Edition Highlights:

  • The Security and Exchange Commission amends the definition of Venture Capital Fund and Private Fund Exemption
  • The Federal Reserve System issued a policy statement on Regulation A, to increase the rate for primary credit at each Federal Bank
  • The Financial Conduct Authority amends the conduct rules section of the Code of Conduct sourcebook (COCON)

Current coverage period: Through April 30, 2017

Note: Anticipated business impact for covered regulations is shown using the following rating legend:       (*Low) (** Medium) (*** High) 

Securities and Exchange Commission (SEC) (***):
Amendments to Investment Advisers Act Rules to Reflect Changes Made by the FAST Act
Publication Date: May 4th 2017

Risks Covered: Market Risk, Compliance Risk

Business Processes Impacted: Funding and Liquidity Management, Portfolio Advisory and Management

The document proposes to amend the definition of a venture capital fund and the private fund adviser exemption under the Investment Advisers Act and to reflect changes in a related Act.1

Prudential Regulation Authority (PRA) (***):
Implementation of MiFID II: Part 2
Publication Date: April 28th 2017

Risks Covered: Market Risk

Business Processes Impacted: Clearing and Settlement – Exchange Traded and Over-the-Counter (OTC), Consumer / Investor Protection
The policy statement, part of the PRA’s transposition of the Markets in Financial Instruments Directive II (MiFID II), sets out the final policy on granting authorization in respect to a new MiFID investment activity, the operation of an organized trading facility (OTF), a new MiFID financial instrument “emission allowances,” and regulated activities such as dealing, advising, managing and arranging structured deposits.
2

The Board of Governors of the Federal Reserve System (The Fed) (*):
Regulation D: Reserve Requirements of Depository Institutions
Publication Date: April 18, 2017

Risks Covered: Liquidity Risk, Interest Rate Risk

Business Processes Impacted: Funding and Liquidity Management, Lending and Investment
The document proposes to amend Regulation D to revise the rate of interest paid on balances maintained to satisfy reserve balance requirements (IORR) and the rate of interest paid on excess balances (IOER) maintained at Federal Reserve Banks by or on behalf of eligible institutions.3

The Board of Governors of the Federal Reserve System (The Fed) (**):

Regulation A: Extensions of Credit by Federal Reserve Banks

Publication Date: April 18th 2017
Risks Covered: Interest Rate Risk

Business Processes Impacted: Lending and Investment
The final amendments in Regulation A reflect the Board’s approval of an increase in the rate for primary credit at each Federal Reserve Bank. The secondary credit rate at each Reserve Bank automatically increased (by formula), as a result of the Board’s primary credit rate action.4

European Commission (EC) (***):
Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for Packaged Retail and Insurance-based Investment Products (PRIIPs) by laying down Regulatory Technical Standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents
Publication Date: April 12th 2017

Risks Covered: Compliance Risk

Business Processes Impacted: Reporting, Audit, Legal and Compliance
This Delegated Regulation lays down Regulatory Technical Standards about the presentation, content, review and revision of key information documents for Packaged Retail and Insurance-based Investment Products (PRIIPs) and the conditions for fulfilling the requirement to provide such documents.5

Bank of England (BoE) (**):
The UK Money Markets Code
Publication Date: April 27th 2017
Risks Covered: Interest Rate Risk, Operational Risk, Business Cycle Risk

Business Processes Impacted: Audit, Legal and Compliance
The updated voluntary UK Money Markets Code document outlines the standards and best practices expected from participants in the deposit, repo and securities lending markets. The Code sets out six high-level principles encompassing ethics, governance, risk management, confidentiality, execution and settlement.
6

Financial Conduct Authority (FCA) (***):
FCA’s Disclosure Rules following Application of PRIIPs Regulation
Publication Date: May 2nd 2017
Risks Covered: Operational Risk, Business Cycle Risk

Business Processes Impacted: Reporting
The policy statement document shows how disclosure requirements will change to reflect the application of the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation.7

Financial Conduct Authority (FCA) (***):
Applying our Conduct Rules to Non-Executive Directors in the Banking and Insurance Sectors
Publication Date: May 3rd 2017
Risks Covered: Conduct Risk

Business Processes Impacted: Consumer / Investor Protection
The policy statement introduces the final rules and extends the conduct rules in the Code of Conduct sourcebook (COCON) to standard non-executive directors (NEDs) in banks, building societies, credit unions and dual-regulated investment firms and insurance firms.
8

European Securities and Markets Authority (ESMA) (*):
ESMA Promotes Common Approach to Rules Supporting the Use of Smaller CRAs
Publication Date: April 6th 2017
Risks Covered: Counterparty Credit Risk, Credit Risk
Business Processes Impacted: Audit, Legal and Compliance
This Supervisory Briefing to national Sectoral Competent Authorities (SCAs) pertains to the application of parts of the CRA Regulation to assist in the supervision and enforcement of these provisions and to promote supervisory convergence through adoption of a common supervisory approach.9

