE Brent Index. The LIBOR benchmark was already subject to regulation. Bringing the additional benchmarks within the regulatory perimeter are a result of the initial recommendations on benchmarks of the Fair and Effective Markets Review. A Policy Statement was also published by the Financial Conduct Authority on March 10, 2015, on the seven new benchmarks it will be regulating and supervising. This includes the FCA's final rules amending Chapter 8 of the Market Conduct Sourcebook (Mar 8), which was originally designed for benchmarks determined through a submission process, such as LIBOR. The rules have now been adapted to the new benchmarks being brought into regulation, and in particular to benchmarks without submitters. The new rules also introduce perimeter guidance to identify persons that carry out the regulated activity of acting as benchmark submitters. The new legislation and FCA rules enter into force on April 1, 2015.

View the legislation and FCA Policy Statement

Amendments to the Implementing Technical Standards for the supervisory reporting of financial institutions under the Capital Requirements Regulation was published in the Official Journal of the European Union. The ITS set out the standards that financial institutions must meet for the purposes of supervisory reporting. The amendments include the replacement of several templates that are to be used by financial institutions in the supervisory reporting process. The purpose of the amendments is to increase clarity and provide further instructions and definitions to financial institutions for the purposes of supervisory reporting. The amended ITS entered into force on February 21, 2015.
 

View he ITS.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency announced that they are seeking comment on banking operations regulations, capital regulations and the Community Reinvestment Act to identify “outdated or unnecessary regulations” that apply to insured depository institutions. Comments are due by May 14, 2015. Over the coming year, the regulators will publish requests for comments for nine additional categories of regulation.

View the Federal Reigster notice.

The Financial Conduct Authority published a feedback report on its wholesale sector competition review, announcing that it will be launching a wholesale market study into investment and corporate banking to assess whether there is adequate competition within this sector. The FCA wholesale sector competition review found that a lack of transparency and clarity in price and quality of services is preventing clients from being able to tell whether they are getting good value for their money. The review also found that the cross-selling and bundling of services may be making it difficult for smaller firms to compete with larger more established firms. The FCA intends to launch the market study and publish the terms of reference in the second quarter of 2015.

View FCA feedback report.

The Prudential Regulation Authority issued a statement on extending the duration of whole-firm liquidity modifications, intragroup liquidity modifications and permissions under the Capital Requirements Regulation. Following the European Commission's adoption of a Delegated Act on the Liquidity Coverage Requirement which will become the binding liquidity standard in the EU from October 1, 2015 (according to its provisions), a number of liquidity modifications granted by the PRA under its Prudential Sourcebook for Banks, Building Societies and Investment Firms and the CRR expire between now and October 1, 2015. Given that the time period between these expirations and the LCR becoming binding is relatively short, the PRA will allow firms to extend modification periods. The PRA statement sets out the process that is to be followed to apply for an extension.
 

View the PRA.

The Financial Conduct Authority published a report on asset management firms and the risk of market abuse. The report sets out the findings from the FCA's thematic review on how asset management firms manage the risk of insider dealing, improper disclosure, market manipulation and market abuse. The report found that firms have procedures in place to control such risks, but that further work is required to cover all material risks as comprehensive procedures were found to be in place only in a minority of firms. Only a small number of firms were found to have appropriate controls on post-trade surveillance, and further steps to manage such risks, and the risks of receiving inside information during the investment process, are recommended.

View the report.

Luc Coene, currently Governor of the Nationale Bank van België, has been appointed as one of four European Central Bank representatives to the Supervisory Board of the Single Supervisory Mechanism. The other ECB representatives are Sirkka Hämäläinen, Julie Dickson and Ignazio Angeloni.

Sandra C. Krieger, executive vice president of the Risk Group and chief risk officer of the Federal Reserve Bank of New York, announced her intention to retire from the bank in the second quarter of 2015.

View the notice.

