2 December – 6 December 2013
IOSCO Announces Supervisory Colleges Established for Internationally Active Credit Rating Agencies
The Supervisory Colleges for Standard & Poor’s, Moody’s and Fitch held their inaugural meetings on 5 – 6 November in New York. The colleges for S&P and Moody’s are chaired by the United States Securities and Exchange Commission (SEC) and the college for Fitch is chaired by the European Securities and Markets Authority (ESMA). The establishment of the colleges follows recommendations that International Organization of Securities Commissions (IOSCO) made in its Final Report on Supervisory Colleges for Credit Rating Agencies (FR08/13) that was published in July 2013.
IOSCO Press Release
IOSCO Research Launches Statistics Web Portal on Securities Markets
The Research Department of the International Organization of Securities Commissions (IOSCO) launched a statistics web portal that provides the public with a global overview of specific securities markets. The objectives of the new portal are threefold. First, it seeks to provide a centralized point for monitoring global trends, risks and vulnerabilities; second, to provide a mechanism for comparison of how well markets are recovering in light of the crisis; and finally, to provide IOSCO members and the broader financial community with easy access to key statistics, charts and indicators on a number of securities markets.
IOSCO Statistics Web Portal
Financial Stability Board Summary of Regional Consultative Group for the Americas
The Financial Stability Board (FSB) held its fifth meeting of the Regional Consultative Group (RCG) for the Americas. At the meeting, the members were updated on the FSB’s policy priorities and work plan, including building resilient financial institutions, ending “Too-Big-To-Fail”, transforming shadow banking and making derivatives markets safer. Members discussed vulnerabilities in the global financial system and regional financial stability issues, including the potential impact for the region of possible changes in accommodative monetary policies.
FSB Press Release
ESMA Identifies Deficiencies in CRAs Sovereign Ratings Processes
The European Securities and Markets Authority (ESMA) published a report identifying a number of deficiencies in the processes for producing and issuing sovereign ratings at the three largest credit rating agencies (CRAs), Fitch Ratings, Moody’s Investors Service and Standard & Poor’s.
The Report follows an investigation carried out by ESMA into the sovereign rating processes at the three CRAs, between February and October 2013. The investigation was prompted by concerns about potential conflicts of interests, the impact of sovereign ratings on other types of ratings, CRAs’ capacity to cope with the number of rating actions during a period of high volatility, the use of bulk rating actions, and issues around the confidentiality and timing of rating actions.
ESMA Press Release
ESMA Publishes Official Translations of AIFMD Guidelines on Supervisory Co-operation Agreements
The European Securities and Markets Authority (ESMA) published the official translations of the ESMA Guidelines on the model Memorandum of Understanding [MoU] concerning consultation, co-operation and the exchange of information related to the supervision of AIFMD [Alternative Investment Fund Managers Directive] entities, which sets out a model MoU for use by Member State supervisors when entering into bilateral agreements with foreign supervisors.
EIOPA Survey Results - Crisis Prevention, Management and Resolution Preparedness of NSAs
The European Insurance and Occupational Pensions Authority (EIOPA) released a report containing the results of a survey on crisis prevention, management and resolution approaches and practices in the EU national supervisory authorities (NSAs). The report states that the financial crisis has changed the NSAs’ approaches in different ways, but that in general it has intensified their monitoring and supervisory activities and has improved their crisis management procedures.
EIOPA Survey Results
Malaysia Publishes Consultation on Trade Repository Reporting Requirement for OTC Derivatives
The enhancement of transparency of over-the-counter (OTC) derivatives is an important step forward to facilitate assessment of risk to financial stability, potential market irregularities and in determining appropriate resolution strategies in dealing with distressed financial institutions. In achieving these objectives, the Suruhanjaya Sekuriti Malaysia, Bank Negara Malaysia and Perbadanan Insurans Deposit Malaysia issued a joint consultation paper on the trade repository reporting requirements for OTC derivatives which sets out the details of the mandatory reporting requirements and the transitional arrangements. The deadline for the consultation is 20 January 2014.
Joint Public Consultation Paper
Monetary Authority of Singapore Consultation Paper on the Review of the Banking Act
The Monetary Authority of Singapore (MAS) is reviewing the Banking Act (BA) to ensure that it remains current and reflects MAS’ requirements and expectations. Specifically, MAS intends to codify its expectations as to the information that banks should provide to MAS and the risk management practices that banks should implement. MAS also proposes several changes to the BA to rationalise and enhance its supervisory powers over banks and their directors, executive officers and external auditors. These proposed changes are discussed in this consultation paper. The deadline for comments is 15 January 2014.
