This newsletter summarizes recent regulatory changes impacting Banking, Capital Markets & Insurance firms.

Current coverage period: Through April 30, 2019

CURRENT REGULATIONS:

Commodity Futures Trading Commission (CFTC):
Financial Surveillance Examination Program Requirements for Self-Regulatory Organizations
Publication Date: April 3rd 2019

Risks Covered: Compliance Risk
Business Processes Impacted: Finance & Performance Management
The agency is amending its regulations governing the minimum standards for a Self-Regulatory Organization’s (SRO) financial surveillance examination program of Futures Commission Merchants (FCMs).1

Federal Reserve (The Fed):
Federal Reserve Policy on Payment System Risk; U.S. Branches and Agencies of Foreign Banking Organizations
Publication Date: April 1st 2019

Risks Covered: Credit Risk
Business Processes Impacted: Payments
The agency has approved changes to part II of the Federal Reserve Policy on Payment System Risk (PSR policy) related to procedures for determining the net debit cap and maximum daylight overdraft capacity of a U.S. branch or agency of a foreign banking organization (FBO).2

Financial Conduct Authority (FCA):
Claims Management Companies enter FCA Regulation Today

Publication Date: April 1st 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Pricing & Valuation
The agency begins regulating the claims management industry as of April 1st. All claims management companies (CMCs) in England, Scotland and Wales will now have to demonstrate they meet and maintain minimum standards as set by the agency. All existing and new CMCs will need to apply to the FCA for authorization.3

Federal Reserve (Fed):
Comprehensive Capital and Analysis Review and Dodd-Frank Act Stress Tests

Publication Date: April 4th 2019
Risks Covered: Operational Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The Federal Reserve conducts the annual Comprehensive Capital and Analysis Review (CCAR) exercise to assess capital positions and planning practices of large firms consistent with Regulation YY (12 CFR part 252) and the capital plan rule (12 CFR 225.8).4

Insurance Europe (IE):
Response to EC stocktaking exercise on application of GDPR
Publication Date: April 11th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Business Continuity Management
The agency has published its response to the European Commission’s stocktaking exercise on the application of the General Data Protection Regulation (GDPR) due in June 2019. The response looks at the impact of the GDPR, including benefits, challenges and suggestions for improvement.5

Insurance Europe (IE):
Response to EDPB draft-Guidelines on Codes of Conduct & Monitoring Bodies
Publication Date: April 29th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Data Quality Management
The agency has issued a response to the European Data Protection Board’s draft-guidelines on Codes of Conduct and Monitoring Bodies. Insurance Europe’s response covers: the importance of codes of conduct for the insurance industry; General Data Protection Regulation provisions on the monitoring body and the draft-guidelines interpretation; the lack of economic viability of mandatory monitoring bodies; the lack of economic viability to meet the accreditation requirements for monitoring bodies; the lack of consultation or the possibility to present amendments to a draft code during the approval phase; and the lack of a concrete time-frame to approve a code of conduct.6

European Banking Authority (EBA); European Securities and Markets Authority (ESMA); European Insurance and Occupational Pensions Authority (EIOPA):
Joint Advice on the costs and benefits of a coherent cyber resilience testing framework for significant market participants and infrastructures within the EU financial sector
Publication Date: April 10th 2019
Risks Covered: Cyber Security Risk
Business Processes Impacted: Consumer/Investor Protection
The European Supervisory Authority’s “Joint Advice” discusses the costs and benefits of a coherent cyber resilience testing framework for significant market participants and the infrastructures in place with the European Union’s financial sector.7

Insurance Europe (IE):
IFRS 17 Position
Publication Date: April 4th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The agency has published a position paper regarding the implementation of the International Financial Reporting Standards (IFRS) 17. In its statement, the agency expresses its support of the IFRS’ (International Accounting Standards Board) planned process for finalizing IFRS 17 and has agreed to cooperate with other regulatory authorities to make sure the draft standards can meet its objectives.8

International Swaps and Derivatives Association (ISDA):
The Fundamental Review of the Trading Book and Emerging Markets
Publication Date: April 1st 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The regulator has released a new report outlining some of the challenges jurisdictions will face in implementing the new market risk capital standards, also known as FRTB (the Fundamental Review of the Trading Book). The report follows recent release of the final revisions to the Basel III market risk framework, set to take effect on January 1, 2022.9

Securities and Exchange Commission (SEC):
SEC and FINRA to Hold National Compliance Outreach Program for Broker-Dealers on June 27, 2019
Publication Date: April 16th 2019
Risks Covered: Business Cycle Risk
Business Processes Impacted: Brokerage Services
The SEC and the Financial Industry Regulatory Authority has designed a program to provide an open forum for regulators and industry professionals including compliance, internal audit, and other senior personnel of broker-dealer firms and branch offices, to discuss current compliance practices and promote a more effective compliance structure for the protection of investors.10

