The European Banking Authority has published final Guidelines on the setting of rates of conversion of debt to equity in bail-in under the Bank Recovery and Resolution Directive. The Guidelines are addressed to national resolution authorities with the objective of clarifying how valuation information should inform the determination of the terms of bail-in.

The BRRD provides that resolution authorities, when applying the bail-in tool, may apply a different rate of conversion to different classes of capital instruments and liabilities.

Read more. 

The European Securities and Markets Authority has issued an Opinion on the European Commission's proposed EU Regulation on CCP Recovery and Resolution. The proposal gives CCPs' national regulators under the European Market Infrastructure regulation powers of supervision and early intervention with regards to CCP recovery. It further asks Member States to designate National Resolution Authorities to develop CCP resolution plans and ensure the resolvability of CCPs established in their Member State and for the establishment of a resolution college. ESMA is tasked with taking on a mediator role. In its Opinion, ESMA states that it broadly supports the regulatory approach taken by the Commission. However, ESMA considers that the EU legislators should consider the budgetary implications of the role assigned to ESMA and include a provision in the final CCP Recovery and Resolution Regulation for ESMA to draft a report on the issue, as was the case for EMIR. While it supports the introduction of binding mediation, ESMA raises some concerns over the proposed mediation mechanism. ESMA also states that further detailed requirements on the content of recovery plans, such as what recovery tools could be used to allocate default losses or to cover non-default losses, would be useful.

View the ESMA Opinion.

The European Securities and Markets Authority has published a consultation paper on updating the Guidelines on the application of the endorsement regime under the Credit Rating Agencies Regulation. Endorsement is a regime that allows credit ratings issued by a third-country CRA and endorsed by an EU CRA to be used for regulatory purposes in the EU. The consultation paper proposes two main changes to the existing Guidelines. First, where a third-country legal and supervisory framework has been positively assessed by ESMA, ESMA will no longer assume that compliance of the third-country CRA with this framework equates to compliance with requirements as stringent as those under the CRA Regulation. The endorsing CRA is expected to verify and be able to demonstrate that the third-country CRA has established internal requirements which are at least as stringent as the corresponding requirements in the relevant provisions of the CRA Regulation. Secondly, the consultation paper clarifies that ESMA has the power to request information directly from the endorsing CRA about the conduct of the third-country CRA. The consultation closes on July 3, 2017.

View the consultation paper.

The US Commodity Futures Trading Commission announced that Andrew B. Busch had been named the CFTC’s first Chief Market Intelligence Officer. In a speech announcing the appointment, Acting CFTC Chairman J. Christopher Giancarlo stated that the new CMIO’s role will be to activate the CFTC’s capability for market intelligence, in order to understand, analyze and communicate dynamics in the derivatives market.

View press release announcing the appointment.

HM Treasury has published the final Legislative Reform (Private Fund Limited Partnerships) Order 2017. The purpose of the Order is to introduce a new Private Fund Limited Partnership structure, available to private investment funds which are structured as limited partnerships, such as private equity and venture capital funds. The Order was made on March 29, 2017 and is in substantially the same form as the revised draft published in January 2017. The Order came into force on April 6, 2017.

View the Order.

The Financial Conduct Authority has published a consultation paper on persistent credit card debt and earlier intervention remedies. The remedies and interventions outlined in the consultation paper form part of the overall package of remedies announced by the FCA in July 2016 in its credit card market study final findings report. The FCA then concluded that competition was working fairly well for the 30 million consumers who hold a credit card. However, the FCA expressed significant concerns regarding the scale, extent and the nature of persistent credit card debt and the limited incentives provided by firms to reduce this.

Read more.

The UK HM Treasury's Office of Financial Sanctions Implementation can impose penalties for serious financial sanctions breaches under the Policing and Crime Act 2017. Penalties can be up to £1 million or 50% of the breach, whichever is higher. The monetary penalties regime created under the 2017 Act is an alternative to criminal prosecution for breaches of financial sanctions, which are punishable upon conviction by up to seven years in prison. The UK Government ran a consultation from December 1, 2016 to January 26, 2017 on the process for imposing monetary penalties for breaches of financial sanctions. The Treasury has since published guidance which gives an explanation of its powers to impose penalties, a summary of its compliance and enforcement approach, an overview of how the OFSI will assess whether to apply a monetary penalty and what factors the OFSI will take into account in doing so, an overview of the process that will decide the level of penalty and an explanation of how the OFSI will impose a penalty, including timescales at each stage and rights of review and appeal.

