8 December - 12 December 2014

Regulatory and Legislative Developments from Across the Globe

global

Basel LogoBasel Committee Releases Draft Consultation on Disclosure of the Net Stable Funding Ratio
The Basel Committee on Banking Supervision released a Consultative Document on net stable funding ratio disclosure standards. It is important that banks adopt a common public disclosure framework to help market participants consistently assess banks' funding risk. To promote the consistency and usability of disclosures related to the NSFR, the Committee has agreed that internationally active banks across Basel Committee member jurisdictions will be required to publish their NSFRs according to a common template. Comments are due by March 6, 2015.
Consultative Document | Press Release

Basel Committee Releases Document on Revisions to the Securitization Framework
The Basel Committee on Banking Supervision has today issued revisions to the securitization framework. The revisions aim to address a number of shortcomings in the Basel II securitization framework and to strengthen the capital standards for securitization exposures. The most significant revisions with respect to the Basel II securitization framework relate to changes in (i) the hierarchy of approaches; (ii) the risk drivers used in each approach; and (iii) the amount of regulatory capital banks must hold for exposures to securitizations (i.e. the framework's calibration).
Document | Press Release

BIS Releases Quarterly Review
The Bank for International Settlements released its Quarterly Review for December 2014. The review found that markets remain buoyant despite mid-October's spike in the volatility of most asset classes. This sharp retreat in risk appetite reflected growing uncertainty about the global economic outlook and monetary policy stance, as well as increased geopolitical tensions. As selling pressure increased, market liquidity temporarily dried up, amplifying market movements.
Quarterly Review | Press Release

BIS and IOSCO Release Consultation Paper on Criteria for Identifying “Simple, Transparent and Comparable” Securitizations
The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) released today a consultative document titled “Criteria for identifying simple, transparent and comparable securitisations.” The purpose of these criteria is to identify – and to assist the financial industry’s development of – simple, transparent and comparable securitizations structures, as well as to help parties involved in a securitization transaction evaluate the risks of a particular securitization as part of their due diligence on securitizations.
Consultative Document

IMF Releases Working Paper on Macroprudential Policies
The International Monetary Fund released a Working Paper entitled "An Overview of Macroprudential Policy Tools." The paper states that macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues
Working Paper

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NORTH AMERICA

Fed Releases Proposed Rule on Capital Surcharges for Systemically Important BHCs
The Federal Reserve released a proposed rule on risk-based capital guidelines for global systemically important bank holding companies, pursuant to Section 165 of the Dodd-Frank Act. The proposal builds on a GSIB capital surcharge framework agreed to by the Basel Committee on Banking Supervision (BCBS), augmented to address risks to U.S. financial stability. A firm identified as a GSIB would calculate its GSIB surcharge under two methods and use the higher of the two surcharges. Comments are due by February 28, 2015.
Proposed Rule | Staff Memorandum | Press Release

Mary Jo White Speaks on Regulatory Issues for the Asset Management Industry
SEC Chair Mary Jo White delivered a speech entitled "Enhancing Risk Monitoring and Regulatory Safeguards for the Asset Management Industry" at the New York Times DealBook Opportunities for Tomorrow Conference in New York City. White said the SEC “must continue to focus on assessing the activities of the asset management industry as it evolves, ensuring that we are addressing the risks of modern portfolio composition and operations, and anticipating and planning for the worst.”
Speech

Manuel Sanchez Speaks on the Challenges Facing Financial Regulators in Emerging Markets
Bank of Mexico Deputy Governor Manuel Sanchez delivered a speech entitled "The Changing Tide of Financial Markets" at the Latin America & Caribbean Government Funds Roundtable in Mexico City. Sanchez spoke about the trade-offs investors may face as monetary policy normalization in advanced countries evolves.
Speech

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europe

EBA Releases Supervisory Disclosure on the Implementation and Transposition of the CRD IV Package
The European Banking Authority released a Supervisory Disclosure, which provides an overview on the implementation and transposition of the Capital Requirements Directive and Capital Requirements Regulation across the EU, as well as the use of options and national discretions by each EU member state. The Supervisory Disclosure also provides aggregate statistical data on the EU banking sector.
Supervisory Disclosure | Press Release

EBA Releases Risk Dashboard on EU Banking Sector
The European Banking Authority released its Risk Dashboard for Q3 2014. This edition of the risk dashboard is the first to have own funds' positions and requirements data that is based on the supervisory reporting standards from COREP, the Common Reporting framework for financial institutions across the EU, and includes an annex on aggregate risk parameters that brings enhanced transparency on EU banks' and allows comparison across countries and geographical areas.
Risk Dashboard | Press Release

EBA Releases Technical Advice on Intervention on Structured Deposits Under MiFIR
he European Banking Authority (EBA) published its final technical advice to the Commission laying out criteria and factors for exercising intervention powers on structured deposits. This final technical advice, which has been developed in accordance with the Markets in Financial Instruments Regulation (MiFIR) requiring the EBA to monitor the market for structured deposits, takes into consideration, where appropriate, comments received during a public consultation earlier this year.
Technical Advice | Press Release

