20 March – 24 March 2017

Regulatory and Legislative Developments from Across the Globe


Basel Committee Releases Consultative Document on Step-In Risk
The Basel Committee on Banking Supervision has issued a consultative document on the identification and management of step-in risk. The proposed framework will help to mitigate potential problems at shadow banks from spilling over to banks. This work is part of the G20's initiative to strengthen the oversight and regulation of the shadow banking system with the aim of mitigating systemic risks, in particular, those arising from banks' involvement with shadow banking entities. Comments are due by May 15, 2017.
Consultative Document | Press Release

IMF Releases Working Paper on Bank Ownership
The International Monetary Fund released a working paper entitled "Bank Ownership: Trends and Implications." The evidence reviewed suggests that foreign-owned banks are more efficient than domestic banks in developing countries, promote competition in host banking sectors, and help stabilize credit when host countries face idiosyncratic shocks.
Working Paper



SEC Releases Final Rule on Amendment to the Standard Settlement Cycle
The Securities and Exchange Commission has adopted an amendment to shorten by one business day the standard settlement cycle in the U.S. 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.
Final Rule | SEC Fact Sheet and Press Release | T+2 Industry Steering Committee Press Release

SEC Releases White Paper on Limit Up-Limit Down NMS Plan
The SEC's Division of Economic and Risk Analysis released a white paper entitled "'Limit Up-Limit Down' Pilot Plan and Associated Events." This paper assesses the frequency of certain events, including Limit States, Straddle States, Trading Pauses2 and clearly erroneous trades, that occurred before and after the implementation of the Limit Up-Limit Down (“LULD”) National Market System (“NMS”) Plan (the “LULD Plan” or “Plan”).
White Paper

National Bankruptcy Conference Sends Letter to Congress on SIFI Resolution
The National Bankruptcy Conference, comprising about 60 leading U.S. bankruptcy judges, professors and practitioners, sent a letter to the chairs and ranking members of the Senate Banking and Judiciary committees and the House Financial Services and Judiciary committees on the resolution of systemically important financial institutions (SIFIs). The letter expresses concerns about the potential repeal of Orderly Liquidation Authority without being replaced by another regulator-supervised resolution procedure.



EC Releases Consultation on Joint Committee Operations
The European Commission has released a consultation paper to seek views on possible changes to the current framework of operation for the European Supervisory Authorities (EBA, EIOPA and ESMA). The consultation focuses on the effectiveness of the ESAs' current governance structure and funding framework, the importance of clarifying and strengthening their tasks and powers, and the possible need to reconsider the supervisory architecture also in light of the new challenges to financial integration.

EBA Releases Report on EU Supervisory Colleges
The European Banking Authority (EBA) published its 2016 annual assessment of EU supervisory colleges, which are established for the effective supervision of EU cross-border banking groups. The report highlighted a number of achievements made by colleges in the course of 2016, including a good level and quality of engagement, and also identified areas for improvement as well as topics for supervisory attention for 2017.
Press Release

ESMA Releases Report on Market Risk
The European Securities and Markets Authority (ESMA)’s latest report on Trends, Risks and Vulnerabilities (TRV) identifies political and policy uncertainty – such as potential repercussions from the upcoming elections in some EU Member States – as the main risk drivers for 2017. ESMA, as part of its ongoing market surveillance, will update its report semi-annually, complemented by its quarterly Risk Dashboard. The results of the report were shared with the European Commission, Parliament and Council.
Report | Press Release

ESMA Announces MOU with Brazilian, Japanese, Indian, Dubai and Emirati Regulators on CCPs Under EMIR
The European Securities and Markets Authority (ESMA) has established five memoranda of understanding (MoUs) under the European Markets Infrastructure Regulation (EMIR). The MoUs establish cooperation arrangements, including the exchange of information, regarding central counterparties (CCPs) which are established and authorized or recognised in Brazil, Japan, India, the Dubai International Financial Center or the United Arab Emirates, and which have applied for EU recognition under EMIR.
Press Release

Bank of England Releases Quarterly Bulletin
The Bank of England released its Quarterly Bulletin for Q1 2017, which features articles entitled "The Financial System and Productive Investment: Evidence from a New Survey" and "The Bank’s Market Intelligence Function."
Quarterly Bulletin

Bank of England FinTech Accelerator Launches New Community
The Bank of England issued a press release announcing that its FinTech Accelerator has launched a new community for FinTech-related organizations to engage with the Bank, share insights on trends and support development of the sector.
Press Release

Andrew Bailey Speaks on Culture in Financial Institutions
Financial Conduct Authority Chief Executive Andrew Bailey delivered a speech entitled "Culture in Financial Institutions: It’s Everywhere and Nowhere" at the HKMA Annual Conference for Independent Non-Executive Directors in Hong Kong.