View HM Treasury's Guidance.

The European Securities and Markets Authority has published its Final Report and final draft Regulatory Technical Standards under the revised Markets in Financial Instruments Directive specifying the scope of the consolidated tape for non-equity products (i.e., bonds, structured finance products, emission allowances and derivatives).

Under MiFID II, consolidated tape providers will collect post-trade information published by trading venues and approved publication arrangements (APAs) and consolidate this into a continuous live data stream made available to the public, both for equity instruments and non-equity products. Given the additional complexity involved in providing a non-equity consolidated tape, the relevant MiFID II provisions for the non-equity tape will not enter into effect until September 3, 2019.

The draft RTS will amend the existing Delegated Regulation 2017/571 (previously RTS 13) on authorization, organizational requirements and the publication of transactions for data reporting services providers, which sets out the scope of the equity tape, by adding provisions:

• permitting non-equity consolidated tape providers to specialize in one or more asset classes to increase the likelihood of a viable business case for non-equity consolidated tape provision; and
• specifying the APAs and trading venues that have to be included in the non-equity consolidated tape based on the required consolidated tape coverage ratio of 80% of all transactions published in an asset class in the EU.

The final draft amending RTS have been provided to the European Commission which has three months to decide whether to endorse the draft RTS.

View ESMA's press release.

A Commission Delegated Regulation has been published in the Official Journal of the European Union that extends the transitional exemption period under the European Market Infrastructure Regulation for pension funds to comply with the EU clearing obligation for a further year. The original date was extended from August 16, 2015 to August 16, 2017 by the European Commission in 2015 over concerns that if pension funds were subjected to the clearing obligation, they would need to source cash for the margin requirements of CCPs. The Commission, and other EU regulators, have asked CCPs to develop a solution that would allow pension funds to clear derivatives without the obligation being too burdensome for pension funds but which would also allow CCPs to liquidate positions rapidly in the event of a default. The Commission is of the opinion that no sufficiently appropriate technical solutions have been found by CCPs yet. The Delegated Regulation extending the transitional exemption period to August 16, 2018 entered into force on April 1, 2017.

View the Delegated Regulation.

The Financial Conduct Authority has published its first Policy Statement on Markets in Financial Instruments Directive II Implementation. The Policy Statement sets out near final rules in the areas consulted on in previous consultation papers, covering, requirements for Regulated Markets, Multilateral Trading Facilities, Organised Trading Facilities, Systematic Internalisers, transparency, market data, algorithmic and high frequency trading requirements, passporting and branches of non-European Economic Area (EEA) firms, Principles for businesses, rules relating to commodity derivatives, supervision, prudential rules, systems and controls, including remuneration and whistleblowing and fees.

It also covers a small number of issues relating to the use of approved reporting mechanisms and the new authorisation category of data reporting service providers and an update on the FCA's proposals for recording of telephone conversations.

In June, the FCA plans to finalize the MiFID II rules in a further policy statement. This will cover remaining issues which include conduct of business, perimeter guidance and client asset protections.

The FCA stated that it does not intend to substantively amend the rules published in the Policy Statement prior to their entry into force. Firms impacted by the changes to the activities and instruments covered by MiFID II should now apply for authorization or for variations of permission, in order to continue being able to operate in the UK after January 3, 2018, when MiFID II takes effect.

View the Policy Statement and related webpage.

The Financial Conduct Authority has published its fifth Consultation Paper on the Markets in Financial Instruments Directive II Implementation. The consultation deals with changes to the FCA's decision procedure and penalties manual (DEPP) and the enforcement guide (EG), consequential and miscellaneous changes to the FCA Handbook and new guidance on the use of third parties where firms are required to provide financial instrument reference data or commodity derivative position reports to the FCA. It also sets out the FCA's proposals for new conduct rules dealing with the non-MiFID business of occupational pension scheme firms.