EC Adopts Proposal for Management Candidates on Single Resolution Board
The European Commission announced the adoption of a proposal for the appointment of the Chair, the Vice-Chair and the Board Members of the Single Resolution Board, the European Resolution Authority for the Banking Union. Once the European Parliament has given its approval on the Commission's proposal for each of the functions, the Council (acting by qualified majority) shall adopt implementing decisions to appoint the Chair, the Vice-Chair and the Board Members.
Press Release

EC Adopts Implementing Regulation Extending Transitional Period for Capital Requirements for Exposures to CCPs
The European Commission has today adopted an implementing act that will extend the transitional period for capital requirements for EU banking groups’ exposures to central counterparties (CCPs) under the Capital Requirements Regulation (CRR). Since the process of authorization and recognition takes time, the CRR provides a transitional period during which these higher requirements will not be applied, to ensure a Mlevel playing field for EU CCPs. This transitional period was set to expire on 15 December
2014.
Implementing Regulation | Press Release

Council of the European Union Announces Conclusions of Finance for Growth of the European Economy
The Council of the European Union has met and adopted conclusions on finance for growth and the long-term financing of the European economy on, among the other matter, Securitization, Private Placement and Crowdfunding. The Council noted the Commission’s intention to consult with a view to an action plan on capital markets union by summer 2015.
Press Release

Council of the European Union Announces Agreement on Single Resolution Fund
The Council of the European Union issued a press release announcing that it has reached political agreement on regulation determining the contributions banks must make to the EU's Single Resolution Fund (SRF). The fund will be set up under a single resolution mechanism (SRM) that is being established to ensure the orderly resolution of failing banks.
Press Release

Council of the European Union Publishes Provisional Compromise Text for Regulation of European Long-Term Investment Funds
A provisional compromise text on Regulation on European Long-term Investment Funds (ELTIFs) has now been published.  As a result, the General Secretariat of the Council requests that the Permanent Representatives Committee approves the compromise text and confirms that the Council Presidency can indicate that should the Parliament adopt the compromise text at first reading, the Council would approve the Parliament’s position.
Compromise Text

ESMA LogoESMA Releases Peer Review of Supervisory Practices on MiFID
The European Securities and Markets Authority (ESMA) has conducted a peer review of how national regulators (national competent authorities or NCAs) supervise MiFID conduct of business rules on providing fair, clear and not misleading information to clients. The Report found that there was overall a high degree of compliance amongst NCAs with the good practices identified in these key areas. However, a variety of approaches were observed, leading to different intensity of supervision.
Peer Review | Press Release

ESM Direct Bank Recapitalisation Instrument Adopted
The European Stability Mechanism (ESM) has adopted a direct recapitalization instrument for euro area financial institutions.  Pursuant to this instrument, the ESM may recapitalize a systemic and viable financial institution located in the euro area directly, although only as a measure of last resort.  To preserve the ESM’s high creditworthiness and lending capacity for other instruments, the maximum available funds from the ESM under the new instrument is capped at €60 billion.
Press Release

Members of the European Parliament Question Candidates for Single Resolution Board
Members of the European Parliament's Economic and Monetary Affairs Committee questioned candidate for Chair of the Single Resolution Board Elke König and five other nominees at a public hearing. The committee is to vote on the candidates on Monday, December 15, at a special meeting in Strasbourg. The vote in plenary session is scheduled for Wednesday, December 17.
Press Release

BoE Releases Quarterly Bulletin
The Bank of England released its Quarterly Bulletin for Q4 2014. Included is an article on the size of the UK banking system that presents some empirical evidence on the relationship between banking system size and financial stability which suggests that while financial sector size can be important, it is the resilience of the banking system that is key for determining financial stability.
Quarterly Bulletin | Press Release

FCA Releases Draft Consultation on Changes to Handbook
The Financial Conduct Authority released a Quarterly Consultation Paper on proposed amendments to its Handbook. Comments are due by February 5, 2015, except for comments on Chapter 5, which are due by January 5, 2015.
Consultation Paper | Press Release

FCA Issues Press Release on Enforcement Conference
The Financial Conduct Authority issued a press release on the Enforcement Conference held on December 2, 2014, which used enforcement actions as lessons to foster better conduct and a stronger regulatory regime. The day opened with an address from Martin Wheatley, Chief Executive and a keynote speech from Tracey McDermott, Director of Enforcement and Financial Crime, followed by panel discussions and breakout sessions.
Press Release

FCA Announces New Strategic Approach and Organizational Changes
The Financial Conduct Authority announced a new strategy to meet regulatory challenges as well as changes to its organizational structure, including the departure of several members of its Executive Committee. The strategic approach recognizes the differences in approach required across the industry given its size and variety, based on emphasizing sector and market-wide work and reflecting the FCA’s competition duties.
Strategy | Organizational Structure | Press Release

