Current coverage period: Through January 31, 2018

CURRENT REGULATIONS:

Hong Kong Monetary Authority (HKMA):
Return of Stable Funding Position of an Authorized Institution (MA(BS)26)
Publication Date: January 11th 2018

Risks Covered: Compliance Risk

Business Processes Impacted: Funding & Liquidity Management

The agency has finalized the Return of Stable Funding Position of an Authorized Institution (MA(BS)26) and the associated Completion Instructions. Institutions from Category 1 and 2A are required to use this return to calculate the Net Stable Funding Ratio (NSFR) and Core Funding Ratio (CFR) respectively, and report the same to the HKMA quarterly according to the prescribed timelines.1

Prudential Regulation Authority (PRA):

Transition Disclosures for IFRS 9 ‘Financial Instruments’
Publication Date: January 11th 2018

Risks Covered: Operational Risk

Business Processes Impacted: Fraud and Financial Crime
The agency has published a letter sent to CFOs of selected firms discussing transition disclosures for International Financial Reporting Standards (IFRS) 9 “Financial Instruments.”2

Financial Industry Regulatory Authority (FINRA):
FINRA announces updates of the Interpretations of Financial and Operational Rules
Publication Date: January 10th 2018
Risks Covered: Business Cycle Risk

Business Processes Impacted: Funding & Liquidity Management
The agency is making available updates to the Interpretations of Financial and Operational Rules that have been communicated to it by the staff of the SEC’s Division of Trading and Markets. The updated interpretations relate to amendments that the SEC adopted concerning the Securities Exchange Act (SEA) Rule 15c6-1 in connection with the standard settlement cycle.”3

Australian Prudential Regulation Authority (APRA):
Residential mortgage requirements for Authorized Deposit-taking Institutions
Publication Date: January 10th 2018
Risks Covered: Market Risk

Business Processes Impacted: Trading
The agency has issued a regulation impact statement on residential mortgage reporting requirements for Authorized Deposit-taking Institutions (ADIs).4

Securities and Exchange Commission (SEC):
Joint Industry Plan; Notice of Filing and Immediate Effectiveness of Amendment No. 4
Publication Date: January 5th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has noticed for immediate effectiveness the Operating Committee for CAT NMS, LLC’s Amendment No. 4 to its consolidated audit trail (CAT NMS Plan). A full executive summary of the Cat NMS Plan, approved by the Operating Committee for CAT NMS, LLC can be found in the body of this notice.5

Prudential Regulation Authority (PRA):
Changes in Insurance Reporting Requirements
Publication Date: January 11th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The agency has published a consultation paper proposing regulatory reporting changes aimed at reducing the burden for Solvency II firms and mutuals while maintaining the PRA’s ability to meet statutory objectives and to supervise firms. The agency has invited feedback on the proposal set out in this consultation, which closes April 13, 2018.6

Insurance Europe (IE):
Data Protection Guidelines must not Overreach the GDPR
Publication Date: January 23rd 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Data Privacy
The agency expects clear guidelines on explicit consent regarding the General Data Protection Regulation (GDPR) to provide legal certainty for insurers.7

International Accounting Standards Board (IASB):
The IFRS 17 Accounting Model in one page
Publication Date: January 17th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published a one page summary of the accounting model in IFRS 17 Insurance Contracts.8

National Association of Insurance Commissioners (NAIC):
U.S. and EU Focus on Regulatory Cooperation
Publication Date: January 25th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The agency met members of the European Insurance and Occupational Pensions Authority (EIOPA) to strengthen the US/EU regulatory relationship, with topics such as a review of Solvency II, the NAIC’s macro-prudential initiative, developments in Insurtech, big data and cybersecurity.9

Consumer Financial Protection Bureau (CFPB):
Rules Concerning Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z)
Publication Date: January 25th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has announced that it will be amending Regulation E and Regulation Z and the official interpretations to those regulations. Following these amendments, comprehensive consumer protections for prepaid accounts (under Regulation E and Regulation Z) will be finalized.10

