This newsletter brings the most recent regulatory changes impacting Banking, Capital Markets & Insurance firms.

Current coverage period: Through September 30, 2017

CURRENT REGULATIONS:

Financial Conduct Authority (FCA):
Conduct of Business (Disclosure Amendment) Instrument 2017
Publication Date: September 12th 2017

Risks Covered: Compliance Risk

Business Processes Impacted: Audit, Legal & Compliance

The agency has issued Legal Instrument FCA 2017/52, cited as Conduct of Business (Disclosure Amendment) Instrument 2017, and which amends the Conduct of Business sourcebook (COBS) and the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB). This instrument is effective as of September 13, 2017.1

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

Restrictions on Qualified Financial Contracts of Systemically Important U.S. Banking Organizations and the U.S. Operations of Systemically Important Foreign Banking Organizations; Revisions to the Definition of Qualifying Master Netting Agreement and Related Definitions
Publication Date: September 12th 2017

Risks Covered: Operational Risk

Business Processes Impacted: Capital Adequacy & Capital Planning
The Board is adopting a final rule to promote U.S. financial stability by improving the resolvability and resilience of systemically important U.S. banking organizations and systemically important foreign banking organizations pursuant to section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).2

European Commission (EC):
Detailed summary of individual responses to the ‘Public Consultation on FinTech: a more competitive and innovative European financial sector’
Publication Date: September 12th 2017
Risks Covered: Operational Risk

Business Processes Impacted: Reporting
The agency has published a document which provides a detailed and factual overview of responses to its consultation paper, “Public Consultation on FinTech: a more competitive and innovative European financial sector.” The public consultation sought input from stakeholders to further develop the EC’s policy approach towards technological innovation in financial services.3

Insurance Europe (IE):
Comments on first set of advice from EIOPA to European Commission on Solvency II review
Publication Date: September 4th 2017
Risks Covered: Compliance Risk

Business Processes Impacted: Risk Management & Stress Testing
Insurance Europe has provided comments on the first set of advice from the EIOPA to the European Commission on the Solvency II review. Insurance Europe supports the goals of the review and acknowledges EIOPA’s good progress towards achieving these goals through the proposals outlined in this first set of advice.4

Financial Conduct Authority (FCA):
Quarterly Consultation Paper No. 18
Publication Date: September 1st 2017
Risks Covered: Conduct Risk, Operational Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has issued Quarterly Consultation No. 18. It addresses, among other things: (i) changes to fees for varying permission; (ii) the FCA’s enforcement approach to breaches of the packaged retail investment and insurance-based products (PRIIPs) regulation; (iii) changes related to the Insurance Distribution Directive and Conduct of Business sourcebook (COBS) 16; (iv) Changes to IFPRU 2.2; (v) the PRIIPs key information document and personal projections; and (vi) changes to COBS and reporting requirements in the Supervision manual; Comments on this Consultation Paper (CP) to be received by October 2, 2017 for Chapters 4, 5 and 6, and November 1, 2017 for Chapters 2, 3, 7, 8 and 9.5

Swiss Financial Market Supervisory Authority (FINMA):
FINMA amends Ordinance on Data Processing
Publication Date: September 5th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance
The Swiss regulator FINMA is amending its Ordinance on Data Processing to clarify provisions on how it collects data to monitor proper business conduct. The changes implement the Federal Supreme Court decision of March 22, 2017, which authorized FINMA to collect data for assessing compliance with proper business conduct requirements. The revised version is effective as of September 15, 2017.6

Monetary Authority of Singapore (MAS):
MAS Sets Up International Advisory Panel for Cyber Security
Publication Date: September 20th 2017
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
The agency has established a Cyber Security Advisory Panel (CSAP) that will be responsible for advising MAS on strategies to enhance the cyber resilience of Singapore’s financial sector.7

European Securities and Markets Authority (ESMA):
EBA and ESMA provide guidance to assess the suitability of management body members and key function holders
Publication Date: September 26th 2017
Risks Covered: Business Cycle Risk
Business Processes Impacted: Business Continuity Management
The European Banking Authority and ESMA, aiming to harmonize and improve suitability assessments within the European Union’s financial sectors, and maintain sound governance arrangements in financial institutions in line with the Capital Requirements Directive (CRD) IV and the Markets in Financial Instruments Directive (MiFID) II, have published their joint Guidelines to assess the suitability of members of management bodies and key function holders.8

