Latest news of financial regulation
The HM Treasury presents Peter Bloxham’s review of the special administration regime for investment banks (SAR) to Parliament
The HM Treasury presented Peter Bloxham’s review of the special administration regime for investment banks (SAR) to Parliament. The SAR was developed in response to the Lehman administration. The SAR was developed to increase the confidence of market participants in the effectiveness of the UK’s insolvency regime as it applies to investment firms. The statutory objectives of the SAR are:
I. identifying, protecting, and facilitating the return of, client assets;
II. protecting creditors' rights; ensuring certainty for investment banks, creditors, clients, liquidators and administrators;
III. minimising the disruption of business and markets; and
IV. maximising the efficiency and effectiveness of the financial services industry in the UK.
Related documents
Review of the Investment Bank Special Administration Regulations 2011: by Peter Bloxham
The Irish EU Council Presidency reaches provisional agreement with the European Parliament on new rules to benefit mortgage holders and consumers across Europe
Property buyers would be better informed about the costs and consequences of taking on a mortgage, better protected from market swings while the contract lasts and better protected if they cannot repay the loan, under a provisional deal struck by Economic and Monetary Affairs Committee MEPs and EU member state representatives.
Related documents
Irish Presidency press release
Statement by Commissioner Michel Barnier following the agreement in trilogue
Legislative steps on the Mortgages Directive
Next steps
EP: Vote in plenary, 11 June 2013
EU Council: endorsement by the member states
News & articles
EU seals agreement on mortgage law to avoid more housing bubbles(€urActiv)
The IOSCO publishes addendum to its report on investigating and prosecuting market manipulation
The Board of the International Organization of Securities Commissions (IOSCO) published addendum to its May 2000 report on investigating and prosecuting market manipulation. The Report clearly presented the basic concepts underlying market manipulation, how and why market manipulation can occur and the tools used by different jurisdictions in detecting, investigating and prosecuting market manipulation. Twelve years later, the basic concepts underlying market manipulation remain the same. However, developments in technology have enabled new market structures to evolve and impact the way in which market manipulation occurs and new methods of market manipulation have emerged. The purpose of this addendum is to provide useful references both to IOSCO’s work and experiences of members of IOSCO, to reflect present day financial market conditions.
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The IOSCO publishes final report on technological challenges to market surveillance
The Board of the International Organization of Securities Commissions (IOSCO) published a final report on technological challenges to effective market surveillance, which makes recommendations to help market authorities address the technological challenges facing effective market surveillance. This final report provides an overview of current market surveillance regimes and identifies the main challenges that technological developments pose to these regimes. It also makes final recommendations to help market authorities develop the regulatory tools for addressing these challenges, particularly with respect to:
I. improving surveillance capabilities on a cross-market and cross-asset basis; and
II. making more useful to market authorities the data collected for surveillance purposes.
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The European Parliament’s ECON Committee publishes a set of amendments to EP motion for a resolution on reforming the structure of the EU’s banking sector
The European Parliament’s ECON Committee published a set of amendments to EP motion for a resolution on reforming the structure of the EU’s banking sector.
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Next step
EP: Consideration of amendments in ECON Committee
Michel Barnier, George Osborne and others Finance Ministers see evidence of fragmentation in the OTC derivatives market
The EU Commissioner Michel Barnier, the UK Chancellor of the Exchequer George Osborne, along with the Finance Ministers of Brazil, France, Germany, Japan, Russia, South Africa and Switzerland wrote a joint letter to US regulators to express their concern at the lack of progress in developing workable cross-border rules as part of reforms of the OTC derivatives market.
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News & articles
U.K. joins Russia in raising alarm on U.S. swap rules’ reach (Bloomberg Businessweek)
The FCA and the PRA publish their approach to regulatory failure
The Financial Conduct Authority (FCA) published its approach to investigating and reporting on regulatory failure, as required by the Financial Services Act 2012. The Act requires the FCA to publish a statement of policy setting out the matters it will take into account to decide whether it should carry out an investigation into possible regulatory failure, and give a report of its findings and recommendations to the Treasury for publication.
The Prudential Regulation Authority (PRA) also published a statement of policy on identifying possible regulatory failure, and conducting investigations into possible regulatory failure and matters of public interest.
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The Council of the EU confirms agreement with EP on bank supervision
The Permanent Representatives Committee (Coreper) approved a compromise agreed with the EP on the establishment of a single supervisory mechanism (SSM) for the oversight of credit institutions. The agreement reached with the Parliament confirms the Council's position, agreed in December, on the balance of rights and obligations between participating and non-participating member states, and between euro area and non-euro area participants. It also strengthens accountability, in terms of transparency and right of inquiry, and gives the Parliament a greater role in the appointment of the chair and vice chair of the supervisory board.
