17 November - 21 November 2014

Regulatory and Legislative Developments from Across the Globe

Happy Thanksgiving! Our next publication will be on Friday, December 5th. 


Basel LogoBasel Committee Releases Working Paper on Basel Implementation Challenges for Emerging Economies
The Basel Committee on Banking Supervision's Basel Consultative Group released a working paper titled “Impact and Implementation Challenges of the Basel Framework for Emerging Market, Developing and Small Economies.” The report assesses the potential impact and implementation challenges of specific standards issued by the Basel Committee in the context of emerging market, developing and small economies. Additionally, it outlines practical steps that can be taken by authorities in these jurisdictions to implement global standards and enhance their supervisory approaches.
Working Paper | Press Release

BIS Releases Working Paper on the Basel III Leverage Ratio
The Bank for International Settlements' Monetary and Economic Department released a working paper on the leverage ratio over the cycle. This paper analyses how the Basel III leverage ratio (Tier 1 capital/exposure) behaves over the cycle. The analysis proposes a setup to test for the cyclical properties of bank capital ratios, taking into account structural shifts in banks' behavior during the global financial crisis and its aftermath.
Working Paper | Press Release

FSB Releases Reports and Letter to G20 on Regulatory Reform Progress and Focus for the Future
The Financial Stability Board released two reports to the G20 Brisbane Summit: the “FSB's Review of the Structure of its Representation,” and an “Overview of Progress in the Implementation of the G20 Recommendations for Strengthening Financial Stability.” It also released an “Overview of Progress and a Roadmap for 2015 on Transforming Shadow Banking into Resilient Market-Based Financing” and a letter from FSB Chair Mark Carney to the G20 Leaders, reporting on progress in reforming the global financial system.
Reports: FSB's Review of the Structure of its RepresentationProgress in Implementation of G20 Recommendations for Strengthening Financial Stability | Overview of Progress and Roadmap for 2015 on Shadow Banking | Letter | Press Release

IMF Releases Working Paper on Liquidity Shocks
The International Monetary Fund released a working paper entitled "The Transmission of Liquidity Shocks: The Role of Internal Capital Markets and Bank Funding Strategies." Using bank-level data for US bank holding companies, we find that a credit rating downgrade is associated with an immediate and persistent decline in access to non-core deposits and wholesale funding, especially during the global financial crisis.
Working Paper

IMF Building

IMF Releases Working Paper on Speculative Asset Bubbles
The International Monetary Fund released a working paper entitled "Identifying Speculative Bubbles: A Two-Pillar Surveillance Framework." The author introduces a two-pillar (price and quantity) approach for financial market surveillance. The intuition is straightforward: while asset pricing models comprise a valuable component of the surveillance toolkit, risk taking behavior, and financial vulnerabilities more generally, can also be reflected in subtler, non-price terms.
Working Paper

IOSCO Releases Draft Consultation on Post-Trade Transparency in the Credit Default Swaps Market
The International Organization of Securities Commissions released a consultation report on post-trade transparency in the credit default swaps market. The report seeks to analyze the potential impact of mandatory post-trade transparency in the credit default swaps (CDS) market. IOSCO reached a preliminary conclusion that the data does not suggest that this introduction of mandatory post-trade transparency had a substantial effect on market risk exposure or market activityfor those CDS products. Comments are due by February 15, 2015.
Consultation Report | Press Release

BIS Releases Pentti Hakkarainen's Speech on Shadow Banking Regulation
The Bank for International Settlements released Bank of Finland Deputy Governor Pentti Hakkarainen's speech entitled "Shadow Banking - What Kind of Regulation for the (European) Shadow Banking System?" delivered on September 3, 2014 at the SAFE Summer Academy 2014's panel discussion on Shadow Banking: Evolution, Background, Perspectives in Brussels, Belgium. Hakkarainen said shadow banking is beneficial in principle and regulation must be careful.

Mark Carney Speaks on the Next Phase of Financial Reform
Chairman of the Financial Stability Board and Governor of the Bank of England Mark Carney delivered a speech entitled "The Future of Financial Reform" at the 2014 Monetary Authority of Singapore Lecture in Singapore. Carney spoke of the need to build “pillars of diversity, trust and openness that will support a global financial system serving the global economy to its full potential.”




GAO Issues Report on Bank Capital Reforms
The GAO issued a report titled: “Bank Capital Reforms: Initial Effects of Basel III on Capital, Credit, and International Competitiveness.” The report found that jurisdictional differences in the implementation of the Basel III capital standards have arisen, but their competitive effect on internationally active banks is unclear.  
Report | Highlights

Daniel Tarullo Speaks on Liquidity Regulation
Federal Reserve Governor Daniel K. Tarullo delivered a speech entitled "Liquidity Regulation" at The Clearing House 2014 Annual Conference in New York, New York. Tarullo said regulators have a much better appreciation for the role of liquidity regulation after the financial crisis and commended the significant progress that firms have made, while admitting that important issues remain and that there may be unintended effects.

Timothy Massad Speaks on Regulatory Reform and Cross-Border Challenges
CFTC Chairman Timothy G. Massad delivered a speech on financial regulatory reform and cross-border challenges in the context of clearinghouse oversight, swaps trading and market data at the CME Global Financial Leadership Conference in Naples, Florida.