The proposals will affect a wide range of authorized firms, recognized bodies and unregulated entities trading commodity derivatives. In particular, it will be of interest to banks, investment firms, recognized investment exchanges, Multilateral Trading Facilities, prospective Data Reporting Service Providers and occupational pension scheme firms.

Comments on the proposals relating to DEPP, EG and consequential changes to the Handbook are due by May 12, 2017. The FCA intends to publish the final rules for these areas in its June policy statement. Comments on the proposed conduct rules for occupational pension scheme firms are due by June 23, 2017. The final rules for these areas will be published in a later policy statement.

View the Consultation Paper and related webpage.

View the online response form.

Level II legislation under the revised Markets in Financial Instruments Directive was published in the Official Journal of the European Union. The legislation published includes 26 Regulatory Technical Standards, two Commission Delegated Regulations and one Commission Delegated Directive. The legislation will enter into force on April 20, 2017.

The Official Journal publication is available here.

The European Securities and Markets Authority has published a report and final draft Implementing and Regulatory Technical Standards for the Securities Financing Transactions Regulation. The majority of the SFTR came into effect on January 12, 2016. One exception is a new reporting obligation for SFTs, which is in the process of being phased in according to counterparty type. Securities financing transactions involve the use of securities to borrow cash or other higher investment-grade securities, or vice versa. Such transactions can include repurchase transactions, securities lending and sell/buy backs. The SFTR requires, amongst other things, all securities financing transactions to be reported to EU recognized trade repositories, including details on the composition of collateral, whether collateral is available for reuse or has been reused, the substitution of collateral and any haircuts applied. The reporting obligation will apply to financial and non-financial counterparties, subject to exceptions for central banks and similar bodies.

Read more. 

US Commodity Futures Trading Commission Acting Chairman J. Christopher Giancarlo announced the appointment of federal prosecutor James McDonald as the agency’s new Director of Enforcement.  Mr. McDonald, who was most recently a prosecutor in the U.S. Attorney's Office for the Southern District of New York, will assume his duties at the agency on April 10, 2017.  On April 3, 2017, Acting Chairman Giancarlo announced that Andrew Busch has been named the CFTC’s first Chief Market Intelligence Officer, responsible for harnessing the CFTC’s market intelligence capabilities and, combined with industry and policy maker outreach, identifying and communicating emerging trends in the commodity futures markets and reporting directly to the CFTC Chairman.
 

The European Securities and Markets Authority has published its final Report containing draft regulatory and implementing technical standards under the Benchmarks Regulation. The Benchmark Regulation sets out the authorization and registration requirements for benchmark administrators, including third-country entities, and the requirements for governance and control of administrators. It provides for different categories of benchmarks depending on the risks involved, imposes additional requirements on benchmarks considered to be "critical" and gives powers to national regulators to mandate, under certain conditions, contributions to or the administration of critical benchmarks.

Read more.

The Basel Committee on Banking Supervision has launched a consultation proposing a revised assessment framework for global systemically important banks. The framework, first published in July 2013, identifies G-SIBs by assessing their contribution to systemic risk and imposes higher capital requirements on G-SIBs to reduce the likelihood of their failure. Identified G-SIBs are placed into buckets based on their score of systemic importance. G-SIBs are also subject to Total Loss Absorbing Capacity requirements and higher supervisory expectations on risk management, risk data aggregation capabilities, risk governance and internal controls. The Basel Committee is proposing to amend the framework by, among other things, removing the cap on the substitutability category, expanding the scope of consolidation to include insurance subsidiaries for three categories, amending the definition of cross-jurisdictional activity, revising disclosure requirements and including further guidance on bucket migration. In addition, the Basel Committee is also asking for feedback on the introduction of a new indicator for short-term wholesale funding.

Responses to the proposals are requested by June 30, 2017. The Basel Committee is proposing a transitional schedule for implementing any revised assessment framework so that any changes announced in November 2017 would take effect in 2019 and the resulting higher loss absorbency requirement would apply from January 2021.

