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

Current coverage period: Through February 28, 2018

 

CURRENT REGULATIONS:

European Securities and Markets Authority (ESMA):
ESMA Launches Interactive Single Rulebook
Publication Date: February 14th 2018

Risks Covered: Operational Risk

Business Processes Impacted: Audit, Legal & Compliance

The agency has announced the launch of its Interactive Single Rulebook. The Rulebook includes the level 1 text for the undertakings pertaining to the collective investment in transferable securities (UCITS) Directive, and links to all relevant Level 2 and Level 3 measures. The next step will be to add an interactive version for all key level 1 texts. The next texts will be the Credit Rating Agencies Regulation and the Markets in Financial Instruments Directive (MiFID) II and the Markets in Financial Instruments Regulation (MiFIR).1

 

Securities and Exchange Commission (SEC):

Notice of Filing of a Proposed Rule Change Relating to Simplified Arbitration
Publication Date: February 12th 2018

Risks Covered: Compliance Risk

Business Processes Impacted: Audit, Legal & Compliance
The agency issued notice concerning rule changes to the Financial Industry Regulatory Authority, Inc’s. (FINRA) proposal to amend FINRA Rules 12600 and 12800 of the Code of Arbitration Procedure for Customer Disputes and Rules 13600 and 13800 of the Code of Arbitration Procedure for Industry Disputes. This would amend the hearing provisions and provide an additional hearing option for parties in arbitration with claims of $50,000 or less, excluding interest and expenses.2

 

Financial Conduct Authority (FCA):
FCA and ICO publishes joint update on GDPR
Publication Date: February 8th 2018
Risks Covered: Compliance Risk

Business Processes Impacted: Reporting
The FCA and the Information Commissioners Office (ICO) published an update in respect to the European Union General Data Protection Regulation (GDPR). From May 25, 2018 the GDPR will apply in the UK and will be an essential step in enhancing the security and privacy of personal data. In this regard, financial services firms must determine how the GDPR will apply to them.3

 

Office of the Comptroller of the Currency (OCC):
OCC Releases Dodd-Frank Act Stress Test Scenarios for 2018
Publication Date: February 1st 2018
Risks Covered: Conduct Risk

Business Processes Impacted: Audit, Legal & Compliance
The agency has released economic and financial market scenarios for use in the upcoming stress tests for covered institutions with more than $10 billion in assets.4

 

European Commission (EC):
European Commission launches the EU Blockchain Observatory and Forum
Publication Date: February 1st 2018
Risks Covered: Conduct Risk 

Business Processes Impacted: Information Technology
The agency issued a press release providing details of its EU Blockchain Observatory and Forum. The intent is that this will support the development of blockchain technology, strengthen European engagement with various stakeholders involved in blockchain activities and promote European actors. Additional background information and comments on the launch are detailed within the press release.5

European Commission (EC):
Withdrawal of the United Kingdom and EU rules in the field of Banking and Finance
Publication Date: February 8th 2018
Risks Covered: Strategic Risk
Business Processes Impacted: Reporting
The agency has issued a notice regarding the UK’s impending withdrawal from the European Union (EU). Per the notice, once the withdrawal goes into effect all EU primary and secondary laws will cease to apply to the UK. This notice aims to prepare stakeholders exposed to the expected effects of this event on banking and finance rules, and on insurance especially.6

 

European Securities and Markets Authority (ESMA):
Keynote speech from Steven Maijoor, ESMA Chair on “A Measured Approach to Fintech” at a FinTech and Digital Innovation Conference
Publication Date: February 27th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Fraud and Financial Crime
Steven Maijoor, ESMA Chair, gave a speech titled “A Measured Approach to Fintech,” and which touched on taking a measured approach to FinTech.7

 

Lloyd’s Market Association (LMA):
General Data Protection Regulation (GDPR)
Publication Date: February 22nd 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published information on General Data Protection Regulation (GDPR) from a London Market Working Group, co-ordinated by the Lloyd’s Market Association (LMA), and specifically addressing insurance market issues.8

 

International Association of Insurance Supervisors (IAIS):
Consultation: Draft Application Paper on the Use of Digital Technology in Inclusive Insurance
Publication Date: February 15th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Information Technology
This paper seeks to provide guidance to supervisors, regulators and policymakers when considering, designing and implementing regulations and supervisory practices pertaining to the use of digital technology in inclusive insurance. The paper was developed as a sequel to the Issues Paper on Conduct of Business in Inclusive Insurance (2015), and at the explicit request of members who are looking for guidance in the area of mobile phone insurance and other use of digital technology.9