The US Commodity Futures Trading Commission announced the members of the CFTC’s Market Risk Advisory Committee. MRAC, first chartered in 2014, is intended to support the CFTC’s efforts to identify and mitigate risks within the market to industry participants, consumers and the broader financial community.

View the full list of MRAC members.

The Federal Deposit Insurance Corporation extended the submission deadline for resolution plans for three non-bank financial companies including American International Group, Inc., General Electric Capital Corporation, Inc., and Prudential Financial, Inc. Originally due July 1, 2015, the “living wills” are now due on December 31, 2015. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires non-bank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve Board to submit plans describing their resolution strategy in the case of material distress. The extension is consistent with extensions to other firms and will give the companies additional time to prepare their resolution plans.

View the FDIC press release.

The European Commission published a green paper on building a Capital Markets Union. This was published alongside two complementary consultation papers on: (i) a EU framework for simple, transparent and standardized securitization; and (ii) the review of the Prospectus Directive. These publications form part of a wider initiative to develop a single market for capital across the EU. The green paper consults on the establishment of the CMU, which aims to lower the costs of funding within the EU and increase sources of funding for businesses. The paper identifies five priority areas for early action: (i) reducing barriers to accessing capital markets; (ii) widening the investor base to small and medium-sized enterprises; (iii) building sustainable securitization; (iv) boosting long-term investment; and (v) developing European private placement markets. The Prospectus Directive consultation seeks views on making it easier for companies to raise capital throughout the EU whilst effective investor protection is maintained and information to be included in prospectuses is simplified. The consultation on the EU framework for simple, transparent and standardized securitizations aims to increase high-quality securitization, through higher standards of process, legal certainty and comparability across securitization. The green paper and two consultations close for comments on May 13, 2015.

View the Green Paper.

View the Prospectus Directive consultation.

View the consultation on the EU framework for simple, transparent and standardized securitization.

The European Securities and Markets Authority published an addendum consultation paper complementing the transparency section of its previous consultation paper published in December 2014 on the implementation of the Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation. The addendum seeks views on transparency requirements for non-equity instruments not covered in the previously published consultation paper, namely foreign exchange derivatives, credit derivatives, other derivatives and contracts for difference. The draft regulatory technical standards on transparency requirements of bonds, structured finance  products, emission allowances and derivatives previously referred to in the December 2014 consultation are completed in this addendum, and therefore the addendum should be read alongside the previously published consultation. MiFID II and MiFIR are applicable from January 3, 2017. The consultation closes on March 20, 2015.

View the consultation paper.

HM Treasury published the final draft Financial Services and Markets Act 2000 (Banking Reform) (Pensions) Regulations together with its response to its consultation on the draft Regulations. The aim of the Regulations is to impose requirements on the pension liabilities of ring-fenced banks to ensure they are not liable for pension schemes of other group entities (except in cases that are specifically prescribed by the Treasury). The draft Regulations provide a framework in which existing pension arrangements can be restructured so that they are aligned with the requirements. In the consultation response, HM Treasury sets out its policy decisions and addresses concerns raised by the respondents, stating that banks would now have to apply for a clearance statement from the Pension Regulator only if changes are likely to be materially detrimental to the scheme and its members. The consultation response also states there is no general provision for transitional tax protections for employees in the Regulations at present but it commits to addressing such issues once it has a better understanding of how banks will implement the ring fence and the nature of any detrimental impact on individuals as a result of scheme changes. The final draft Regulations have now been put before Parliament.

View the consultation response.

View the final regulations.

The European Banking Authority published its opinion on the appropriateness of the definition of “eligible capital” under the Capital Requirements Regulation. The term “eligible capital” has been used since January 2014, replacing the earlier “own funds” term for defining large exposures and setting large exposure limits. Under the “eligible funds” definition, the amount of Tier 2 capital recognized as eligible capital must not exceed one third of Tier 1 capital. Under the “own funds” definition, there was no limit for Tier 2 capital. The EBA opinion
states that it has not found any evidence to show that the new stricter regime would impact firms detrimentally and recommends that a review of the EU large exposures regime is carried out so that it can be further aligned with the final standard of the Basel Committee on Banking Supervision that was published in April 2014.