View the consultation paper.

View the existing G-SIB assessment framework.

View the current list of G-SIBs.

US Comptroller of the Currency Thomas Curry provided remarks describing actions the OCC has taken to meet the needs of all types of consumers, businesses and communities in the US. Specifically, he described a new department at the OCC, Compliance and Community Affairs Department, which brings together policy, supervision and community outreach in respect of consumer compliance, fair lending, AML/BSA and the Community Reinvestment Act. Curry also discussed OCC’s focus on encouraging innovation and establishing a framework for responsible innovation in the federal banking industry. He noted that the OCC started conducting research and discussing opportunities for innovation and financial technology (fintech) with banks and other companies as well as community and consumer groups, academics and other regulators in 2015, before releasing its framework in October 2016. He also discussed the agency’s draft supplement to its licensing manual that provides additional detail on how the OCC would evaluate applications for national bank charters from fintech companies and how the agency would supervise these banks and ensure fair access and treatment of customers. Specifically, Curry emphasized that the supplement does not establish any new authority, charter or policy and rather builds upon existing rules, guidance and processes. He further noted that, although changes to the OCC’s manuals are not typically released for public comment, the OCC is accepting comment on the supplement until April 14, 2017 in order to appropriately incorporate industry feedback.

View full text of speech.

The Judiciary Committee of the US House of Representatives marked up and passed HR 1667, the Financial Institution Bankruptcy Act of 2017. The bill would amend Title II of the Dodd-Frank Act and would create a new subchapter V to chapter 11 of the Bankruptcy Code, to establish a new bankruptcy process for certain financial institutions with assets of $50 billion or more. The legislation now goes to the US Senate for full consideration.

Read HR 1667.

The Basel Committee on Banking Supervision has published details of interim regulatory treatment of accounting provisions and standards for transitional arrangements under Basel III capital framework.

Read more.

The Basel Committee on Banking Supervision has published a consolidated and enhanced Pillar 3 disclosure framework standard. The Basel Committee announced in June 2014 that it was undertaking a review of Pillar 3. In January 2015, it issued its revised Pillar 3 disclosure requirements, completing the first phase of the review. This latest publication represents the second phase of the review. The new standard includes enhancements to the revised Pillar 3 framework, such as key regulatory metrics to provide an overview of a bank's prudential position, and a new disclosure requirement for prudent valuation adjustments. It also includes revisions arising from recent developments, such as the new disclosure requirements arising from the total loss-absorbing capacity regime for global systemically important banks and the revised standard on market risk issued on January 14, 2016. The new standard consolidates all Basel Committee disclosure requirements into the Pillar 3 framework, covering the composition of capital, the leverage ratio, the liquidity ratios, the indicators for determining globally systemically important banks, the countercyclical capital buffer, interest rate risk in the banking book and remuneration.

Read more.

UK Prime Minster Theresa May formally notified the European Council of the UK's intention to withdraw from the European Union in accordance with requirements set out in Article 50 of the Treaty on the European Union. Prime Minister May sent a letter to the President of the Council, Donald Tusk, which sets out the approach the UK Government seeks to take in discussing its exit from the European Union over the next two years.

View the letter.

You might like to view our Brexit resource page, which is available here.

US Federal Reserve Board Governor Jerome Powell provided remarks regarding the history and structure of the Federal Reserve System. Against calls for reform of the Federal Reserve System, Governor Powell defended its current structure, which he noted is essentially unchanged since it was modified by the Banking Act of 1935.  He emphasized the importance of avoiding a concentration of power over US monetary policy and financial system, and the need to address national and regional interests. Pointing to reforms in the Dodd-Frank Act, Powell noted that while the governance structure of the Federal Reserve continues to evolve, the independence of a central bank is paramount. On April, 2015 the US House Financial Services Committee’s monetary policy subcommittee held a hearing on the Federal Reserve's mandate and governance structure.

Read Governor Powell’s speech.