Pentti Hakkarainen Speaks on SSM and SRM
Bank of Finland Deputy Governor Pentti Hakkarainen delivered a speech entitled "Banking Union - the 'Game-Changer' in the European Financial Markets" before Ambassadors and Representatives of the EU countries in Helsinki, Finland. Hakkarainen said that by giving up a small part of the national sovereignty, the countries belonging to the Banking Union have gained an access to the European level decision making on key areas of supervision, crisis prevention and management as well as regulation of European banks.
Speech

Luis Linde Speaks on Challenges of the Single Supervisory Mechanism
Bank of Spain Governor Luis M. Linde delivered a speech entitled "Situation of and Challenges Facing the European and Spanish Banking Industry Following the Start-Up of the Single Supervisory Mechanism" at the 10th Banking Industry/IESE Meeting in Madrid, Spain. Linde said challenges include excessive risk-taking, low profitability, and the sustainability of sovereign debt.
Speech

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asia-pacific

Australian Government Releases Final Report of Financial System Inquiry
On December 7, the Australian government released the final report of the Financial System Inquiry. The report makes 44 recommendations to serve as a blueprint for the financial system over the next decade. The recommendations focus on two general themes: funding Australia’s economy and boosting competition; and five specific areas: resilience; superannuation and retirement incomes; innovation; consumer outcomes and the regulatory system.
Press Release

Reserve Bank of Australia Publishes Research Paper on Evolution of Payment Costs
The Reserve Bank of Australia has published a research paper titled “The Evolution of Payment Costs in Australia.” This paper examines the costs borne by financial institutions, merchants, and consumers in making, facilitating and accepting consumer-to-business payments. It examines the resource costs incurred by these sectors, how these have changed since 2006, and how fees and other transfers determine which sectors ultimately bear these costs. It also examines how resource costs vary at different transaction sizes and, for merchants, how costs differ between small and large entities.
Press Release

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of Interest

SIFMA’s Bentsen: State of the Industry
In a blog post, SIFMA President and CEO, Kenneth E. Bentsen, Jr., shared highlights from SIFMA’s annual State of the Industry media briefing. He examines the role the capital markets play in the nation’s economic recovery; our efforts around cybersecurity, equity market structure reform, and preserving investor choice; and our policy agenda for the coming year. As Mary Jo White, Chair of the U.S. Securities and Exchange Commission (SEC), said at our Annual Meeting, “The markets are the strongest and most reliable in the world – but that doesn’t mean they can’t be optimized.”
Read the full blog post and watch video replays from the briefing.

SIFMA Announces 2015/2016 Holiday Schedule for US and UK Bond Markets
SIFMA issued its 2015 and 2016 holiday schedules for full and early market closes for the trading of US dollar-denominated fixed-income securities in the United States and the United Kingdom.  The 2015 U.S. calendar includes two changes from standard practice: a noon close for Good Friday and open markets on July 3.

SIFMA will publish its 2016 recommendations for Japan in early 2015. Please note that SIFMA's recommended early and full market closes are recommendations only; each SIFMA member firm should decide for itself whether its fixed-income departments remain open for trading.  All SIFMA recommendations are subject to change due to market conditions.  Early closes will not affect the closing time for settlements.

Want to know more about how SIFMA came to be responsible for making market close recommendations? Find out here.

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GFMA & GFMA - Affiliate News & Events

View Program Topics: SIFMA's AML Conference - Feb. 24-25, NYC
This year’s AML and Financial Crimes Conference general sessions will focus on the customer due diligence challenges for securities firms in the context of the recent FinCEN proposal; the regulators’ priorities and perspectives for 2015 and the challenges facing both the industry and the regulatory community in the current AML and financial crime environment; the current AML and financial crime compliance challenges and other hot topics, including: individual liability; whistleblowers; sanctions; anti-bribery issues and overseas hiring practices; and senior investor issues; and the lessons learned from recent enforcement actions.
Register Today

Program Preview: 2015 Insurance- and Risk-Linked Securities Conference, Mar. 3-4, NYC
The SIFMA Insurance- and Risk-Linked Securities Conference (IRLS 2015) will feature industry experts, sponsors and institutional investors discussing this growing and evolving market place, product design and innovation, and emerging trends. Join us to learn about the expanding opportunities in a market that is set to have a record year, the risk management strategies that you can apply, and how regulatory changes and other related factors will affect the industry in 2015.
Early bird rates are now available!

View the Program and Register Today: SIFMA's 2015 C&L Society Annual Seminar – March 15-18
SIFMA’s Compliance & Legal Society is pleased to present the program for this year’s Annual Seminar from March 15-18 in Phoenix, Arizona. With more than 65 dynamic panels and sessions, register today at an early bird rate to hear from our industry’s experts and regulators on the latest developments impacting the compliance and legal space.
Click for more event and registration details.

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