Edition Highlights:

  • The Prudential Regulation Authority explains the methodologies for setting Pillar 2 capital
  • The Security and Exchange Commission finalizes the implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015
  • The Office of the Comptroller of the Currency releases Supervisory Scenarios for Stress Test for 2017

Current coverage period: Through Jan 31, 2017

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

CURRENT REGULATIONS:

Financial Industry Regulatory Authority (FINRA) ( ***):
Notice of Filing of a Proposed Rule Change to Adopt the FINRA Rule 6800 Series (Consolidated Audit Trail Compliance Rule)
Publication Date: February 3rd 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance
This notice of filing puts forth the proposal to adopt the FINRA Rule 6800 Series to implement the compliance rule regarding the National Market System Plan Governing the Consolidated Audit Trail.1

Prudential Regulation Authority (PRA) (**):
The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)
Publication Date: February 1st 2017
Risks Covered: Credit Risk, Liquidity Risk and Compliance Risk
Business Processes Impacted: Capital Adequacy and Capital Planning, Reporting
This Supervisory Statement was updated to implement the expectation that a UK parent of a ring-fenced body (RFB) should not make use of double leverage to fund its investment in an RFB or other entities in an RFB sub-group, and to comply with the Financial Policy Committee’s (FPC) recommendation in relation to the systemic risk buffer (SRB) framework.2

Prudential Regulation Authority (PRA) (**):
The PRA’s Methodologies for Setting Pillar 2 capital
Publication Date: February 1st 2017

Risks Covered: Business Credit Risk, Market Risk and Operational Risk
Business Processes Impacted: Capital Adequacy and Capital Planning; Reporting
This document first explains the methodologies the PRA will use to inform the setting of a firm’s Pillar 2A individual capital guidance for risks and then gives information on the purpose of the PRA buffer, how it is determined and its relation to the Capital Requirement Directive IV buffers.3

European Commission (EC) (**):
Commission Delegated Regulation (EU) 2017/104 of 19 October 2016 Amending Delegated Regulation (EU) No 148/2013 Supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC Derivatives, Central Counterparties and Trade Repositories with Regard to Regulatory Technical Standards on the Minimum Details of the Data to be Reported to Trade Repositories
Publication Date: January 21st 2017

Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance
The new rules require Member States to automatically exchange information on all new cross-border tax rulings that they issue and, at a later date, all cross-border rulings issued since 2012.4

Prudential Regulation Authority (PRA) (*):
Deposit Protection Limit
Publication Date: January 16th 2017

Risks Covered: Interest Rate Risk
Business Processes Impacted: Customer / Investor Protection, Lending and Investment, Training and Development
This policy statement provides consultation feedback, final rules and an updated Supervisory Statement. Firms are expected to make all changes to customer-facing materials required to implement the new deposit limit as soon as practicable.5

Securities and Exchange Commission (SEC) (***):
Adjustments to Civil Monetary Penalty Amounts
Publication Date: January 18th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance
This final rule to implement the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires all agencies to annually adjust for inflation the civil monetary penalties that can be imposed under the statutes administered by the agency.6

The Board of Governors of the Federal Reserve System (The Fed) (***):
Total Loss-Absorbing Capacity, Long Term Debt, and Clean Holding Company Requirements for Systemically Important U.S. Bank Holding Companies and Intermediate Holding Companies of Systemically Important Foreign Banking Organizations
Publication Date: January 24th 2017
Risks Covered: Systemic Risk
Business Processes Impacted: Funding and Liquidity Management, Recovery and Resolution Planning
This final rule requires a US top-tier bank holding company identified under the Board rules as a global systemically important bank holding company (BHC) to maintain outstanding a minimum amount of loss-absorbing instruments, including a minimum amount of unsecured long-term debt.7

Monetary Authority of Singapore (MAS) (*):
Financial Reporting for Business Trusts and Collective Investment Schemes
Publication Date: January 19th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Lending and Investment, Reporting
Registered business trusts are now required to prepare financial statements in accordance with the New Framework for annual periods beginning on or after January 1, 2018 while authorized collective investment schemes are required to prepare financial statements according to the Statement of Recommended Accounting Practice 7: Reporting Framework for Unit Trusts (RAP 7), issued by the Institute of Singapore Chartered Accountants (ISCA).8