View the opinion.

The European Securities and Markets Authority published its annual report on its supervision of credit rating agencies and trade repositories. In the report, ESMA sets out its work plan for credit rating agencies in 2015 which will focus on credit rating agency’s governance, risk management and internal decision making processes and their business development processes. ESMA aims to gain a better understanding of how these processes influence the process of issuing credit ratings. ESMA also intends to continue with the thematic and individual investigations that it is already conducting such as the review and validation of rating methodologies and IT internal controls and information security.

View ESMA's report.

The European Securities and Markets Authority published its technical advice (dated February 3, 2015) to the European Commission on certain aspects of secondary legislation to be adopted under the EU Regulations on European Social Entrepreneurship Funds and European Venture Capital Funds. The advice covers: (i) the types of goods and services, methods of production for goods and services and financial support representing a social objective; (ii) conflicts of interest of European Social Entrepreneurship and European Venture Capital fund managers; (iii) methods for the measurement
of social impact; and (iv) information that European Social Entrepreneurship fund managers should provide to investors. The European Commission will use the technical advice to develop the required secondary legislation.

View ESMA's advice.

The European Securities and Markets Authority published its annual report on its supervision of credit rating agencies and trade repositories. In the report, ESMA sets out its work plan for trade repositories for 2015. Trade repositories are authorized and supervised by ESMA under EMIR. ESMA’s 2015 work plan focuses on: (i) monitoring the action and improvement plans of trade repositories, including the data quality action plan; (ii) monitoring system operation and changes deployment; (iii) thematic reviews relating to the inter-TR reconciliation process, business continuity planning and cost relatedness of fees; (iv) trade repository’s systems software development lifecycle; (v) data availability; (vi) regulators’ access to trade repositories; and (vii) confidentiality of trade repository data.

View ESMA's report.

Implementing technical standards for currencies in which there is an extremely narrow definition of central bank eligibility were published in the Official Journal of the European Union. The Capital Requirements Regulation requires firms to report assets as liquid assets where they meet certain conditions, one of which is that the assets are eligible collateral for standard liquidity operations of a central bank in a Member State or a third country. The condition is waived for liquid assets held to meet liquidity outflows in a currency in which there is an extremely narrow definition of central bank eligibility. The ITS establish that the Bulgarian Lev is the only such currency to date.

View the legislation.

The US Federal Deposit Insurance Corporation announced the release of the third technical assistance video developed to assist bank employees in meeting regulatory requirements. This is the final release in a series of three technical assistance videos which address compliance with certain mortgage rules issued by the US Consumer Financial Protection Bureau. The first video, released on November 19, 2014, covered the Ability to Repay and Qualified Mortgage Rule. The second video, released on January 27, 2015, covered the Loan Officer
Compensation Rule. The third video covers the Mortgage Servicing Rules.

View the third video.

View all FDICs technical assistance videos.

A European Central Bank Recommendation on dividend distribution policies was published in the Official Journal of the European Union. The ECB Recommendation is addressed to significant supervised entities and significant supervised groups, which are subject to supervision by the ECB under the Single Supervisory Mechanism.

View the recommendation.

The Board of Governors of the Federal Reserve System, the FDIC and the Office of the Comptroller of the Currency announced that they have developed an automated tool to aid financial institutions subject to the agencies’ regulatory capital rules in calculating risk-based capital requirements for individual securitization exposures. This tool is not a part of the regulatory capital rules or a component of regulatory reporting, and financial institutions may use the tool solely at their own discretion. Specifically, institutions that use the rules’ Simplified Supervisory Formula Approach to calculate risk-based capital requirements for securitization exposures may use the tool to calculate capital requirements for such exposures. The SSFA is a formula-based approach intended to apply relatively higher capital requirements to the more risky junior tranches of securitizations that are the first to absorb losses, and relatively lower requirements to the most senior tranches.

