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

Current coverage period: Through August 31, 2018

CURRENT REGULATIONS:

European Commission (EC):
Commission Delegated Regulation (EU) 2018/1108 of 7 May 2018 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council with regulatory technical standards on the criteria for the appointment of central contact points for electronic money issuers and payment service providers and with rules on their functions
Publication Date: August 10th 2018

Risks Covered: Compliance Risk

Business Processes Impacted: Payment

The agency has published its commission delegated regulation on the criteria for appointing the central contact points for electronic money issuers and payment service providers and the rules pertaining to their functions. This Regulation came into force on August 30, 2018.1

Consumer Financial Protection Bureau (CFPB):

Amendment to the Annual Privacy Notice Requirement Under the Gramm-Leach-Bliley Act (Regulation P)
Publication Date: August 9th 2018

Risks Covered: Compliance Risk

Business Processes Impacted: KYC, Consumer/Investor Protection
The agency is amending Regulation P (annual privacy notice requirement under the Gramm-Leach-Bliley).2

Securities and Exchange Commission (SEC):
Regulation of NMS Stock Alternative Trading Systems
Publication Date: August 7th 2018
Risks Covered: Compliance Risk

Business Processes Impacted: Brokerage Services
The agency is adopting amendments to regulatory requirements in Regulation ATS under the Securities Exchange Act of 1934 applicable to Alternative Trading Systems that trade National Market System stocks, including so called ‘‘dark pools’’.3

The Board of Governors of the Federal Reserve (The Fed):
Single-Counterparty Credit Limits for Bank Holding Companies and Foreign Banking Organizations
Publication Date: August 6th 2018
Risks Covered: Compliance Risk

Business Processes Impacted: Business Continuity Management
The Fed is adopting a final rule to establish Single-Counterparty Credit limits for bank holding companies and foreign banking organizations with $250 billion or more in total consolidated assets, including any U.S. intermediate holding company of such a foreign banking organization with $50 billion or more in total consolidated assets, and any bank holding company identified as a global systemically important bank holding company under the Board’s capital rules.4

European Securities and Markets Authority (ESMA):
MiFID II: ESMA publishes data for the Systematic Internaliser Calculations for Equity, Equity-like Instruments and Bonds
Publication Date: August 1st 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Trading
The agency has issued a press release in respect to publishing “data for the systemic internaliser calculations” for equity, equity-like instruments and bonds under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).5

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA joins the Sustainable Insurance Forum
Publication Date: August 8th 2018
Risks Covered: Business Cycle Risk
Business Processes Impacted: Business Continuity Management
The agency has joined the Sustainable Insurance Forum (SIF), a network of insurance supervisors and regulators working on sustainability challenges facing the insurance sector.6

International Association of Insurance Supervisors (IAIS):
Issues Paper on digitalization of the insurance business model consultation
Publication Date: August 6th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Business Continuity Management
The agency is seeking feedback on draft Issues Paper on the increasing use of digital technology in insurance and its potential impact on consumer outcomes. The aim of this paper is to consider the impact of the increasing use of digital technology in insurance.7

International Association of Insurance Supervisors (IAIS):
Public Consultation on Risk-based Global Insurance Capital Standard (ICS) Version 2.0
Publication Date: August 6th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has announced a unified path for the convergence of group capital standards in furtherance of the ultimate goal of a single ICS that achieves comparable outcomes across jurisdictions.8

Financial Conduct Authority (FCA):
Guidance for firms outsourcing to the ‘Cloud’ and other third-party IT services
Publication Date: August 20th 2018
Risks Covered: Market Risk
Business Processes Impacted: Fraud and Financial Crime
The agency has issued final guidance for firms outsourcing to the “Cloud” and other third-party IT services.9

International Financial Reporting Standards (IFRS):
IFRS 17 webcast on Insurance Contracts with participation and other features
Publication Date: August 17th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
The agency provides details on the explanations of features and measurements of fulfillment cash flow insurance contracts.10

The Board of Governors of the Federal Reserve System (The Fed):
Small Bank Holding Company and Savings and Loan Holding Company Policy Statement and Related Regulations; Changes to Reporting Requirements
Publication Date: August 30th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has invited comment on an interim final rule that raises the asset size threshold for determining the applicability of the Board’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (Regulation Y, appendix C) to $3 billion from $1 billion of total consolidated assets.11

