20 February – 24 February 2017

Regulatory and Legislative Developments from Across the Globe

Global

Agustin Carstens’ Appointment as BIS General Manager Postponed to December
The Board of Directors of the Bank for International Settlements (BIS) has agreed to a request from Agustín Carstens to postpone the date of his appointment as BIS General Manager by two months to 1 December 2017. His appointment was originally planned to take effect on 1 October 2017.
Press Release

FSB Regional Consultative Group for Sub-Saharan Africa Holds Meeting
The Financial Stability Board's Regional Consultative Group for Sub-Saharan Africa held its eleventh meeting in Maseru, Lesotho to discuss, among other items, corporate governance, macroprudential frameworks and shadow banking.
Press Release

IOSCO Releases Final Report on Loan Funds
The International Organization of Securities Commissions released a final report on findings of its survey on loan funds. Despite the risks, many jurisdictions consider their general rules for funds to be sufficient to address the specificities of Loan Funds. Therefore, the report concludes that further work on Loan Funds is not warranted at this stage. It notes, however, that IOSCO will continue to monitor this segment of the fund industry with a view to possibly revisiting it for further work, depending on market developments.
Report | Press Release

NORTH AMERICA

Fed Releases Discussion Paper on FX Market Risks
The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) on Thursday issued guidance explaining how supervisors should examine for compliance with the swap margin rule, which established margin requirements for swaps not cleared through a clearinghouse. The guidance explains that swap entities' compliance with counterparties that present significant credit and market risk exposures is expected to be in place on March 1, 2017, as laid out in the final rule. For other counterparties that do not present significant credit and market risks, the OCC and the Board expect swap entities to make good faith efforts to comply with the final rule in a timely manner, but no later than September 1, 2017.
Press Release

Fed Releases Discussion Paper on FX Market Risks
The Federal Reserve released a discussion paper entitled "Uncertainty, Currency Excess Returns, and Risk Reversals." The authors provide strong evidence that heightened uncertainty in the U.S. real economy or financial markets significantly raises excess returns to the currency carry trade.
Discussion Paper

OFR Releases Working Paper on Margin Requirements
The Office of Financial Research released a working paper entitled "Persistence and Procyclicality in Margin Requirements." The authors use a model of volatility and a combination of theoretical and empirical results to analyze how much higher margin levels need to be to avoid procyclicality while reducing counterparty credit risk.
Working Paper

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Europe

ESAs Publish Statement on Variation Margin Exchange
The European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) have published a statement in response to industry requests relating to operational challenges in meeting the deadline of 1 March 2017 for exchanging variation margin. As regards difficulties that in particular smaller counterparties are facing, the ESAs expect CAs to generally apply their risk-based supervisory powers in their day-to-day enforcement of applicable legislation. This approach entails that CAs can take into account the size of the exposure to the counterparty plus its default risk, and that participants must document the steps taken toward full compliance and put in place alternative arrangements to ensure that the risk of non-compliance is contained, such as using existing Credit Support Annexes to exchange variation margins.
Statement | Press Release

ESAs Warn on Money Laundering and Terror Financing Risks
The three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) have published a joint opinion addressed to the European Commission on the risks of money laundering and terrorist financing affecting the European Union's financial sector. This opinion will contribute to the European Commission's risk assessment work as well as that of the ESAs of fostering supervisory convergence and a level playing field in the area of anti-money laundering and countering the financing of terrorism.
Press Release

Bank of England Releases Annual Report on FMI Supervision
The Bank of England released an annual report on its supervision of financial market infrastructures (FMIs). The report sets out how the Bank has exercised its responsibilities in respect of supervising financial market infrastructure over the past year. It also looks at how the Bank is at the forefront of both domestic and international work to strengthen both regulatory standards and supervisory frameworks for the supervision of FMIs going forward.
Annual Report | Press Release

Jon Cunliffe Speaks on Challenges for Systemic Financial Infrastructure
Bank of England Deputy Governor Jon Cunliffe delivered a speech at the Official Monetary and Financial Institutions Forum on Wednesday entitled “Global Pipes – Challenges for Systemic Financial Infrastructure.” Cunliffe examined three challenges facing international financial market infrastructure: operational risk, in particular cyber risk; prudential risk, and the regulation and supervision of cross-border infrastructure.
Speech

Yannis Stournaras Speaks on European Banking Regulation
The Bank for International Settlements released Bank of Greece Governor Yannis Stournaras's speech entitled "Proportionality in European Banking Regulation" delivered at the Conference on Proportionality in European Banking Regulation on February 13, 2017 in Athens, Greece.
Speech

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Asia-Pacific

ASIC Publishes Report on Corporate Finance Regulation
The Australian Securities & Investments Commission has published its sixth report on the regulation of corporate finance issues in Australia. The report, which covers the period July to December 2016, provides companies and their advisers with insights into ASIC’s regulatory approach in the corporate finance sector to assist them in carrying out their associated legal and compliance obligations. It also demonstrates the important role ASIC plays in facilitating business transactions in Australia while ensuring that the protection of the investing community is maintained.
Press Release

Malaysia to Host Counter-Terrorism Financing Summit
Malaysia will be hosting the 3rd Counter-Terrorism Financing (CTF) Summit in November 2017. This is a manifestation of Malaysia’s support and commitment in addressing terrorism and terrorism financing. The Summit, to be held from 20 to 23 November 2017, is a platform for participating countries to collaboratively develop real solutions in countering terrorism financing. The event is organized following the success of the 2016 CTF Summit in Bali, Indonesia which involved more than 200 specialists from over 20 countries. This year, the summit will include greater private sector participation.
Press Release

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GFMA & GFMA - Affiliate News & Events

Early Bird Ends March 3: MiFID II Seminar, April 4 in NYC or via Webinar
The revision of the European Union’s Markets in Financial Instruments Directive (MiFID II) is expected to go into effect in January 2018. This rule will significantly change the way broker dealers and asset managers comply with cross-border business requirements in Europe – especially in the area of payment for research. Join SIFMA for a focused half-day discussion on the key considerations of the framework for unbundling and the implications for cross border research.
Register Today

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Published quarterly, the LEI Update newsletter provides updates on developments surrounding the implementation of the global legal entity identifier (LEI). A unique ID associated with a single legal entity, LEIs allow for consistent identification of parties to financial transactions, facilitating a consistent and integrated view of exposures. The establishment of an LEI system is a foundational and critically important element towards the improved measurement and monitoring of systemic risk. 
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