MAS Consultation Paper: Review of the Banking Act
Council Publishes Compromise Proposal on SRM Regulation
The Council of the European Union has published the latest compromise proposal on the proposed Single Resolution Mechanism (SRM) Regulation, dated 28 November 2013. The Council has also published a note in respect of key outstanding issues in reaching a general approach to the proposed SRM Regulation, which are: decision-making in the SRM and governance of the single resolution board; financing arrangements of the SRM; and advancing the bail-in date to 1 January 2015.
Council of the European Union Report on SRM
Council Presidency Publishes General Approach for UCITS V
The Council of the European Union published its general approach to the proposal for a Directive amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions (also known as UCITS V), dated 2 December 2013.
European Parliament and the Council of the EU Publish Directive to Amend Solvency II
The European Parliament and the Council of the EU published the text of the Directive to amend Solvency II and set new repeal date for Solvency I, dated 29 November 2013.
PRA Announces Capital Standards Ahead of CRD IV
The UK Prudential Regulation Authority (PRA) has announced key decisions with regard to capital standards for banks ahead of the introduction of the Capital Requirements Directive IV (CRD IV) package. In addition, the PRA published a supervisory statement setting out changes to its capital and leverage expectations for the major UK banks and building societies to apply from 2014 onwards.
Statement on CP5/13
FCA Issues Guidance on Information Required from AIFMs on Depositary Arrangements
The Financial Conduct Authority (FCA) issued guidance on the information that alternative investment fund managers (AIFMs) need to provide the FCA in respect of their depositary arrangements. This guidance is applicable both to firms seeking a variation of permission arising out of the implementation of the AIFM Directive (AIFMD) and to new applicants seeking authorisation to manage an alternative investment fund (AIF).
The guidance note establish, in particular, that where information about depositary arrangements is missing from a firm’s application for authorisation, the firm will not be permitted to start managing the AIF in question until one month after the missing information has been provided, even if authorisation is granted in the interim.
FCA Guidance Note
GFMA and GFMA Affiliate News and Events
GFMA and Other Associations Submit Comments to the EBA on the Use of a LEI
On 28 November, GFMA, the International Swaps and Derivatives Association, Inc (ISDA), the Investment Industry Association of Canada (IIAC), ISITC Europe and the UK Investment Management Association provide comments to the European Banking Authority (EBA) on the EBA's Consultative Document on the use of the Legal Entity Identifier (LEI) for entity identification in EU regulatory reporting.
The Associations strongly agree with the EBA’s recommendation to support “the adoption of Legal Entity Identification system proposed by the Financial Stability Board (FSB) and endorsed by the G20, aimed at achieving a unique, worldwide identification of parties to financial transactions” and to call for “competent authorities [to] request that all institutions under their supervisory remit obtain a pre-LEI code” and use that LEI when providing information to the EBA concerning institutions.
The groups offer a few brief comments on the Draft Recommendation as well respond to the questions included in the paper.
GFMA & IIF Submit Comments to the FSB on Strengthening Oversight and Regulation of Shadow Banking
On 28 November, GFMA and the Institute of International Finance (IIF) provide comments to the Financial Stability Board (FSB) on the FSB Consultative Document: Strengthening oversight and regulation of shadow banking, policy framework for addressing shadow banking risks in securities lending and repos – Annex 2: Proposed regulatory framework for haircuts on non-centrally cleared securities financing transactions.
GFMA and the IIF support the goals and the objectives of the FSB. However, as stated in GFMA’s letter dated 14 January 2013, any regulation introduced with the aim of furthering these objectives needs to be carefully tailored so as to not undermine the securities lending and repo markets, prime brokerage and other securities financing transactions, which serve several crucial roles in the financial system, as outlined in this response.
Comment Letter 28 November 2013
Previous Comment Letter 14 January 2013
SIFMA Research Quarterly Finds Total Issuance Falls in 2013 Q3
SIFMA released its U.S. Research Quarterly for the third quarter of 2013. The report determined long-term securities issuance totaled $1.74 trillion in the third quarter of 2013, a 2.0 percent decrease quarter-over-quarter (q-o-q) and a 5.7 percent decrease year-over-year (y-o-y). Increases in U.S. Treasuries and corporate bond issuance were offset by declines in federal agency debt, municipal debt, asset-backed securities, and mortgage-related issuance.
SIFMA US Research Quarterly 2013, Q3
Ask the Experts: Custom Answers to Your Questions at AML & Financial Crimes Conference 2014
Available during the networking and refreshment breaks at the SIFMA AML & Financial Crimes Conference, Ask the Experts will offer you the opportunity to consult one on one with regulators and seasoned AML and financial crime practitioners from firms across the industry on the issues that are most important to your organization. Register today at the early bird rate for SIFMA's 14th Annual Anti-Money Laundering and Financial Crimes Conference and join us on Jan. 29-30 in New York for practical guidance on implementing effective compliance programs and addressing money laundering and other financial crimes
Register for SIFMA AML 2014