Prudential Regulation Authority (PRA); Bank of England (BoE):
Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK’s withdrawal from the EU
Publication Date: April 18th 2019
Risks Covered: Business Cycle Risk
Business Processes Impacted: Business Continuity Management
Agencies provided a Statement of Policy on the general approach being taken pertaining to a functioning legal framework when the United Kingdom leaves the European Union.11

Federal Deposit Insurance Corporation (FDIC):
Resolution Plans Required for Insured Depository Institutions With $50 Billion or More in Total Assets
Publication Date: April 22nd 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency invites comments on its Advance Notice of Proposed Rule-Making (ANPR) and that pertains to the tailoring and improvement of its rule which requires certain insured depository institutions to submit resolution plans. Comments were to be received by June 21, 2019.12

Consumer Financial Protection Bureau (CFPB):
Request for Information Regarding Potential Regulatory Changes to the Remittance Rule
Publication Date: April 29th 2019
Risks Covered: Operational Risk
Business Processes Impacted: Payments
The Electronic Fund Transfers Act (EFTA), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), establishes certain protections for consumers sending international money transfers, or remittance transfers. The Bureau of Consumer Financial Protection’s remittance rules (Remittance Rule or Rule) implement these protections.13

Office of the Comptroller of the Currency (OCC); Department of the Treasury (US):
Fiduciary Capacity; Non-Fiduciary Custody Activities
Publication Date: April 29th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency is inviting comment on an Advance Notice of Proposed Rule-making (ANPR) regarding its fiduciary activities rules and a potential rule for non-fiduciary custody activities of national banks, Federal savings associations, and Federal branches of foreign banks.14

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA held Fourth InsurTech Roundtable on “The use of cloud computing by (re)insurance undertakings”
Publication Date: April 17th 2019
Risks Covered: Cyber Security Risk
Business Processes Impacted: Business Continuity Management
The agency has published details on the fourth InsurTech Roundtable regarding the use of cloud computing by (re)insurance undertakings. The purpose of the meeting was to discuss views and approaches to cloud outsourcing in a Solvency II and post-European Banking Authority Recommendations environment and to find best practices for the development of an informed decision of a principle-based guideline.15

Prudential Regulation Authority (PRA):
Status Check: EU Exit
Publication Date: April 18th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Business Continuity Management
The agency has published the “PRA Rulebook: EU Exit Legal Instruments.” The legal Instruments are set out in two tables, with the first table listing instruments amending the Rulebook.16

Monetary Authority of Singapore (MAS):
IBF-MAS study identifies skills for more competitive financial sector workforce
Publication Date: April 23rd 2019
Risks Covered: Market Risk
Business Processes Impacted: Training & Development
The agencies commissioned a study which explores how data analytics and automation are likely to transform 121 job roles in Singapore’s financial sector over the next three to five years.17

FORTHCOMING REGULATIONS:

European Insurance and Occupational Pensions Authority (EIOPA)
EIOPA consults on Corrections and Amendments to the implementing technical standards on Reporting and Disclosure

The agency has issued a consultation paper on the draft amendments and corrections to the procedures, formats and templates of the Solvency and Financial Condition Report (SFCR). Comments to this consultation were to be submitted by May 14, 2019.18

Monetary Authority of Singapore (MAS)
Consultation Paper on Proposed Revisions to Technology Risk Management Guidelines

The agency is seeking comments from the public on proposed amendments to the “Guidelines on Technology Risk Management,” These are to include guidance on effective cyber surveillance, secure software development, adversarial attack simulation, and management of cyber risks posed by the Internet of Things. Comments were to be received by April 8, 2019.19

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC); Department of the Treasury (US)
Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations

The OCC, Board, and FDIC are inviting public comment on a notice of proposed rule-making that would address advanced approaches pertaining to banking organization’s regulatory capital treatment of an investment in unsecured debt instruments issued by foreign or U.S. global systemically important banking organizations (GSIBs) for the purposes of meeting minimum total loss absorbing capacity (TLAC) and, where applicable, long-term debt (LTD) requirements, or unsecured debt instruments issued by GSIBs that are “pari passu” or subordinated to such debt instruments.20

Federal Reserve (The Fed)
Proposed Agency Information Collection Activities; Comment Request

The board invites comment on a proposal to extend for 3 years, with revision, the Reporting Requirements Associated with Regulation Y (Extension of Time to Conform to the Volcker Rule) (FR Y-1; OMB No. 7100-0333).21

Office of the Comptroller of the Currency (OCC); Department of the Treasury (US)
Other Real Estate Owned and Technical Amendments
The agency is inviting comment on a proposed rule that would clarify and streamline its regulation on other real estate owned (OREO) for national banks and update the regulatory framework for OREO activities at Federal savings associations. Comments closed on June 24, 2019.22

Financial Conduct Authority (FCA)
A Duty of Care and Potential Alternative Approaches: Summary of Responses and Next Steps

The agency has published a feedback statement in respect of its consultation titled “A duty of care and potential alternative approaches” (DP18/5). The statement provides a summary of the consultation responses received and outlines the FCA’s next steps.23

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

References:

  1. “Financial Surveillance Examination Program Requirements for Self-Regulatory Organizations,” Federal Register, April 3, 2019. Access at: Financial Surveillance Examination Program Requirements for Self-Regulatory Organizations.
  2. “Federal Reserve Policy on Payment System Risk: U.S. Branches and Agencies of Foreign Banking Organizations,” Federal Register, April 1, 2019. Access at: Federal Reserve Policy on Payment System Risk; U.S. Branches and Agencies of Foreign Banking Organizations.
  3. “Claims management companies enter FCA regulation today,” Financial Conduct Authority, April 1, 2019. Access at: Claims Management Companies enter FCA Regulation Today.
  4. “Comprehensive Capital and Analysis Review and Dodd-Frank Act Stress Tests: Questions and Answers,” Board of Governors of the Federal Reserve System, April 4, 2019. Access at: Comprehensive Capital and Analysis Review and Dodd-Frank Act Stress Tests.
  5. “Response to the EC stocktaking exercise on application of GDPR,” Insurance Europe, April 11, 2019. Access at: Response to EC stocktaking exercise on application of GDPR
  6. “Response to the EDPB’s draft-guidelines on Codes of Conduct & Monitoring Bodies,” Insurance Europe, April 29, 2019. Access at: Response to EDPB draft-guidelines on codes of conduct & monitoring bodies.
  7. “Joint Advice of the European Supervisory Authorities,” European Banking Authority; European Securities and Markets Authority; and the European Insurance and Occupational Pensions Authority, April 10, 2019. Access at: Joint Advice on the costs and benefits of a coherent cyber resilience testing framework for significant market participants and infrastructures within the EU financial sector.
  8. “IFRS 17 position,” Insurance Europe, April 4, 2019. Access at: IFRS 17 Position.
  9. “The Fundamental Review of the Trading Book and Emerging Markets,” International Swaps and Derivatives Association (ISDA), April 1, 2019. Access at: The Fundamental Review of the Trading Book and Emerging Markets.
  10. “SEC and FINRA to Hold National Compliance Outreach Program for Broker-Dealers on June 27, 2019,” Securities and Exchange Commission, April 16, 2019. Access at: SEC and FINRA to Hold National Compliance Outreach Program for Broker-Dealers on June 27, 2019.
  11. “Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK’s withdrawal from the EU,” Prudential Regulation Authority; Bank of England, April 18, 2019. Access at: Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK’s withdrawal from the EU.
  12. “Resolution Plans Required for Insured Depository Institutions With $50 Billion or More in Total Assets,” Federal Register, April 22, 2019. Access at: Resolution Plans Required for Insured Depository Institutions With $50 Billion or More in Total Assets.
  13. “Request for Information Regarding Potential Regulatory Changes to the Remittance Rule,” Federal Register, April 29, 2019. Access at: Request for Information Regarding Potential Regulatory Changes to the Remittance Rule.
  14. “Fiduciary Capacity; Non-Fiduciary Custody Activities,” Federal Register, April 29, 2019. Access at: Fiduciary Capacity; Non-Fiduciary Custody Activities.
  15. “EIOPA held Fourth InsurTech Roundtable on “The use of cloud computing by (re)insurance undertakings”,” European Insurance and Occupational Pensions Authority, April 17, 2019. Access at: EIOPA held Fourth InsurTech Roundtable on “The use of cloud computing by (re)insurance undertakings”.
  16. “PRA Rulebook: (EU Exit) Instrument 2019,” Prudential Regulation Authority, April 18, 2019. Access at: Status Check: EU Exit.
  17. “Singapore looks to prep financial workforce for data analytics, automation era,” ZDNet, April 23, 2019. Access at: IBF-MAS study identifies skills for more competitive financial sector workforce.
  18. Consultation on the amendments and corrections to the Implementing Regulation (EU) 2015/2450, Consultation paper CP-19/002, European Insurance and Occupational Pensions Authority, April 2, 2019. Access at: EIOPA consults on Corrections and Amendments to the implementing technical standards on Reporting and Disclosure.
  19. “Singapore: MAS Consults on Proposed Enhancements to Technology Risk and Business Continuity Management Guidelines 7 March 2019,” MarketWatch, March 13, 2019. Access at: Consultation Paper on Proposed Revisions to Technology Risk Management Guidelines.
  20. “Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations,” Federal Register, April 8, 2019. Access at: Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations.
  21. “Proposed Agency Information Collection Activities; Comment Request,” Federal Register, April 19, 2019. Access at: Proposed Agency Information Collection Activities; Comment Request.
  22. “Other Real Estate Owned and Technical Amendments,” Federal Register, April 24, 2019. Access at: Other Real Estate Owned and Technical Amendments.
  23. “A duty of care and potential alternative approaches: summary of responses and next steps,” Financial Conduct Authority, April 4, 2019. Access at: A Duty of Care and Potential Alternative Approaches: Summary of Responses and Next Steps.

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

Copyright © 2019 Accenture. All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by Accenture as general information on the subject. It is not intended to provide advice on your specific circumstances.

Submit a Comment

Your email address will not be published. Required fields are marked *