 

European Financial Reporting Advisory Group (EFRAG):
EFRAG issues IFRS 17 Simplified Case Study
Publication Date: February 7th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
European insurers that apply International Financial Reporting Standards (IFRS) are invited to complete a simplified case study on the expected impact of IFRS 17 Insurance Contracts. Responses are requested by close of business on May 31, 2018.10

 

European Commission (EC):
Commission Regulation (EU) 2018/289 of 26 February 2018 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard (IFRS) 2 ‘Share-based Payment’
Publication Date: February 27th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Payment
The agency has published a regulation confirming that amendments made to the International Financial Reporting Standards (IFRS) 2 by the International Accounting Standards Board (IASB) in 2016 meet the criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002. The amendments are effective January 1, 2018.11

 

Financial Conduct Authority (FCA):
FCA launches call for Input on the use of Technology to Achieve Smarter Regulatory Reporting
Publication Date: February 20th 2018
Risks Covered: IT Risk
Business Processes Impacted: Information Technology
The agency has issued a press release announcing a Call for Input on how technology can assist firms in meeting their regulatory reporting requirements and enhance the quality of the information they provide. Additionally, it seeks feedback on some of the wider issues regarding the Role of Technology in Regulatory Reporting.12

 

Commodity Futures Trading Commission (CFTC):
Commodity Futures Trading Commission 17 CFR Parts 1, 3, 4, 5, 15, 18, 19, 23, 30, 38, 39, 41, 50, 150, 151, 155, and 166
Publication Date: February 23rd 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The agency is amending its primary definitions regulation to make it more user-friendly both to the industry and the public. This rule is effective February 23, 2018 and comments were to be received by March 26, 2018.13

 

Financial Conduct Authority (FCA):
PS18/3: Perimeter guidance on Personal recommendations on Retail Investments
Publication Date: February 23rd 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has released a policy statement which summarizes the feedback the agency received on the amendments to guidance in FCA’s Perimeter Guidance Manual (PERG) material proposed in consultation paper ‘CP17/28’ Financial Advice Market Review (FAMR).14

 

Securities and Exchange Commission (SEC):
Investment Company Liquidity Risk Management Programs; Commission Guidance for In-Kind ETFs
Publication Date: February 22nd 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Lending & Investment
The agency has adopted an interim final rule that revises the compliance date concerning requirements to rule 22e-4 for classification, highly liquid investment minimum, and board approval, as well as related reporting requirements of Part D on Form N-LIQUID and liquidity disclosures on Form N-PORT under the Investment Company Act of 1940. The revised compliance date is June 1, 2019, for larger entities (revised from December 1, 2018) and December 1, 2019, for smaller entities (revised from June 1, 2019).15

 

Belgian Financial Services and Markets Authority (FSMA):
PRIIPs Regulation: New Online Application for the Notification of KIDs
Publication Date: February 1st 2018
Risks Covered: Strategic Risk
Business Processes Impacted: Reporting
The agency has issued a press release following the entry into force of the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation on January 1, 2018. In respect to the electronic notification of Key Information Documents (KIDs), the FSMA has put the “FINPRO” application online.16

 

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA Recommends Further Simplifications to the Calculation of Insurers’ Capital Requirements
Publication Date: February 28th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Fraud and Financial Crime
The agency has issued a press release regarding its second and final set of advice to the European Commission on the Solvency Capital Requirement (SCR) standard formula.17

 

Prudential Regulation Authority (PRA):
PRA response to the Treasury Committee’s inquiry into Solvency II
Publication Date: February 27th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency issued a response to the Treasury Committee’s (Committee) inquiry into the impact of the Solvency II Directive on the UK insurance industry. While acknowledging the relatively smooth transition for UK insurers from the previous UK Individual Capital Adequacy Standards (ICAS) regime to Solvency II (given their shared underlying principles), the PRA has reiterated its commitment to making improvements where the regime is not operating as intended.18

 

European Financial Reporting Advisory Group (EFRAG):
“EFRAG issues a background briefing paper on IFRS 17 Insurance Contracts and Level of Aggregation”
Publication Date: February 23rd 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Recovery & Resolution planning
The aim of these documents is to provide simplified information on controversial areas of the International Financial Reporting Standards (IFRS) 17 to enable constituents to understand the issues and be in a position to comment on EFRAG’s draft endorsement advice.19

 