Australian Prudential Regulation Authority (APRA) (**):
Countercyclical Capital Buffer
Publication Date: January 16th 2017
Risks Covered: Systemic Risk
Business Processes Impacted: Capital Adequacy and Capital Planning
This annual Information Paper on the countercyclical capital buffer contains an update on the setting of countercyclical capital buffer and on the levels of some core indicators of systemic risks related to the financial cycle.9

FORTHCOMING REGULATIONS:

The Board of Governors of the Federal Reserve System (The Fed)
Strategies for Improving the U.S. Payment System – Progress Report
This progress report outlines accomplishments and anticipated steps moving forward related to the ongoing initiatives to enhance the speed, efficiency and security of the US payment system.10

European Banking Authority (EBA)
EBA and ESMA Report on the Functioning of the Regulation (EU) No 575/2013 (CRR) with the Related Obligations under Regulation (EU) No 648/2012 (EMIR)
This joint report on the functioning of the Capital Requirements Regulation (CRR) with the European Market Infrastructure Regulation asks that the requirements for credit, market and counterparty credit risk in the CRR be clarified.11

The Board of Governors of the Federal Reserve System (The Fed)
Amendments to the Capital Plan and Stress Test Rules
This final rule removes large and noncomplex firms from the qualitative assessment of the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR), reducing significant burden on these firms and focusing the qualitative review in CCAR on the largest, most complex financial institutions.12

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

References:

  1.      “Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change to Adopt the FINRA Rule 6800 Series (Consolidated Audit Trail Compliance Rule),” Securities and Exchange Commission, February 3, 2017. Access at:Notice of Filing of a Proposed Rule Change to Adopt the FINRA Rule 6800 Series (Consolidated Audit Trail Compliance Rule)
  2.      “The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP),” Prudential Regulatory Authority, February 1, 2017. Access at:
    The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)
  3.      “The PRA’s methodologies for setting Pillar 2 capital,” Prudential Regulation Authority, February 1, 2017. Access at:The PRA’s Methodologies for Setting Pillar 2 capital
  4.      “Commission delegated regulation (EU) 2017/104 of 19 October 2016 amending Delegated Regulation (EU) No 148/2013 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to regulatory technical standards on the minimum details of the data to be reported to trade repositories,” Official Journal of the European Union, January 21, 2017. Access at: COMMISSION DELEGATED REGULATION (EU) 2017/104 of 19 October 2016 amending Delegated Regulation (EU) No 148/2013 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to regulatory technical standards on the minimum details of the data to be reported to trade repositories
  5.      “Deposit protection limit,” Prudential Regulation Authority, January 16, 2017. Access at:Deposit Protection Limit
  6.      “Adjustments to Civil Monetary Penalty Amounts,” Securities and Exchange Commission, January 18, 2017. Access at:Adjustments to Civil Monetary Penalty Amounts
  7.      “Total Loss-Absorbing Capacity, Long-Term Debt, and Clean Holding Company Requirements for Systemically Important U.S. Bank Holding Companies and Intermediate Holding Companies of Systemically Important Foreign Banking Organizations,”The Board of Governors of the Federal Reserve System, January 24, 2017. Access at:Total Loss-Absorbing Capacity, Long Term Debt, and Clean Holding Company Requirements for Systemically Important U.S. Bank Holding Companies and Intermediate Holding Companies of Systemically Important Foreign Banking Organizations
  8.      “Financial Reporting for Business Trusts and Collective Investment Schemes,” Monetary Authority of Singapore (MAS), January 19, 2017. Access at:Financial Reporting for Business Trusts and Collective Investment Schemes
  9.      “Countercyclical capital buffer,” Australian Prudential Regulation Authority, January 16, 2017. Access at: Countercyclical Capital Buffer
  10.   “Strategies for Improving the U.S. Payment System,” Federal Reserve System, January 26, 2015. Access at: Strategies for Improving the U.S. Payment System – Progress Report
  11.   “EBA and ESMA Report on the Functioning of the Regulation (EU) No 575/2013 (CRR) with the Related Obligations under Regulation (EU) No 648/2012 (EMIR),” European Banking Authority, European Securities and Markets Authority, January 18, 2017. Access at: EBA and ESMA Report on the Functioning of the Regulation (EU) No 575/2013 (CRR) with the Related Obligations under Regulation (EU) No 648/2012 (EMIR)
  12.   “Amendments to the Capital Plan and Stress Test Rules; Regulations Y and YY,” Board of Governors of the Federal Reserve System, Federal Register, January 30, 2017. Access at:  Amendments to the Capital Plan and Stress Test Rules

 

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

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