The Prudential Regulation Authority has published a consultation paper outlining the Prudential Regulation Authority's proposed changes to the Internal Ratings Based approach. The proposed changes are to clarify the PRA's expectations for UK banks, building societies and PRA designated investment firms applying for IRB approval as outlined in its Supervisory Statement. First, with regard to how a firm can demonstrate that they meet the requirements of the Capital Requirements Regulation on the "prior experience" of using IRB approaches. Second, clarifying the use of external data to supplement internal data for estimating Probability of Default and Loss Given Default for residential mortgages. The PRA has also proposed two reference points for estimating Probability of Possession Given Default for residential mortgages for firms that lack significant possession data. Responses to the consultation are due by June 28, 2017. The PRA aims to publish an updated Supervisory Statement in October 2017.

View the consultation paper.

The European Securities and Markets Authority has published a research Report on securities financing transactions in the European Union and the use of collateral haircuts by firms. The purpose of ESMA's research is to outline the current level and calculation methodologies of haircuts used in the EU by SFT market participants with the overall aim of informing future discussions in the context of global regulatory policy.

Read more.

The Bank of England has published the key elements of its 2017 stress test. The 2017 test will comprise two scenarios, the annual cyclical scenario and, for the first time, a biennial exploratory scenario. The stressed outcome for UK activity and unemployment is the same as in the 2016 annual cyclical scenario. However for the global economy, the stressed outcome is worse than 2016, largely reflecting the continued and rapid growth of credit in China. The current cyclical scenario will incorporate a sudden increase in the rate of return investors demand for holding pounds sterling with an associated fall in the value sterling. This is particularly relevant due to the vulnerability created by the UK's large current account deficit. The 2017 scenario also differs from the 2016 exercise as it incorporates a rise in the bank rate (in 2016 the bank rate was cut to zero). The purpose of the exploratory scenario is to consider how the UK banking system might evolve if the recent headwinds to bank profitability persist or intensify. The Bank of England will publish the results of the stress test sometime between October and the end of December 2017.

View the stress test scenarios and elements.

HM Treasury has published a revised"Banking Act 2009 Special Resolution Regime Code of Practice". The Code aims to encourage financial stability by resolving institutions such as banks, building societies and certain investment firms that are failing, and protecting depositors, taxpayers and the wider economy from the consequences of such failure. The Code was first published in November 2010 and was last updated in March 2015. The Code has been amended to take into account the Bank Recovery and Resolution Order 2016 which came into force on December 16, 2016. The Order amends the Banking Act 2009, the Financial Services and Markets Act 2000 and certain related secondary legislation in order, among other things, to ensure that the Bank of England (as the UK's resolution authority) and the Prudential Regulation Authority and Financial Conduct Authority (as the regulators) have powers to manage the failure of a bank or investment firm and their group companies and to ensure that critical functions continue to be performed. The Order also provides specific powers to the PRA and FCA to replace directors and senior managers and appoint temporary managers, amends provisions relating to triggers of contractual termination rights and adds new provisions relating to the resolution of UK branches of third-country firms. The Code has been updated to reflect the relevant changes, in particular those relating to contractual termination rights and the resolution of UK branches of third-country firms.

View the revised SRR Code of Practice.

The US FDIC and the Federal Reserve Board completed their evaluation of the 2015 resolution plans of 16 domestic banks and separately issued guidance to four foreign banks.

Read more.

The US Federal Reserve System released the 2016 combined annual audited financial statements for the Federal Reserve Banks, as well as statements for the 12 individual Federal Reserve Banks and the Board of Governors. An independent auditing firm engaged by the Federal Reserve Board has issued unqualified opinions on the financial statements and on the Federal Reserve Board’s and the Federal Reserve Banks’ internal controls over financial reporting.

The audited financial statements provide a significant amount of information about the assets, liabilities and earnings of the Federal Reserve Banks and the Federal Reserve Board as of December 31, 2016, including information about the composition, fair value and earnings related to the $4.4 trillion of US Treasury securities, government-sponsored enterprise (GSE) debt securities and federal agency and GSE mortgage-backed securities acquired through open market operations.

View The Federal Reserve System financial statements.

The CFTC’s Division of Market Oversight (DMO) issued a no-action letter extending relief associated with swap trade confirmation requirements that previously was provided in CFTC Staff Letter 16-25, which expires March 31, 2017.
 