Monetary Authority of Singapore (MAS):
Monetary Authority of Singapore and Dubai Financial Services Authority strengthen ties in FinTech
Publication Date: August 29th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Business Continuity Management
The agency and the Dubai Financial Services Authority (DFSA) signed a FinTech Agreement to promote the referral of innovative businesses between the two authorities and joint innovation projects on the application of key technologies such as: digital and mobile payments; blockchain and distributed ledgers; big data; and application programming interfaces (APIs).12

Indonesian Financial Services Authority (OJK):
Application of Risk Management and Risk Measurement Standard Approaches on Interest Rate Risk in The Banking Book for Commercial Banks
Publication Date: August 21st  2018
Risks Covered: Interest Rate Risk (non-trading book)
Business Processes Impacted: Risk Management & Stress Testing
The agency has issued the “Circular on Application of Risk Management and Risk Measurement Standard Approaches on Interest Rate Risk in The Banking Book for Commercial Banks,” effective August 21, 2018.13

Consumer Financial Protection Bureau (CFPB):
Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages)
Publication Date: August 27th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Data Quality Management
The agency has issued a final rule amending the regulation text and official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). This final rule is effective January 1, 2019.14

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC):
Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks
Publication Date: August 22nd 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Consumer/Investor Protection
The regulatory bodies are jointly issuing and requesting public comment on the interim final rules to implement section 210 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act), which was enacted on May 24, 2018.15

China Insurance Regulatory Commission (CIRC); China Banking Regulatory Commission (CBRC):
CBIRC Decision to Repeal and Amend Some Rules
Publication Date: August 23rd 2018
Risks Covered: Business Cycle Risk
Business Processes Impacted: Recovery & Resolution planning
The China Banking and Insurance Regulatory Commission (CBIRC) has published a “CBIRC Decision to Repeal and Amend Some Rules.” CBIRC has decided to repeal the “Measures for the Administration of the Investment and Shareholding in Chinese-funded Financial Institutions by Foreign Financial Institutions” as well as amend the “CBRC Implementation Measures for the Administrative Licensing Items concerning Chinese-Funded Commercial Banks.”16

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC:
Liquidity Coverage Ratio Rule: Treatment of Certain Municipal Obligations as High-Quality Liquid Assets
Publication Date: August 22nd 2018
Risks Covered: Liquidity Risk
Business Processes Impacted: Funding & Liquidity Management
Multiple agencies jointly issued and invited comment on an interim final rule that amends the agencies’ Liquidity Coverage Ratio (LCR) rule to treat liquid and readily-marketable, investment grade municipal obligations as High-Quality Liquid Assets (HQLA).17

Commodity Futures Trading Commission (CFTC):
CFTC Unanimously Adopts Rule Amendments Simplifying Chief Compliance Officer Duties and Annual Report Rules for FCMs, Swap Dealers and Major Swap Participants
Publication Date: August 21st 2018
Risks Covered: Operational Risk
Business Processes Impacted: Netting & Collateral Management
The agency unanimously approved final amendments clarifying and simplifying its regulations governing Chief Compliance Officer (CCO) duties and annual compliance reporting requirements for Futures Commission Merchants (FCM), Swap Dealers and Major Swap Participants.18

Indonesian Financial Services Authority (OJK):
Digital Financial Innovation in the Financial Services Sector
Publication Date: August 16th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Finance & Performance Management
The agency has issued the “Regulation on Digital Financial Innovation in the Financial Services Sector” to establish an innovation framework that is accountable and safe to enhance consumer protection and mitigate risks. The regulation is effective August 16, 2018.19

Japan Financial Services Agency (JFSA):
Result of Public Comment on Cabinet Office Ordinance (Draft) to Revise Part of the Enforcement Order for the Banking Law
Publication Date: August 15th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has announced the result of public comment on Cabinet Office Ordinance (draft) to revise part of the enforcement order for the Banking Law. The Cabinet Office Ordinance came into effect August 16, 2018.20

 

FORTHCOMING REGULATIONS:

Commodity Futures Trading Commission (CFTC)
Exemption From Derivatives Clearing Organization Registration
The agency is proposing amendments to its regulations that establish a regulatory framework within which the agency may exempt a clearing organization that is organized outside of the U.S., from registering as a Derivatives Clearing Organization (DCO) in connection with the clearing organization’s clearing of swaps.21

Consumer Financial Protection Bureau (CFPB)
BCFP collaborates with regulators around the world to create global financial innovation network
The agency is working in collaboration with 11 financial regulators and related organizations, and has announced an initiative to create the Global Financial Innovation Network (GFIN).22