Department of the Treasury (DoT):
Agency Information Collection Activities; Submission for OMB Review; Comment Request; Terrorism Risk Insurance Program
Publication Date: February 14th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Funding & Liquidity Management
The agency has submitted information collection requests pertaining to provisions from the “Terrorism Risk Insurance Program Reauthorization Act of 2015” to the Office of Management and Budget (OMB) for review and clearance, on or after the date of publication of this notice. The public was invited to submit comments by March 16, 2018.20

 

FORTHCOMING REGULATIONS:

Financial Crimes Enforcement Network (FinCEN)
Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies
The regulator published an advisory announcing that, as part of the Financial Action Task Force’s (FATF) listing and monitoring process for ensuring compliance with its international anti-money laundering and combating the financing of terrorism (AML/CFT) standards, the FATF has identified certain jurisdictions as having strategic deficiencies in their AML/CFT regimes.21

 

Hong Kong Monetary Authority (HKMA)
Guideline on Authorisation of Virtual Banks
The agency has published a revised Guideline on the authorization of virtual banks for public consultation from February 6, 2018 to March 15, 2018. The Guideline sets out the principles which the HKMA will take into account when deciding whether to allow virtual banks to conduct banking business in Hong Kong.22

 

International Financial Reporting Standards (IFRS)
IFRS 17 Transition Resource Group
The agency has published the summary of the TRG (Transition Resource Group) for the International Financial Reporting Standards (IFRS) 17 Insurance Contracts meeting held on February 6, 2018.23

 

Financial Conduct Authority (FCA)
Call for Input: Using Technology to Achieve Smarter Regulatory Reporting
The regulator invited views on a “proof of concept” which could potentially make it easier for firms to meet their regulatory reporting requirements and improve the quality of information they provide.24

 

Bank for International Settlements (BIS)
The Basel Committee consults on Revisions to the Pillar 3 Disclosure Framework
The regulator published a press release noting that the Basel Committee issued Pillar 3 disclosure requirements – updated framework, for consultation. Pillar 3 of the Basel Framework has been released as a means of promoting market discipline through regulatory disclosure requirements.25

 

Prudential Regulation Authority (PRA)
Pillar 2 Liquidity
The agency has published a Policy Statement which sets out the feedback it received to Consultation Papers CP21/16 and CP13/17 “Pillar Liquidity.”26

 

European Insurance and Occupational Pensions Authority (EIOPA)
EIOPA’s second set of Advice to the European Commission on specific items in the Solvency II Delegated Regulation
The agency has published the final report on its second set of advice for the European Commission (EC) regarding specific items in the Solvency II Delegated Regulation following a consultation. The EC intends to review methods, standard parameters and assumptions used when calculating the Solvency Capital Requirement before December 2018, and they’ve asked EIOPA to provide technical advice to assist in this review.27

 

European Commission (EC)
The deadline to respond to the public consultation on Fitness check on Supervisory Reporting has been Extended
The regulator has announced that the existing public consultation concerning fitness check on supervisory reporting has been extended to March 14, 2018.28

 

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

 

References:

  1. “ESMA Launches Interactive Single Rulebook,” European Securities and Markets Authority, February 14, 2018. Access at: ESMA Launches Interactive Single Rulebook.
  2. “Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to Simplified Arbitration,” Securities and Exchange Commission, February 12, 2018. Access at: Notice of Filing of a Proposed Rule Change Relating to Simplified Arbitration.
  3. “FCA and ICO publish joint update on GDPR,” Financial Conduct Authority, February 8, 2018. Access at: FCA and ICO publishes joint update on GDPR.
  4. “OCC Releases Dodd-Frank Act Stress Test Scenarios for 2018,” Office of the Comptroller of the Currency, February 1, 2018. Access at: OCC Releases Dodd-Frank Act Stress Test Scenarios for 2018.
  1. “European Commission launches the EU Blockchain Observatory and Forum,” European Commission, February 1, 2018. Access at: European Commission launches the EU Blockchain Observatory and Forum.
  2. “Notice to Stakeholders – Withdrawal of the United Kingdom and EU Rules in the field of Insurance / Reinsurance,” European Commission, February 8, 2018. Access at: Withdrawal of the United Kingdom and EU rules in the field of Banking and Finance.
  1. “Keynote Address: A Measured Approach to Fintech,” Speech by Steven Maijoor, ESMA Chair, European Securities and Markets Authority, February 27, 2018. Access at: Keynote speech from Steven Maijoor, ESMA Chair on “A Measured Approach to Fintech” at a FinTech and Digital Innovation Conference 
  1. “LMA Guidance: GDPR Core Uses Information Notice,” Lloyd’s Market Association, February 22, 2018. Access at: General Data Protection Regulation (GDPR).
  1. “Application Paper on the Use of Digital Technology in Inclusive Insurance,” International Association of Insurance Supervisors, February 15, 2018. Access at: Consultation: Draft Application Paper on the Use of Digital Technology in Inclusive Insurance.
  2. “EFRAG Issues IFRS 17 Simplified Case Study,” European Financial Reporting Advisory Group (EFRAG), February 7, 2018. Access at: EFRAG issues IFRS 17 Simplified Case Study.
  3. “Commission Regulation (EU) 2018/289 of 26 February 2018 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard (IFRS) 2 ‘Share-based Payment’,” Official Journal of the European Union, February 27, 2018. Access at: Commission Regulation (EU) 2018/289 of 26 February 2018 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard (IFRS) 2 ‘Share-based Payment’.
  4. “FCA launches call for input on the use of technology to achieve smarter regulatory reporting,” Financial Conduct Authority, February 20, 2018. Access at: FCA launches call for Input on the use of Technology to Achieve Smarter Regulatory Reporting.
  5. “Interim final rule; request for comment,” Commodity Futures Trading Commission, February 23, 2018. Access at: Commodity Futures Trading Commission 17 CFR Parts 1, 3, 4, 5, 15, 18, 19, 23, 30, 38, 39, 41, 50, 150, 151, 155, and 166.
  6. “PS18/3: Perimeter guidance on personal recommendations on retail investments,” Financial Conduct Authority, February 23, 2018. Access at: PS18/3: Perimeter guidance on Personal recommendations on Retail Investments.
  7. “Investment Company Liquidity Risk Management Programs; Commission Guidance for In-Kind ETFs,” Securities and Exchange Commission, February 22, 2018. Access at: Investment Company Liquidity Risk Management Programs; Commission Guidance for In-Kind ETFs.
  8. “PRIIPs Regulation: New Online Application for the Notification of Kids,” Financial Services and Markets Authority, February 1, 2018. Access at: PRIIPs Regulation: New Online Application for the Notification of KIDs.
  9. “EIOPA Recommends Further Simplifications to the Calculation of Insurers’ Capital Requirements,” European Insurance and Occupational Pensions Authority, February 28, 2018. Access at: EIOPA Recommends Further Simplifications to the Calculation of Insurers’ Capital Requirements.
  10. “PRA response to the Treasury Committee’s inquiry into Solvency II,” Prudential Regulation Authority, February 27, 2018. Access at: PRA response to the Treasury Committee’s inquiry into Solvency II.
  11. “EFRAG issues IFRS 17 Background Briefing Paper on Level of Aggregation,” European Financial Reporting Advisory Group, February 23, 2018. Access at: “EFRAG issues a background briefing paper on IFRS 17 Insurance Contracts and Level of Aggregation”.
  12. “Agency Information Collection Activities; Submission for OMB Review; Comment Request; Terrorism Risk Insurance Program,” Department of the Treasury, February 14, 2018. Access at: Agency Information Collection Activities; Submission for OMB Review; Comment Request; Terrorism Risk Insurance Program.
  13. “Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies,” Financial Crimes Enforcement Network, February 9, 2018. Access at: Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies.
  14. “Guideline on Authorization of Virtual Banks,” Hong Kong Monetary Authority, February 6, 2018. Access at: Guideline on Authorization of Virtual Banks.
  15. “IFRS 17 Transition Resource Group,” International Financial Reporting Standards, February 6, 2018. Access at: IFRS 17 Transition Resource Group.
  16. “Call for Input: Using technology to achieve smarter regulatory reporting,” Financial Conduct Authority, February 20, 2018. Access at: Call for Input: Using Technology to Achieve Smarter Regulatory Reporting.
  17. “The Basel Committee consults on revisions to the Pillar 3 disclosure framework,” Bank for International Settlements, February 27, 2018. Access at: The Basel Committee consults on Revisions to the Pillar 3 Disclosure Framework.
  18. “Pillar 2 liquidity,” Prudential Regulation Authority, February 25, 2018. Access at: Pillar 2 Liquidity.
  19. “EIOPA’s second set of advice to the European Commission on specific items in the Solvency II Delegated Regulation,” European Insurance and Occupational Pensions Authority, February 28, 2018. Access at: EIOPA’s second set of Advice to the European Commission on specific items in the Solvency II Delegated Regulation.
  20. “Consultation Document – Fitness Check on Supervisory Reporting,” European Commission, February 15, 2018. Access at: The deadline to respond to the public consultation on Fitness check on Supervisory Reporting has been Extended.

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 © 2017 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 *