The letter extends the relief until the effective date of any revised CFTC regulations regarding trade confirmation requirements. The relief is subject to terms and conditions in the letter.

Read more.

The UK Payment Systems Regulator has published a Report outlining how it will use the money retained from any financial penalties it imposes. The PSR has decided to adopt the approach as outlined in its consultation paper published on November 11, 2017. The Report notes that a majority of respondents supported the proposals and summarizes the ten responses to the consultation. The PSR will use amounts retained to reduce regulatory fees levied in a particular year from payment service providers. As a result, some of the PSR's enforcement costs would be funded through penalties imposed, rather than through fees. The PSR's enforcement powers under the Financial Services (Banking Reform) Act 2013 allow the PSR to impose penalties for compliance failures on firms subject to regulation.

View the Report.

The US Securities and Exchange Commission adopted an amendment to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions.  Currently, the standard settlement cycle for these transactions is three business days, known as T+3.  The amended rule shortens the settlement cycle to two business days, T+2.

The amended rule is designed to enhance efficiency, reduce risk and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle.

Broker-dealers will be required to comply with the amended rule beginning on September 5, 2017.

View the final rule.

View the SEC fact sheet.

The Financial Conduct Authority has issued a press release announcing that Nick Stace had been appointed as a Non-Executive Director Board Member. Mr. Stace commenced his initial three-year term on April 1, 2017. Mr. Stace is also Chief Executive of the Royal College of Veterinary Surgeons.

View the press release.

FINRA issued a notice seeking comment from interested parties regarding its current engagement programs.  The notice provides an overview of the engagement programs, with particular focus on FINRA’s committees, rulemaking process and member relations and related programs.

The notice is part of a new FINRA initiative to evaluate various aspects of its operations and programs to identify opportunities to more effectively further its mission. FINRA’s status as a self-regulatory organization (SRO) requires that FINRA engage effectively with its member firms, as well as investors and other stakeholders, many of whom devote time to these programs.

The comment period expires on May 5, 2017.

View the notice.

Member agencies of the Federal Financial Institutions Examination Council (FFIEC), including the Federal Reserve Board, FDIC, OCC and the National Credit Union Administration issued a joint report to Congress detailing their review of rules affecting financial institutions.  The review was conducted as part of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) as part of the agencies’ continued efforts to reduce regulatory burdens while ensuring the safety and soundness of US financial institutions. EGRPRA requires the federal banking agencies, along with the FFIEC, to conduct a review of their rules at least every 10 years to identify outdated or unnecessary regulations.

The report describes several joint actions planned or taken by the federal financial institutions regulators, including: (i) simplifying regulatory capital rules for community banks and savings associations; (ii) streamlining reports of condition and income (call reports); (iii) increasing the appraisal threshold for commercial real estate loans; and (iv) expanding the number of institutions eligible for less frequent examination cycles.  The report also describes the individual actions taken by each agency to update its own rules, eliminate unnecessary requirements, and streamline supervisory procedures.

View the report.

The Joint Money Laundering Steering Group has published and opened up for consultation its proposed revisions to Part I of its Guidance on the prevention of money laundering and the financing of terrorism for the UK financial services industry. The proposed revisions will align the JMLSG Guidance with the proposed Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, on which the Government recently consulted. The draft Regulations are intended to implement into UK laws the EU Fourth Money Laundering Directive and are due to take effect by June 26, 2017 at the same time as 4MLD.

Read more.

The European Central Bank has published final Guidance to banks on non-performing loans. The Guidance applies immediately to all Eurozone Significant Institutions supervised by the ECB in the Single Supervisory Mechanism as well as their international subsidiaries. The Guidance is not legally binding but a bank will need to explain, upon request, why it does not comply. Any non-compliance could lead to supervisory action being taken. Eurozone banks are expected to apply the Guidance proportionately with those banks that have a high level of NPLs taking greater actions. The ECB emphasizes that an NPL strategy should outline the bank's approach and objectives regarding the effective management and ultimate reduction of NPL stocks in a clear, credible and feasible manner for each relevant portfolio.