Financial Conduct Authority (FCA):
PS18/2: Client Money and Unbreakable Deposits
Publication Date: January 22nd 2018
Risks Covered: Conduct Risk
Business Processes Impacted: KYC
The regulator has released a policy statement which summarizes the feedback the agency received on consultation paper “CP17/29: Client money and unbreakable deposits,” the FCA’s response to that feedback and the final rules the agency has drafted.11

The Board of Governors of the Federal Reserve System (The Fed):
Interagency Statement on Accounting and Reporting Implications of the New Tax Law
Publication Date: January 18th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The Fed has issued the Inter-agency Statement on Accounting and Reporting Implications of the new tax law to provide supervised institutions with guidance on the accounting implications of the new tax law. The statement notes that the agencies expect supervised institutions to use all available information to make a good faith effort to reasonably estimate the effects of the Act when preparing their regulatory reports.12

European Commission (EC):
Commission Delegated Regulation (EU) 2018/72 of 4 October 2017 supplementing Regulation (EU) 2015/751 of the European Parliament and of the Council on interchange fees for card-based payment transactions with regard to regulatory technical standards establishing the requirements to be complied with by payment card schemes and processing entities to ensure the application of independence requirements in terms of accounting, organisation and decision-making process
Publication Date: January 18th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published Proposed Regulation (EU) 2018/72 which is to supplement Regulation (EU) 2015/751 in relation to interchange fees for card-based payment transactions, and with regard to Regulatory Technical Standards establishing the requirements to be complied with by payment card schemes and processing entities. The proposed regulations is to ensure the application of independence requirements in terms of accounting, organization and decision-making process.13

European Commission (EC):
Commission Delegated Regulation (EU) 2018/67 of 3 October 2017 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council with regard to the establishment of the conditions to assess the impact resulting from the cessation of or change to existing benchmarks
Publication Date: January 17th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has delegated regulation (EU) 2018/67 of October 3, 2017, by supplementing Regulation (EU) No 2016/1011 of the European Parliament and of the Council with regard to establishing the conditions to assess the impact resulting from the cessation of or change to existing benchmarks.14

International Association of Insurance Supervisors (IAIS):
IAIS publishes a first list of responses to questions received following the IAIS announcement regarding the implementation of ICS 2.0
Publication Date: January 26th 2018
Risks Covered: Strategic Risk
Business Processes Impacted: Reporting
The agency has published a list of responses to questions received after its announcement of the implementation of the Insurance Capital Standard (ICS) 2.0. The document answered questions touching on: the monitoring period, possible changes to ICS 2.0 and parties affected by the confidential reporting.15

Financial Conduct Authority (FCA):
Building Cyber Resilience
Publication Date: January 26th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Fraud and Financial Crime
Robin Jones, FCA Head of Technology, Resilience and Cyber delivered a speech on “Building cyber resilience.”  Mr Jones noted that it is important for firms to protect critical information, as well as to detect and respond quickly to breaches of protective controls. And, as cyber-attacks will adapt to counteract defensive controls, firms should build their cyber capabilities, implement accountability, and constantly be prepared to enter recovery.16

Insurance Europe (IE):
Response to European Commission proposal for a directive amending the Solvency II Directive
Publication Date: January 26th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published a response to the European Commission’s proposal for amending the Solvency II Directive. It was indicated that the EIOPA should have access to data in order to ensure that internal models remain a core part of Solvency II and that a convergent approach to them is achieved.17

European Insurance and Occupational Pensions Authority (EIOPA):
Report to the European Commission on the Application of Group Supervision under the Solvency II Directive
Publication Date: January 25th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The regulator has published its report to the European Commission (EC) on the application of group supervision under the Solvency II Directive. The report discusses, among other things: (i) the definition and scope of group supervision; (ii) EIOPA’s involvement in promoting supervisory convergence in group supervision; (iii) the functionality of the colleges of supervisors and cooperation of authorities within them;  (iv) group internal models; and (v) group capital add-ons.18