Mark Wetjen Speaks on Trans-Atlantic Collaboration on Trade Execution
CFTC Commissioner Mark P. Wetjen delivered a speech entitled "The Next Opportunity for Trans-Atlantic Collaboration: Shaping a New Era for Swap Execution" at the Cumberland Lodge Financial Services Policy Summit. Wetjen said derivatives regulators should not be satisfied with regulatory fragmentation



European Commission Adopts Regulation on Designation of G-SIFIs
The European Commission adopted Delegated Regulation ((EU) No 1222/2014), supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards for the specification of the methodology for the identification of global systemically important institutions and for the definition of subcategories of global systemically important institutions. The new regulatory technical standards become applicable January 1, 2015.
Commission Delegated Regulation (EU) No 1222/2014

ESMA Releases Risk Dashboard on EU Securities Markets
The European Securities and Markets Authority released its Risk Dashboard for 3Q 2014. ESMA’s Risk Dashboard assesses the risks associated to European financial markets looking into liquidity, market, contagion and credit risks. The Dashboard finds that in 3Q14 EU systemic stress indicators increased, after experiencing a calm 2Q14.
Risk Dashboard | Press Release

Mario Draghi Details ESRB’s Work Before Committee on Economic and Monetary Affairs
Mario Draghi, chair of the European Systemic Risk Board (ESRB), provided details of the ESRB’s work in his introductory statement before the Committee on Economic and Monetary Affairs of the European Parliament (ECON), particularly in relation to the rebuilding confidence in the European banking system; and the operationalising macro-prudential policy in the banking sector. Draghi concluded by noting that the ESRB is due to publish a report early next year on the regulatory treatment of sovereign exposures.
Draghi Statement

FCA Releases Reviews and Draft Guidance on Managing Financial Crime Risks for Small Firms
The Financial Conduct Authority released a thematic review on how small banks manage money laundering and sanctions Risk, and a thematic review on managing bribery and corruption risk in commercial insurance broking, as well proposed guidance on financial crime systems and controls. The FCA has found that many small banks and commercial insurance intermediaries fail to effectively manage financial crime risk. Comments on the Proposed Guidance are due by February 6, 2015.
Reviews: How Small Banks Manage Money Laundering and Sanctions RiskManaging Bribery and Corruption Risk in Commercial Insurance Broking | Guidance | Press Release

HM Treasury Consults on Regulating Individual Conduct in UK Branches of Foreign Banks
M Treasury has published a consultation paper entitled “Regulating individual conduct in banking: UK branches of foreign banks”. This consultation follows a recommendation made by the Parliamentary Commission on Banking Standards. The PCBS’ recommendations were partly implemented by the Financial Services (Banking Reform) Act 2013 which gives HM Treasury the power to extend reforms to cover the UK branches of foreign credit institutions and investments firms, which is exercisable via a statutory instrument. The deadline for comments is January 30, 2015.

Steven Maijoor Speaks on Preventing Another Financial Crisis
European Securities and Markets Authority Chair Steven Maijoor delivered a speech entitled "Regulatory Measures to Prevent Another Crisis" at the CFA Institute in Brussels, Belgium. Maijoor expressed confidence that reforms to date have made the financial system safer.

Martin Wheatley Speaks on Achieving Meaningful Progress in Conduct Regulation
Financial Conduct Authority Chief Executive Martin Wheatley delivered a speech entitled "Economics, Technology and Data - Redefining the Future of Conduct Regulation" at the Institute of Directors in London.

Martin Taylor Speaks on the Leverage Ratio
Financial Policy Committee External Member Martin Taylor delivered a speech entitled "Why We Need a Leverage Ratio, And How Bank Boards Might Take Charge" at the Oliver Wyman Institute Annual Conference in London.
Speech | Press Release

Andreas Dombret Speaks on the European Banking Union
Deutsche Bundesbank Executive Board Member Andreas Dombret delivered a speech entitled "Big Bang Banking Union - What Can We Expect?" at the Euro Finance Week in Frankfurt, Germany. Dombret said the original role of banks is to service the real economy, and that “putting this idea back into the heads of bankers would contribute greatly to making the financial system more stable.”



ASIC Launches Consultation on Cutting Red Tape and Encouraging More Electronic Disclosure
The Australian Securities and Investments Commission is seeking feedback on proposals to make it easier for businesses to deliver financial services disclosures electronically while preserving choice for consumers. Consultation Paper 224, “Facilitating electronic financial services and disclosures,” is aimed at enhancing investor engagement with disclosure. Comments are due January 16, 2015.
Consultation Paper | Press Release

Reserve Bank of India Published Revised Regulatory Framework for Non-Banking Finance Companies
The Reserve Bank of India has published a revised regulatory framework for non-banking finance companies (NBFCs). A review of the entire NBFC sector was undertaken with the goal of eventually transitioning to an activity-based regulatory system. Changes were made to a) address risks wherever they exist, b) address regulatory gaps and arbitrage arising from differential regulations, both within the sector as well as vis-a-vis other financial institutions, c) harmonize and simplify regulations to facilitate a smoother compliance culture among NBFCs, and d) strengthen governance standards.



GFMA & GFMA - Affiliate News & Events

Keynote Speakers Sneak Preview: SIFMA's AML Conference - Feb. 24-25, NYC
Hear from the SEC’s Director of Enforcement, Andrew Ceresney, and the FBI’s Securities Program Coordinator, David Chaves, at this year’s Anti-Money Laundering and Financial Crimes Conference.  Join us to hear the practical guidance on implementing effective compliance programs and law enforcement techniques to address money laundering and other financial crimes. Stay tuned for additional speaker and program announcements!
Register Today

Mark Your Calendar: 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, risk management strategies, and how regulatory changes and other related factors will affect the industry in 2015. Early bird rates are now available!
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