View the final Guidance.

The G20 Leaders have published a Communique from the Summit held in Germany. The G20 Leaders reiterated their commitment to finalizing the remaining elements of the financial sector reform agenda and to conducting a post-implementation evaluation of the reforms. The G20 Leaders have endorsed the Financial Stability Board's recommendations to address structural vulnerabilities arising from asset management activities and have asked the International Organization of Securities Commissions to prepare measures for timely implementation of those recommendations. Monitoring of those risks is to continue and, for the July 2017 Summit, the FSB is to assess the adequacy of monitoring and policy tools to address risks from shadow banking and to consider whether any further policy is needed. The G20 Leaders have called on their members to complete their implementation of the OTC derivatives reforms. The FSB is due to review the implementation and effects of these reforms.

Read more.

The US Consumer Financial Protection Bureau announced that it is seeking feedback from the public regarding the effectiveness of the remittance rule. The remittance rule, which took effect on October 28, 2013, requires, among other things, that companies give accurate disclosures to consumers prior to a remittance transfer. In addition, the rule also requires remittance transfer providers to investigate disputes and remedy certain areas. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act which authorized the CFPB to issue rules governing remittance transfers, the CFPB is also required to conduct an assessment of the rule within 5 years from the date of effectiveness of the rule. Under this requirement, the CFPB will be required to issue a report of the assessment in the fall of 2018.

View the CFPB press release requesting comment.

The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017 have been published. The Amending Regulations aim to improve the return of client money when an investment firm fails. The changes are in line with the Bloxham Report's recommendations on minimizing the market impact of a failed firm's entry into special administration. The Amending Regulations amend the scope of the SAR regime to include firms that manage an alternative investment fund or Undertakings for the Collective Investment of Transferable Securities or who act as a trustee or depositary for such an AIF or UCITS. The Amending Regulations will make easier the transfer of client assets from a failing firm, as it removes restrictions on transfers, limitations on what may be assigned and requirements to obtain client consent. The Amending Regulations also strengthen the bar date mechanism (which requires a reasonable time to pass before the calculation/submission of claims to the administrator) and provide continuity of safe custody services. The Amending Regulations come into force on April 6, 2017.

View the Amending Regulations.

View the Bloxham Report.

Final EU Implementing Technical Standards on common procedures, forms and templates for the consultation process between national regulators when carrying out prudential assessments relating to proposed acquisitions of qualifying holdings in credit institutions have been published. The Capital Requirements Directive requires regulators to consult each other when assessing a proposed acquirer of qualifying holdings. The ITS supplements the CRD by setting out requirements on the designation of contact points by regulators, and the timeframe and process for submitting the consultation notice and responding. The ITS also prescribes the templates for the response from the regulator from whom information has been requested. It also outlines language requirements, methods of communication and the mutual feedback process. The ITS enter into force on April 6, 2017.

View the ITS.

The US Board of Governors of the Federal Reserve System announced that it was raising the asset threshold for bank mergers that it considers unlikely to pose systemic. In an order approving the merger of People’s United Financial Inc. and Suffolk Bancorp, the Federal Reserve stated that in its experience, proposals involving an acquisition of less than $10 billion in assets, or that result in a firm with less than $100 billion in total assets, were generally unlikely to create institutions that pose systemic risks. The previous thresholds were $2 billion and $25 billion, respectively.  Proposals below the threshold generally receive a more streamlined regulatory review.

View text of Federal Reserve order approving the merger.

The UK Government has published a review of the UK's Anti-Money Laundering and Counter Financing of Terrorism regime. The document summarizes the views and evidence submitted by businesses to the UK Government's Cutting Red Tape review on the impact of the current Regime. Businesses such as banks, financial institutions and businesses who are asked to comply with banks' and financial institutions' requirements under the Regime. The UK Government launched the CRT Review in 2015 seeking evidence of any needless and ineffective burdens associated with the UK AML/CTF Regime.

Read more.