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Next step
Following the approval of the legislation by the Coreper, a letter will be sent to the chair of the Parliament's "ECON" committee confirming the Council's agreement on the EBA regulation and informing the chair that it has also endorsed the amending regulation on the ECB.
If the Parliament votes accordingly and in particular approves the EBA text as agreed, the Council will approve both texts without further discussion.
News & articles
No law change needed or wanted for bank union completion: EU officials (Reuters)
Background
On the occasion of the Informal meeting of Ministers and Governors in Dublin (12 April 2013), Member States agreed on a political declaration to accompany the final compromise on the ECB Regulation Proposal.
The FSB announces the successful implementation of the initial phase of a common data template for G-SIBs
The FSB announced the successful implementation of the initial phase of a common data template for global systemically important banks (G-SIBs). The first phase of the Data Gaps Initiative (Phase 1) started in March 2013 with the harmonized collection and pooling of improved consolidated data on bilateral counterparty credit exposures of major systemic banks, as well as their consolidated aggregated exposures. Extensions of the project will be considered in stages to progressively expand and enhance the framework potentially with improved data on bilateral funding dependencies (Phase 2) and consolidated balance sheet (Phase 3). Following implementation, participating national authorities will take responsibilities to maintain the common data template for G-SIBs and provide further technical support and guidance to reporters.
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The IOSCO Consults on Regulation of Retail Structured Products
The IOSCO published a consultation report on regulation of retail structured products, which analyses trends in the retail structured product market, and proposes a regulatory Toolkit for IOSCO members.
The retail structured products work responds to concern among IOSCO members about the regulatory challenges these products pose, particularly in the area of investor protection.
The Toolkit has five sections. They cover:
I. A potential regulatory approach to retail structured products;
II. Potential regulation of the product design and issuance;
III. Potential regulation of product disclosure and marketing;
IV. Potential regulation of the product distribution; and
V. Potential regulation of post-sales practices (that is, once the products are in the hands of investors).
The closing date for comments is 13 June 2013.
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Regulation on EuVECA has been published in the Official Journal of the European Union
Regulation on EuVECA has been published in the Official Journal of the European Union. The purpose of this Regulation is to enhance the growth and innovation of small and medium-sized enterprises (SMEs) in the Union. Investments in qualifying portfolio undertakings established in third countries can bring more capital to qualifying venture capital funds and thereby benefit SMEs. This Regulation shall enter into force on 15 May 2013.
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The FED proposes fee on financial institutions to cover costs of regulation
The Board of Governors of the Federal Reserve System (Board) is inviting comments on a proposed rule to implement section 318 of the Dodd-Frank Act, which directs the Board to collect assessments, fees, or other charges equal to the total expenses the Board estimates are necessary or appropriate to carry out the supervisory and regulatory responsibilities of the Board for bank holding companies and savings and loan holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated for Board supervision by the Financial Stability Oversight Council.
Comments should be received by 15 June 2013.
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News & articles
U.S. Fed proposes bank fee to cover cost of regulation (Reuters)
The IOSCO Consults on Principles for Financial Benchmarks
The IOSCO published a consultation paper on principles for financial benchmarks, which seeks public comments on a set of high-level principles for benchmarks used in global financial markets.
Because of the wide diversity of benchmarks, IOSCO also is asking for public comment on a subset of more detailed principles for benchmarks having specific risks arising from their reliance on submissions and/or their ownership structure.
The closing date for responses is 16 May 2013.
Related documents
Principles for financial benchmarks
Comment
IOSCO proposes principles for financial benchmarks (Financial Conduct Authority)
News & articles
Benchmark rates should be anchored in real data, Iosco says (Bloomberg Businessweek)
The FSB publishes its fifth progress report on implementation of OTC derivatives market reforms
The Financial Stability Board published its fifth six-monthly progress report on the implementation of over-the-counter (OTC) derivatives market reforms. This report takes stock of progress made by standard-setting bodies, national and regional authorities and market participants towards meeting the commitments made by G20 Leaders at the Pittsburgh 2009 Summit that all standardised OTC derivative contracts be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties (CCPs); that OTC derivative contracts be reported to trade repositories; and that non-centrally cleared contracts be subject to higher capital requirements.
Feedback should be submitted by 15 May 2013.
Related documents
OTC derivatives market reforms
Next step
The FSB will publish a further progress report ahead of the G20 Leaders Summit in St Petersburg in September 2013.
CRD IV package: the European Parliament publishes texts adopted in plenary
The European Parliament discussed and voted on the legislative reports concerning the Commission's proposals for legislation on capital requirements and bankers' bonuses during the plenary sitting of 16.04.13, following the political agreement reached with Council representatives in March 2013.