HM Treasury (HMT):
Implementation of the EU Payment Services Directive II Impact Assessment
Publication Date: September 19th 2017
Risks Covered: Liquidity Risk
Business Processes Impacted: Payments
The HM Treasury has published an impact assessment on the implementation of the European Union Payment Services Directive II (PSDII) into UK law.9

European Commission (EC):
Proposal for a Regulation amending Regulation (EU) No 1092/2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board
Publication Date: September 20th 2017
Risks Covered: Operational Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The Departments of Directorate-General for Financial Stability, Financial Services and Capital Markets Union, within the European Commission, have released a proposal for a regulation of the European Parliament and of the council amending Regulation (EU) No 1092/2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board.10

Commodity Futures Trading Commission (CFTC):
17 CFR Part 38 Commission Delegated Authority Provisions for Designated Contract Markets’ System Safeguards Requirements
Publication Date: September 29th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Fraud & Financial Crime
The agency is adopting final rules to establish a new delegation of authority to Commission staff under the CFTC’s system safeguards rules. The focus is to notify each Designated Contract Market (DCM) of its share of the total annual trading volume among all DCMs regulated by CFTC. The final rule is effective September 29, 2017.11

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA publishes a new set of Solvency II statistics on the European insurance sector
Publication Date: September 18th 2017
Risks Covered: Operational Risk
Business Processes Impacted: Reporting
The agency has published its second set of statistical information on the European insurance sector based on Solvency II regulatory reporting. These statistics include up-to-date country breakdowns and distributions of key variables, which help provide a comprehensive picture of the European insurance sector, and foster comparability.12

Financial Conduct Authority (FCA):
Insurance Distribution Directive implementation – Consultation Paper 3
Publication Date: September 25th 2017
Risks Covered: Conduct Risk
Business Processes Impacted: Data Privacy & Data Quality Management
The agency has released Consultation Paper CP17/33 targeting “Insurance Distribution Directive Implementation,” and which lays out their final proposal on how they plan to implement the Insurance Distribution Directive (IDD).13

Financial Conduct Authority (FCA):
Insurance Distribution Directive implementation – Feedback to CP17/7 and near-final rules
Publication Date: September 25th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has released Policy Statement PS17/21 – “Insurance Distribution Directive (IDD) implementation – Feedback to CP17/7 and near-final rules.” The FCA is planning on implementing the rules set out in CP17/7 with some necessary changes, due to the feedback received. Firms affected by these changes will need to comply as of February 23, 2018.14

European Commission (EC):
Cybersecurity: Commission scales up EU’s response to cyber-attacks
Publication Date: September 19th 2017
Risks Covered: Cyber Security Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has proposed to introduce a European Union (EU) Cybersecurity certification framework for information communications technology (ICT) products and services. This includes a proposal for a EU Cybersecurity Agency to assist member states in dealing with cyber-attacks and a directive on combatting fraud and counterfeiting of non-cash means of payment. This should provide for a more efficient criminal law response to cyber-crime.15

European Insurance and Occupational Pensions Authority (EIOPA):
Learning lessons from Solvency II
Publication Date: September 27th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency published an article, written by Gabriel Bernardino, EIOPA Chairman, regarding lessons that have been learned by insurers following the implementation of Solvency II and the initial analysis of progress since the regulations started. Subjects discussed include: Risk and the Board, Own Risk and Solvency Assessment (ORSA) – making sense of risk, EIOPA’s role, state of play, room for improvement, good for business and benefit for consumers.16

 

FORTHCOMING REGULATIONS:

Monetary Authority of Singapore (MAS)
The Monetary Authority of Singapore and the Securities Commission Malaysia Collaborate to Foster FinTech Innovation and Cross-Border Activities
The MAS and the Securities Commission Malaysia (SC) signed a cooperation agreement to foster closer cooperation on FinTech and innovation in financial services, to establish a strategic framework to assist innovative businesses to better understand the regulatory regime in each jurisdiction, as well as to provide support through the application and authorization process.17

European Banking Authority (EBA)
The EBA CRDIV CRR Basel III monitoring exercise shows further improvement of EU banks capital leverage and liquidity ratios
The EBA published its twelfth Report of the Capital Requirements Directives IV – Capital Requirements Regulation (CRD IV-CRR)/Basel III monitoring exercise on the European banking system. This exercise presents aggregate data on European Union banks’ capital, leverage, and liquidity ratios assuming full implementation of the CRD IV-CRR/Basel III framework. Overall, the results show further improvement of European banks’ capital positions, with a total average Common Equity Tier 1 (CET1) ratio of 13.4% (12.8% as of June 30, 2016).18