The Financial Conduct Authority has published draft Guidance on the treatment of politically exposed persons under the UK draft Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The draft Regulations were published by HM Treasury on March 15, 2017. Politically exposed persons or "PEPs" are people who hold high public office. The Money Laundering Regulations 2007 impose an obligation on firms to undertake enhanced due diligence measures when dealing with PEPs who are located outside of the UK, as well as family members and close associates of PEPs. PEPs, as well as their families and persons known to be close associates, have been recognized by the Financial Action Task Force as requiring enhanced scrutiny by firms as PEPs may be in position to abuse their public office for private gain.

Read more.

The US Office of the Comptroller of the Currency released its proposed FinTech charter supplement to the Comptroller’s Licensing Manual. Among other things, the OCC supplement defends the decision to consider issuing special purpose national bank charters for FinTech companies and provides further guidance on (i) initial steps for applying for an SPNB charter; (ii) standards that would apply to such a charter; (iii) applicable business plan requirements (i.e., inclusion of alternative business strategies, contingency plans and recovery and exit strategies); and (iv) the approval process. Comments on the OCC draft supplement are due by April 14, 2017.

View the OCC supplement.

The UK Government has published draft Money Laundering Regulations 2017 alongside a consultative document. Publication of the draft Regulations follows a consultation launched by HM Treasury on September 15, 2016, entitled "Transposition of the Fourth Money Laundering Directive," where it outlined how the UK Government intended to transpose the 4MLD and the Fund Transfer Regulation. The 4MLD builds on the Third Money Laundering Directive and Money Laundering Regulations, imposing new requirements on businesses and amends some of the existing obligations. The FTR updates the rules contained in the 2006 regulation relating to the information on payers and payees that accompanies transfers of any currency, with a view to preventing, detecting and investigating money laundering and terrorist financing. The FTR applies to the transfer of funds where at least one of the payment service providers involved in the transfer is established in the EU. This consultation outlines the responses submitted to the 2016 consultation and the UK Government's policy decisions following that consultation and requests feedback on further policy questions and the draft Regulations.

Read more.

The Basel Committee on Banking Supervision has published draft Guidelines on the identification and management of step-in risk. The draft Guidelines follow a previous Basel Committee consultation that was launched in December 2015. Step-in risk relates to the risk that a bank might support unconsolidated entities, beyond the bank's contractual obligations, in order to protect itself from any reputational damage that may result from connections to such entities. The materialization of such risk, if not appropriately anticipated, could result in the erosion of bank's capital and liquidity position. The Committee has expanded its identification criteria by building on the comments received during the first consultation to take into account the risk characteristics of entities involved in addition to the banks' relationships with them. The Basel Committee has adopted a tailored approach in formulating its prudential response and is seeking comments by May 15, 2017.

View the consultation page.

View the draft Guidelines.

President Trump made several nominations for key posts in the US Department of Treasury. Specifically, President Trump nominated James Donovan as Deputy Secretary of the Treasury and David Malpass to serve as Under Secretary for International Affairs. Sigal Mandelker was nominated as Under Secretary for Terrorism and Financial Intelligence. Brent James McIntosh was nominated to serve as General Counsel to the Treasury, and Adam Lerrick was nominated as Deputy Under Secretary for International Finance.

View the White House press release on the nominations.

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

View the text of the speech.

New York’s Department of Financial Services issued FAQs on its new cybersecurity requirements. Among other things, the updated guidance confirms that a financial services firms that are regulated by the DFS, referred to as a “covered entity”, may adopt an affiliate’s cybersecurity program, in whole or in part, so long as the covered entity’s overall cybersecurity program meets the requirements under DFS regulations. In addition, to the extent that an entity relies on an affiliate’s cybersecurity procedures in whole or in part, those policies and procedures must be made available for examination by the DFS.

View the FAQs.

The CFTC announced that it was extending the comment period for the proposed rule on capital requirements applicable to swap dealers and major swap participants. In addition to proposing minimum capital and financial reporting requirements for swap dealers and major swap participants, the proposed rule would also establish specific capital requirements for futures commission merchants that engage in swaps or security-based swaps that are not cleared by a clearing organization. The original comment period was due to expire on March 16, 2017. The new comment period will expire on May 15, 2017.

View text of federal register notice extending the comment period.