International Accounting Standards Board (IFRS) (**):
Prepayment Features with Negative Compensatioxn
Publication Date: April 21st 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance, Lending and Investment, Corporate Finance, M&A and Advisory
The proposed amendments to IFRS (International Financial Reporting Standard) 9 allows for financial assets with prepayment features with negative compensation to be measured at amortized cost.10

FORTHCOMING REGULATIONS:

European Banking Authority (EBA)
EBA Pillar 2 Roadmap
This roadmap document explains the multi-stage approach for updating the European Union Supervisory Review and Evaluation Process (SREP) framework in 2017-2018 and also summarizes the on-going policy initiatives affecting Pillar 2/SREP that will need to be reflected in the revised regulator’s guidelines on Pillar 2 topics.11

Commodity Futures Trading Commission (CFTC)
Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants, Amendments
The proposed amendments to rules governing Chief Compliance Officer duties and annual reports for certain registrants would:

1) define “senior officer” in Regulation 3.1;

2) clarify the duties of a Chief Compliance Officer (CCO) of a futures commission merchant, swap dealer, or major swap participant; and

3) modify the CCO annual report’s content and submission requirements.12

Consumer Financial Protection Bureau (CFPB)

Technical Corrections and Clarifying Amendments to the Home Mortgage Disclosure (Regulation C) October 2015 Final Rule

The changes proposed clarify the information that financial institutions are required to collect and report about their mortgage lending in order to comply with the 2015 updates to the Home Mortgage Disclosure Act (HMDA) rule.13

Visit www.accenture.com/RegulatoryCompliance for latest insights on regulatory remediation and compliance transformation.

References:

1.  “Amendments to Investment Advisers ACT Rules to Reflect Changes Made by the Fast Act,” Securities and Exchange Commission, May 4, 2017. Access at: Amendments to Investment Advisers Act Rules to Reflect Changes Made by the FAST Act

2.  “Implementation of MiFID II: Part 2,” Prudential Regulation Authority, April 28, 2017. Access at: Implementation of MiFID II: Part 2

3.  “Regulation D: Reserve Requirements of Depository Institutions,” The Board of Governors of the Federal Reserve System, April 18, 2017. Access at: Regulation D: Reserve Requirements of Depository Institutions

4.  “Regulation A: Extensions of Credit by Federal Reserve Banks,” The Board of Governors of the Federal Reserve System, April 18, 2017. Access at: Regulation A: Extensions of Credit by Federal Reserve Banks

5.  “Regulations – Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs),” Official Journal of the European Union, April 12, 2017. Access at: Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for Packaged Retail and Insurance-based Investment Products (PRIIPs) by laying down Regulatory Technical Standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents

6.  “The UK Money Markets Code,” Bank of England, April 27, 2017. Access at: The UK Money Markets Code

7.  “FCA’s disclosure rules following application of PRIIPs Regulation – Feedback to CP16/18 and final rules,” Financial Conduct Authority, May 2, 2017. Access at: FCA’s Disclosure Rules following Application of PRIIPs Regulation

8.  “Applying our conduct rules to non-executive directors in the banking and insurance sectors,” Financial Conduct Authority, May 3, 2017. Access at: Applying our Conduct Rules to Non-Executive Directors in the Banking and Insurance Sectors

9.  “ESMA Promotes Common Approach to Rules Supporting the Use of Smaller CRAs,” European Securities and Markets Authority, April 6, 2017. Access at: ESMA Promotes Common Approach to Rules Supporting the Use of Smaller CRAs

10. “Prepayment Features with Negative Compensation (Amendments to IFRS 9),” International Financial Reporting Standards. Access at: Prepayment Features with Negative Compensation[PM1] 

11. “EBA Pillar 2 Roadmap,” European Banking Authority, April 11, 2017. Access at: EBA Pillar 2 Roadmap

12. “Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants; Amendments,” Commodity Futures Trading Commission, May 8, 2017. Access at: Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants, Amendments

13. “Technical Corrections and Clarifying Amendments to the Home Mortgage Disclosure (Regulation C) October 2015 Final Rule,” Bureau of Consumer Financial Protection, April 13, 2017. Access at: Technical Corrections and Clarifying Amendments to the Home Mortgage Disclosure (Regulation C) October 2015 Final Rule

About the Monthly Regulatory Tracker

The tracker is the monthly initiative aimed at updating the Finance and Risk community with the most recent regulatory changes impacting Banks and Capital Markets firms. We update our comprehensive regulatory database every month by tracking more than 40 regulatory and industry bodies covering North America, Europe and Asia Pacific. Every month, we will highlight approximately 10 regulations shortlisted on the basis of geography of coverage and anticipated business impacts. Our summaries highlight the risks covered and business processes affected by the regulatory reforms.

Disclaimer

This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, all liability for the accuracy and completeness of the information in this blog and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional.

About Accenture:

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