The Organization for Economic Co-operation and Development (OECD)
Technology and innovation in the insurance sector
This report catalogues the relevant technologies that are being viewed as having the potential to bring innovation to the insurance sector. How InsurTech is being funded is examined, as this indicates which markets are actively investing in start-ups and how insurers are engaging with start-ups. Case studies on insurance start-ups, and how Blockchain Technology, the Sharing Economy, Robo-Advice and data aggregation are influencing the insurance sector are discussed. The manner in which insurers engage technology for better compliance with regulation is also examined.19

International Accounting Standards Board (IASB)
IFRS 17 webinar IASB on reinsurance contracts
The IASB has published guidance on International Financial Reporting Standards (IFRS) 17 standard related to insurance contract accounting and regarding reinsurance contracts held.20

European Commission (EC)
Amendment of pending proposal for a Regulation amending Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority) and amending Regulation (EU) No 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs (EMIR II Commission’s proposal)
The agency has put forward a supplement to its proposal for a regulation amending Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority) and amending Regulation (EU) No 648/2012 on the procedures and authorities involved for the authorization of central counterparties (CCPs) and requirements for the recognition of third-country CCPs (EMIR II Commission’s proposal). This document specifically looks at allocating an additional task to the CCP Executive Session.21

Board of Governors of the Federal Reserve System (The Fed)
Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996
The Fed, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), are inviting public comment on a notice of proposed rule-making that would simplify compliance with certain aspects of the capital rule.22

Department of The Treasury (DoT)
Joint Statement on Upcoming Signature of the Bilateral Agreement between the European Union and the United States of America on Prudential Measures Regarding Insurance and Reinsurance
The agency has announced the European Union (EU) – US agreement on prudential insurance and reinsurance, conveying benefits to EU and US insurers and reinsurers operating across the Atlantic, by offering them enhanced regulatory certainty, while maintaining robust consumer protections.23

International Financial Reporting Standards (IFRS)
The Essentials—Busting insurance jargon
To help investors adapt to the changes and better anticipate how the new Standard could affect their analyses, this issue of The Essentials translates existing terminology and metrics into the language of International Financial Reporting Standards (IFRS) 17.24

 

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

 

References:

  1. “Conduct of Business (Disclosure Amendment) Instrument 2017,” Sourcebook (COBS),” Financial Conduct Authority, September 12, 2017. Access at: Conduct of Business (Disclosure Amendment) Instrument 2017
  2. “Restrictions on Qualified Financial Contracts of Systemically Important U.S. Banking Organizations and the U.S. Operations of Systemically Important Foreign Banking Organizations; Revisions to the Definition of Qualifying Master Netting Agreement and Related Definitions,” Board of Governors of the Federal Reserve System, September 12, 2017. Access at: Restrictions on Qualified Financial Contracts of Systemically Important U.S. Banking Organizations and the U.S. Operations of Systemically Important Foreign Banking Organizations; Revisions to the Definition of Qualifying Master Netting Agreement and Related Definitions.
  3. “Detailed summary of individual responses to the ‘Public Consultation on FinTech: a more competitive and innovative European financial sector’,” European Commission, September 12, 2017. Access at: Detailed summary of individual responses to the ‘Public Consultation on FinTech: a more competitive and innovative European financial sector’
  4. “Comments on first set of advice from EIOPA to European Commission on Solvency II review,” Insurance Europe, September 4, 2017. Access at: Comments on first set of advice from EIOPA to European Commission on Solvency II review
  5. “Quarterly Consultation No.18,” Financial Conduct Authority, September 1, 2017. Access at: Quarterly Consultation Paper No. 18.
  6. “FINMA amends Ordinance on Data Processing,” Swiss Financial Market Supervisory Authority, September 5, 2017. Access at: FINMA amends Ordinance on Data Processing.
  7. “MAS Set Up International Advisory Panel for Cyber Security,” Monetary Authority of Singapore, September 20, 2017. Access at: MAS Sets Up International Advisory Panel for Cyber Security
  8. “EBA and ESMA provide guidance to assess the suitability of management body members and key function holders,” European Securities and Markets Authority, September 26, 2017. Access at: EBA and ESMA provide guidance to assess the suitability of management body members and key function holders.
  9. “Implementation of the EU Payment Services Directive II,” HM Treasury, September 19, 2017. Access at: Implementation of the EU Payment Services Directive II Impact Assessment.
  10. “Revision of the ESRB establishing regulation,” European Commission, September 20, 2017. Access at: Proposal for a Regulation amending Regulation (EU) No 1092/2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board.
  11. “Commission Delegated Authority Provisions for Designated Contract Markets’ System Safeguards Requirements,” Commodity Futures Trading Commission, September 29, 2017. Access at: 17 CFR Part 38 Commission Delegated Authority Provisions for Designated Contract Markets’ System Safeguards Requirements.
  12. “EIOPA publishes a new set of Solvency II statistics on the European insurance sector,” European Insurance and Occupational Pensions Authority, September 18, 2017. Access at: EIOPA publishes a new set of Solvency II statistics on the European insurance sector.
  13. “CP17/33: Insurance Distribution Directive implementation – Consultation Paper 3,” Financial Conduct Authority, September 25, 2017. Access at: Insurance Distribution Directive implementation – Consultation Paper 3.
  14. “PS 17/21: Insurance Distribution Directive implementation – Feedback to CP17/7 and near final rules,” Financial Conduct Authority, September 25, 2017. Access at: Insurance Distribution Directive implementation – Feedback to CP17/7 and near-final rules.
  15. “State of the Union 2017 – Cybersecurity: Commission scales up EU’s response to cyber-attacks,” European Commission, September 19, 2017. Access at: Cybersecurity: Commission scales up EU’s response to cyber-attacks.
  16. “Learning lessons from Solvency II,” European Insurance and Occupational Pensions Authority, September 27, 2017. Access at: Learning lessons from Solvency II.
  17. “The Monetary Authority of Singapore and the Securities Commission Malaysia Collaborate to Foster FinTech Innovation and Cross-Border Activities,” Monetary Authority of Singapore, September 15, 2017. Access at: The Monetary Authority of Singapore and the Securities Commission Malaysia Collaborate to Foster FinTech Innovation and Cross-Border Activities.
  18. “The EBA CRDIV CRR Basel III monitoring exercise shows further improvement of EU banks capital leverage and liquidity ratios,” European Banking Authority, September 12, 2017. Access at: The EBA CRDIV CRR Basel III monitoring exercise shows further improvement of EU banks capital leverage and liquidity ratios.
  19. Technology and innovation in the insurance sector,” The Organization for Economic Co-operation and Development (OECD), September 1, 2017. Access at: Technology and innovation in the insurance sector.
  20. “IFRS 17 Insurance Contracts, Reinsurance contracts held,” International Accounting Standards Board, September 1, 2017. Access at: IFRS 17 webinar IASB on reinsurance contracts.
  21. “Amendment of pending proposal for a Regulation amending Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority) and amending Regulation (EU) No 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs (EMIR II Commission’s proposal),” European Commission, September 20, 2017. Access at: Amendment of pending proposal for a Regulation amending Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority) and amending Regulation (EU) No 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs (EMIR II Commission’s proposal).
  22. “Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996,” Board of Governors of the Federal Reserve System, September 27, 2017. Access at: Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996.
  23. “Joint Statement on Upcoming Signature of the Bilateral Agreement Between the European Union and the United States of America on Prudential Measures Regarding Insurance and Reinsurance,” Department of The Treasury, September 22, 2017. Access at: Joint Statement on Upcoming Signature of the Bilateral Agreement between the European Union and the United States of America on Prudential Measures Regarding Insurance and Reinsurance.
  24. “The EssentialsꟷBusting insurance jargon,” International Financial Reporting Standards, September 1, 2017. Access at: The Essentials—Busting insurance jargon.

About the Monthly Regulatory Tracker

The “Regulatory Reform” newsletter is the monthly initiative aimed at updating the Finance & Risk community with the most recent regulatory changes impacting Banking, Capital Markets & Insurance firms. We track more than 70 regulatory and industry bodies covering North America, Europe and Asia-Pacific. Every month, we will highlight approximately 20 regulations shortlisted on the basis of geography of coverage and anticipated business impacts. Our summaries will 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

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 425,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Its home page is www.accenture.com

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