International Association of Insurance Supervisors (IAIS)
Public Consultation on Overall ComFrame
The agency is seeking feedback via public consultation on the draft of the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame).23

European Insurance and Occupational Pensions Authority (EIOPA)
Understanding Cyber Insurance – A Structured Dialogue with Insurance Companies
Cyber risk is a growing concern for institutions, individuals, and financial markets. In less than five years, it has surged to the top positions in the list of global risks for business. The increasing number of cyber incidents, the continued digital transformation and new regulatory initiatives in the European Union are expected to raise awareness and to boost the demand for cyber insurance.24

Bank of England (BoE)
Business Investment, Cash Holding and Uncertainty Since the Great Financial Crisis
The bank has issued a working paper to its staff regarding the aftermath of the 2008 economic downturn. In the paper, the BoE outlines the fall of the UK’s real GDP and real investment experienced in 2009, with each downturn lasting between 4-6 years respectively.25

Indonesian Financial Services Authority (OJK)
OJK Inaugurates Digital Financial Innovation Centre
The agency inaugurated the OJK Innovation Center for Digital Financial Technology (OJK Infinity) which will act as a forum for discussion and collaboration between industries, regulators, the government, academics and other innovation hubs. OJK Infinity aims to facilitate the regulatory sandbox as a Fintech incubator, innovation hub for the development of the digital financial industry, and as an educational center for financial services players, consumers and academics.26

Securities and Exchange Commission (SEC)
SEC Adopts Amendments to Simplify and Update Disclosure Requirements
The agency has announced that it has voted to adopt amendments to certain disclosure requirements that have become duplicative, overlapping, or outdated in light of other SEC disclosure requirements, General Accepted Accounting Principles, or changes in the information environment.27

 

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

References:

  1. “Commission Delegated Regulation (EU) 2018/1108 of 7 May 2018 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council with regulatory technical standards on the criteria for the appointment of central contact points for electronic money issuers and payment service providers and with rules on their functions,” Official Journal of the European Union, August 10, 2018. Access at: Commission Delegated Regulation (EU) 2018/1108 of 7 May 2018 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council with regulatory technical standards on the criteria for the appointment of central contact points for electronic money issuers and payment service providers and with rules on their functions.
  2. “Amendment to the Annual Privacy Notice Requirement Under the Gramm-Leach-Bliley Act (Regulation P),” Consumer Financial Protection Bureau, Final rule, August 9, 2018. Access at: Amendment to the Annual Privacy Notice Requirement Under the Gramm-Leach-Bliley Act (Regulation P).
  3. “Regulation of NMS Stock Alternative Trading Systems,” Securities and Exchange Commission, Final rule, August 7, 2018. Access at: Regulation of NMS Stock Alternative Trading Systems.
  4. “Single-Counterparty Credit Limits for Banking Holding Companies and Foreign Banking Organizations,” The Board of Governors of the Federal Reserve, Final rule, August 6, 2018. Access at: Single-Counterparty Credit Limits for Bank Holding Companies and Foreign Banking Organizations.
  1. “MIFID II: ESMA publishes data for the Systematic Internaliser Calculations for Equity, Equity-like Instruments and Bonds,” European Securities and Markets Authority, August 1, 2018. Access at: MiFID II: ESMA publishes data for the Systematic Internaliser Calculations for Equity, Equity-like Instruments and Bonds.
  2. “EIOPA joins the Sustainable Insurance Forum,” European Insurance and Occupational Pensions Authority, August 8, 2018. Access at: EIOPA joins the Sustainable Insurance Forum.
  1. “Issues Paper on the Increasing Use of Digital Technology in Insurance and Its Potential Impact on Consumer Outcomes,” International Association of Insurance Supervisors, August 6, 2018. Access at: Issues Paper on digitalization of the insurance business model consultation. 
  1. “Risk-based Global Insurance Capital Standard Version 2.0,” International Association of Insurance Supervisors, Public consultation document, August 6, 2018. Access at: Public Consultation on Risk-based Global Insurance Capital Standard (ICS) Version 2.0. 
  1. “FG 16/5 Guidance for firms outsourcing to the ‘cloud’ and other third-party IT services,” Financial Conduct Authority, Finalised guidance, August 20, 2018. Access at: Guidance for firms outsourcing to the ‘Cloud’ and other third-party IT services.
  2. “Insurance contracts with participation and other features,” International Financial Reporting Standards, Webcast, August 17, 2018. Access at: IFRS 17 webcast on Insurance Contracts with participation and other features.
  3. “Small Bank Holding Company and Savings and Loan Holding Company Policy Statement and Related Regulations; Changes to Reporting Requirements,” The Board of Governors of the Federal Reserve System, August 30, 2018. Access at: Small Bank Holding Company and Savings and Loan Holding Company Policy Statement and Related Regulations; Changes to Reporting Requirements.
  4. “Monetary Authority of Singapore and Dubai Financial Services Authority strengthen ties in FinTech,” Monetary Authority of Singapore, August 29, 2018. Access at: Monetary Authority of Singapore and Dubai Financial Services Authority strengthen ties in FinTech.
  5. “Application of Risk Management and Measurement of Risk of Standard Approach for Interest Rate Risk in Banking Book for Commercial Banks,” Indonesian Financial Services Authority, August 21, 2018. Access at: Application of Risk Management and Risk Measurement Standard Approaches on Interest Rate Risk in The Banking Book for Commercial Banks.
  6. “Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages),” Consumer Financial Protection Bureau, Final rule, August 27, 2018. Access at: Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages).
  7. “Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks,” Office of the Comptroller of the Currency; Federal Reserve; Federal Deposit Insurance Corporation, August 22, 2018. Access at: Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks.
  8. “Bank of China Insurance Supervision and Administration Commission Order No. 5 of 2018,” China Banking Regulatory Commission, August 23, 2018. Access at: CBIRC Decision to Repeal and Amend Some Rules.
  9. “Liquidity Coverage Ratio Rule: Treatment of Certain Municipal Obligations as High-Quality Liquid Assets,” Office of the Comptroller of the Currency; Federal Reserve; Federal Deposit Insurance Corporation, August 22, 2018. Access at: Liquidity Coverage Ratio Rule: Treatment of Certain Municipal Obligations as High-Quality Liquid Assets.
  10. “CFTC Unanimously Adopts Rule Amendments Simplifying Chief Compliance Officer Duties and Annual Report Rules for FCMs, Swap Dealers and Major Swap Participants,” Commodity Futures Trading Commission, August 21, 2018. Access at: CFTC Unanimously Adopts Rule Amendments Simplifying Chief Compliance Officer Duties and Annual Report Rules for FCMs, Swap Dealers and Major Swap Participants.
  11. “Digital Financial Innovation in the Financial Services Sector,” Indonesian Financial Services Authority, August 16, 2018. Access at: Digital Financial Innovation in the Financial Services Sector.
  12. Result of public comment on Cabinet Office Ordinance, Japan Financial Services Agency, August 15, 2018. Access at: Result of Public Comment on Cabinet Office Ordinance (Draft) to Revise Part of the Enforcement Order for the Banking Law.
  13. “Exemption From Derivatives Clearing Organization Registration,” Commodity Futures Trading Commission, August 13, 2018. Access at: Exemption From Derivatives Clearing Organization Registration.
  14. “BCFP Collaborates With Regulators Around The World To Create Global Financial Innovation Network,” Consumer Financial Protection Bureau, August 7, 2018. Access at: BCFP collaborates with regulators around the world to create global financial innovation network.
  15. “Draft overall ComFrame for public consultation (clean version),” International Association of Insurance Supervisors, August 1, 2018. Access at: Public Consultation on Overall ComFrame.
  16. “Understanding Cyber Insurance – A Structured Dialogue with Insurance Companies,” European Insurance and Occupational Pensions Authority, August 2, 2018. Access at: Understanding Cyber Insurance – A Structured Dialogue with Insurance Companies.
  17. “Business investment, cash holding and uncertainty since the Great Financial Crisis,” Bank of England, Staff Working Paper No. 753, August 24, 2018. Access at: Business Investment, Cash Holding and Uncertainty Since the Great Financial Crisis.
  18. “OJK Inaugurates Digital Financial Innovation Center (Fintech Center),” Indonesian Financial Services Authority, Press release, August 20, 2018. Access at: OJK Inaugurates Digital Financial Innovation Centre. 
  1. “SEC Adopts Amendments to Simplify and Update Disclosure Requirements,” Securities and Exchange Commission, Press release, August 17, 2018. Access at: SEC Adopts Amendments to Simplify and Update Disclosure Requirements.

 

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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