Andreas Dombret Speaks on Basel III
Deutsche Bundesbank Executive Board Member Andreas Dombret delivered a speech entitled "Basel III – Goal Within Sight" at the Bundesbank symposium on Banking Supervision in Dialogue in Frankfurt, Germany.



APRA Sends Letter on Review of Prudential Requirements for Traded Market Risk
The Australian Prudential Regulatory Authority (APRA) sent a letter to all its authorized deposit-taking institutions (ADIs) on the Basel Committee’s Fundamental Review of the Trading Book. APRA is advising affected ADIs that it does not envisage a new market risk standard being finalized until the beginning of 2020 at the earliest

ASIC Updates Guidance on Conduct and Disclosure Obligations for Financial Advisers
The Australian Securities & Investments Commission (ASIC) has updated Regulatory Guide 175 Licensing: Financial product advisers conduct and disclosure (RG 175) to reflect regulatory and legislative changes, including revisions to the Future of Financial Advice (FOFA) reforms. RG 175 has been updated to clarify that while the best interests duty and the appropriate advice requirement introduced as part of the FOFA reforms are separate obligations, it is unlikely that advice which fails to meet the best interests duty will be appropriate.
Press Release

ASIC Consults on Revised Liquidity Reporting Requirements
The Australian Securities & Investments Commission (ASIC) is consulting on revisions to Reporting Standard ARS 210.0 Liquidity. In line with the introduction of the net stable funding ratio (NSFR) requirement, APRA is proposing to introduce a new reporting form ARF 210.6 Net stable funding ratio. APRA is also taking this opportunity to make amendments to the current liquidity reporting forms and to streamline the current statistical reporting.
Draft Reporting Standard | Letter

HKMA Establishes Resolution Office
The Hong Kong Monetary Authority (HKMA) announced that a Resolution Office will be established in the HKMA on 1 April 2017, a major step to implement the Financial Institutions (Resolution) Ordinance (FIRO) enacted in June 2016.  The Office will work to ensure the Hong Kong resolution regime is operational for banks.  Its priorities will be to establish resolution policy standards for banks, define resolution strategies and conduct resolvability assessments of banks, work with banks to remove impediments to their orderly resolution, and develop the operational capability necessary to execute orderly resolution. 
Press Release

SFC Concludes Consultation on Position Limit Regime
Hong Kong’s Securities and Futures Commission (SFC) has published conclusions to a consultation to expand the scope of the position limit regime. After considering market feedback, the SFC has concluded that the proposals as set out in the consultation will be implemented. These include a 300% cap on the excess position limit that may be authorized by the SFC, a statutory position limit of 150,000 contracts for stock options as well as new excess position limits for index arbitrage activities, asset managers and market makers of exchange-traded funds.
Press Release

MAS Proposes a New Corporate Structure for Investment Funds
The Monetary Authority of Singapore (MAS) has commenced a public consultation on a new corporate structure for investment funds – the Singapore Variable Capital Company (S-VACC). Lawrence Wong, Minister for National Development and Second Minister for Finance, said at the Investment Management Association of Singapore (IMAS) 20th Anniversary Conference held that the S-VACC structure would offer asset managers greater flexibility and lower costs. 
Press Release

Guy Debelle Speaks on Global FX Code of Conduct
Reserve Bank of Australia Deputy Governor Guy Debelle delivered a speech entitled “The FX Global Code – Defining the Next Steps Towards a Standard Industry Code of Conduct” at the TradeTech FX Asia Conference on March 22, 2017.

Ravi Menon Speaks on the Regulatory Agenda Looking Forward
Monetary Authority of Singapore (MAS) Managing Director Ravi Menon delivered a speech entitled “Financial Regulation – The Forward Agenda” at the annual forum of the Australian Securities & Investments Commission on March 20, 2017.


GFMA & GFMA - Affiliate News & Events

View the Program: Canada-US Securities Summit: April 20, NYC
Join co-hosts, SIFMA and the Investment Industry Association of Canada (IIAC), at the 5th annual Canada-U.S. Securities Summit on April 20 in New York City. This half-day event brings together experts from Canada and the United States to discuss key economic, regulatory and political issues in the North American capital markets. It will include perspectives on the agenda of the new U.S. administration and its potential implications for the long-held ties between the two nations. Attendance is complimentary.
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