The Securities and Exchange Commission published final rules regarding security-based swap data repository registration and security-based swap reporting in accordance with Section 763 and Section 766 of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rules establish (i) a registration process for swap data repositories; and (ii) certain policies and procedures for the reporting and dissemination of security-based swap transactions by registered swap data repositories. The goal of the regulation is to improve transparency in security-based swap reporting and is a part of the overall regulatory agenda to improve transparency in the OTC dervatives markets.

Additionally, the SEC issued two security-based swap proposed rules regarding the physical reporting and public availability of security-based swap data. The SEC also proposed new rules, rule amendments and guidance to Regulation SBSR regarding the reporting duties for cleared and platform-executed security-based swap transactions.

View the final rule on the SEC site.

View the SEC Open Meeting notice.

The G20 Finance Ministers and Central Bank Governors issued a draft communiqué which was adopted in a meeting at the Turkish G20 Presidency on February 9-10, 2015. The communiqué highlighted the risk of prolonged low inflation, slow growth, and demand weakness in some advanced economies. G20 members will keep fiscal policy flexible to reflect near-term economic realities.

Additionally on February 10, 2015, the Chairman of the Financial Stability Board published a letter to the G20 Finance Ministers and Central Bank Governors titled, Financial Reforms – Finishing the Post-Crisis Agenda and Moving Forward. This letter sets out the FSB’s priorities in the next phase of reform which include: consistent and prompt implementation of agreed reforms, finalizing the design of remaining post-crisis reforms and addressing new risks and vulnerabilities.

The FSB plans to publish its first annual report on the implementation of agreed reforms and their effects this year. In addition, implementation will be supported through peer reviews which will cover: implementation of the G20 policy framework for ‘other shadow banking entities’, effective supervisory frameworks for global systemically important banks; bank resolution powers and recovery and resolution planning requirements and the effectiveness of reporting of OTC derivatives transactions to trade repositories. Additionally, the FSB will focus efforts to address two explicit emerging vulnerabilities: market-based finance and misconduct.

View The Communiqué.

View the FSB Chairman's Letter.

The US Commodity Futures Trading Commission issued a no-action letter (“CFTC Letter 15-03”) that provides additional time for reporting parties to comply with certain reporting requirements of the ownership and control final rule (“OCR Final Rule”). CFTC Letter 15-03 letter extends certain relief provided under CFTC Letter No. 14-95, a no-action letter issued July 23, 2014 that extended time-limited no-action relief from certain reporting obligations under the OCR Final Rule. The OCR Final Rule requires the electronic submission of trader identification and market participant data reporting forms. CFTC Letter 15-03 provides time-limited no-action relief for reporting parties from the requirement to file the forms electronically and provide certain additional information required by the OCR Final Rule. The relief is extended to dates ranging from September 30, 2015 to February 13, 2017.

View the CFTC Letter 15-03.

The European Banking Authority published an overview of the potential implications of regulatory measures for banks’ business models. The report focuses on the impact of regulation for business models after the recent financial crisis, including the implementation of regulatory capital requirements, the leverage ratio, the liquidity coverage ratio, net stable funding ratio, reforms on banking structures, recovery and resolution regimes and the obligations under European Market Infrastructure Regulation for the derivatives markets.

View the EBA report.

The US Securities and Exchange Commission approved the issuance of amendments that would increase corporate disclosure of company hedging policies for directors and employees. The proposed rules, mandated by the Dodd-Frank Act, would require directors, officers and other employees to disclose any hedges or offsetting transactions which would decrease their exposure to equity securities granted by the company as compensation or held, directly or indirectly, by directors or employees.

According to the SEC, the proposed rules, if finalized as proposed, would enhance transparency into corporate governance practices and provides additional information to investors to understand the alignment of employee/directors interests with shareholder interests.

View the proposed rule.

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.