Texts adopted in plenary have been published.
Related documents
Prudential requirements for credit institutions and investment firms (CRR)
Credit institutions and prudential supervision (CRD IV)
Next step
The new rules must be formally approved by the Council of Ministers to apply from 1 January 2014.
Suggested links
The FED and the FDIC provide additional instructions for submission of some resolution plans
The Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC) announced the release of additional guidance, clarification and direction for the first group of institutions filing their resolutions plans pursuant to the Dodd-Frank Act. These 11 institutions filed their initial resolution plans with the FRB and the FDIC in 2012. Plans were required generally from U.S. bank holding companies with $250 billion or more in total nonbank assets and foreign-based bank holding companies with $250 billion or more in total U.S. nonbank assets. Following review of the initial resolution plans, the agencies have developed instructions for the firms to detail what information should be included in their 2013 resolution plan submissions.
Related documents
Next step
The 2013 resolution plan filing deadline will move from 1 July 2013 to 1 October 2013.
News & articles
US regulators extend deadline for big banks' "living wills" (Reuters)
Big U.S. banks get three-month extension for ‘living wills’ (Bloomberg)
The EP votes reform package to strengthen EU banks
The European Parliament voted reform package to strengthen EU banks. Changes voted by Parliament will cap banker's bonuses to curb speculative risk-taking, step up capital provisions to help banks cope better with crises and stiffen supervision. This EU banking reform package, the most comprehensive so far, should also spur growth, by making it easier for banks to lend to small firms that drive the real economy.
Related documents
Statement by President J.M. Barroso and Commissioner M. Barnier
Suggested links
Key docs on CRR
Key docs on CRD IV
EU bank capital requirements regulation and directive - Background (EP)
Next step
The new rules must be formally approved by the Council of Ministers to apply from 1 January 2014.
News & articles
European lawmakers vote for banker bonus cap, laws to strengthen banks’ capital buffers (The Washington post)
EU lawmakers set to adopt banker bonus cap (CTV news)
The ESMA publishes a peer review report on money market funds
The ESMA published a peer review report examining whether EU securities supervisors correctly apply ESMA’s guidelines on money market funds (MMFs). The review compared supervisory and enforcement practices for MMFs of 30 supervisory authorities across the European Economic Area (EEA). ESMA reviewed those 20 jurisdictions that had transposed the guidelines into their national rules. The report found that more than two thirds of the 20 jurisdictions reviewed have implemented the ESMA guidelines on MMFs nationally as mandatory provisions, while a minority have used measures which do not have the force of law.
Related documents
Money market fund guidelines – peer review
Next steps
Next year ESMA, as part of its regular activities, will consider Member States’ application of the guidelines, taking into account any possible legislative proposals by the European Commission regarding MMFs.
News & articles
ESMA finds differences in regulation of money market funds (Investment Europe)
EU Money-Market Fund Clients Seen at Risk in Oversight Patchwork (Business week)
The FSB reports to G20 on progress of financial regulatory reforms
Participants discussed traditional G20 agenda, such as global economy outlook, implementation of the G20 Framework for Strong Sustainable and Balanced Growth Working Group Meeting, as well as further implementation of the International Financial Architecture reform and progress review on some issues of the financial regulation agenda. Finally, G20 Finance Ministers and Central Banks Governors approved and signed-off the Joint Communiqué.
The FSB published a letter from the Chairman to the G20 Finance Ministers and Central Bank Governors describing progress on the financial regulatory reform programme, and a progress report on reforming resolution regimes and resolution planning for G-SIFIs.
Related documents
Implementing the FSB key attributes of effective resolution regimes – how far have we come?
The Joint Committee of the ESAs calls for action on cross-sectoral risks
The Joint Committee of the European Supervisory Authorities published its first report dated 13 March on risks and vulnerabilities in the EU’s financial system.
The publication identifies the key cross-sectoral risks facing the EU’s financial markets and system, and sets out recommendations on how these can be addressed through coordinated policy and supervisory action by policy-makers, the ESAs and Member States.
The report has identified the following risks the EU financial system is facing:
I. Weak macroeconomic outlook and consequently a deterioration for financial institutions’ asset quality and profitability;
II. Low interest rate environment;
III. Risk of further fragmentation on the single market ;
IV. Increased reliance on collateral;
V. Lack of confidence in financial institutions’ balance sheet valuations and risk disclosure;
VI. Loss of confidence in financial benchmarks.
Related documents
JC report on risks and vulnerabilities in the EU financial system
- Last Update: Thursday 23 May 2013, 17:57.