Central Bank of Ireland (CBI):
Financial regulation, technological innovation and change – Gerry Cross, Director of Policy and Risk
Publication Date: January 17th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Reporting
Gerry Cross, the Central Bank of Ireland (CBI) Director of Policy and Risk delivered a speech to the Association of Compliance Officers in Ireland with regards to the FinTech industry and recent regulatory changes in Ireland. Mr Cross set out newly implemented regulations, such as the MiFID II, MiFIR and the Revised PSD2 and their impact on the CBI such as the coincidence of MiFID II’s implementation with the CBI’s Conduct Pillar and the enhancement of regulatory oversight provided by the PSD2.19

FORTHCOMING REGULATIONS:

European Union Agency for Network and Information Security (ENISA)
ENISA Threat Landscape Report 2017
The agency has published a threat landscape report for 2017 on the Top 15 cyber threats and trends.20

Hong Kong Monetary Authority (HKMA)
Applicable Jurisdictional Countercyclical Capital Buffer (CCyB) Ratio for Hong Kong to become effective on 1 January 2019
The agency has announced a Countercyclical Capital Buffer (CCyB) Ratio of 2.5% for Hong Kong, effective January 1, 2019, and enclosed a copy of the formal announcement of the same.21

The Board of Governors of the Federal Reserve System
Consumer Leasing (Regulation M)
The agency is proposing to revise its Regulation M, which was issued to implement the Consumer Leasing Act (CLA). Comments were to be submitted by March 5, 2018.22

Financial Industry Regulatory Authority (FINRA)
Proposed Rule Change Relating to Simplified Arbitration
The regulator proposes to amend FINRA Rules 12600 and 12800 of the Code of Arbitration Procedure for Customer Disputes and 13600 and 13800 of the Code of Arbitration Procedure for Industry Disputes, to amend the hearing provisions to provide an additional hearing option for parties in arbitration with claims of $50,000 or less, excluding interest and expenses.23

Bank of England (BoE)
Staff Working Paper No. 707 Bank liquidity and the cost of debt
The BoE has published a staff working paper regarding bank liquidity and the cost of debt. The paper depicts a bank run model with an equilibrium where solvent banks can fail due to illiquidity.24

European Commission (EC)
Commission Delegated Regulation (EU) 2018/63 of 26 September 2017 amending Delegated Regulation (EU) 2017/571 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on the authorisation, organisational requirements and the publication of transactions for data reporting services providers
The agency has published the Commission Delegated Regulation (EU) 2018/63 which amends the Delegated Regulation (EU) 2017/571 which complements Directive 2014/65/EU.25

Insurance Europe (IE)
Response to consultation on EIOPA’s second set of advice to EC on Solvency II review
The regulator has published a response to EIOPA’s consultation on its draft second set of advice to the European Commission on specific items in the Solvency II Delegated Regulation.26

Financial Conduct Authority (FCA)
Insurance Distribution Directive implementation – Feedback and near-final rules to CP17/33 and other IDD consultations
The agency has published a feedback and near-final rules for CP17/23, CP17/32, CP17/33, CP17/39 and CP17/07.27

 

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

 

References:

  1. “Return of Stable Funding Position of an Authorized Institution (MA (BS) 26),” Hong Kong Monetary Authority (HKMA), January 11, 2018. Access at: Return of Stable Funding Position of an Authorized Institution (MA(BS)26).
  2. “Transition disclosures for IFRS 9 ‘Financial Instruments’,” Prudential Regulation Authority, January 11, 2018. Access at: Transition Disclosures for IFRS 9 ‘Financial Instruments’.
  3. “FINRA Announces Updates of the Interpretations of Financial and Operational Rules,” Financial Industry Regulatory Authority, Regulatory Notice, SEC Financial Responsibility Rules, January 10, 2018. Access at: FINRA announces updates of the Interpretations of Financial and Operational Rules.
  4. “Residential mortgage reporting requirements for authorised deposit-taking institutions,” Australian Prudential Regulation Authority, Regulation Impact Statement, January 10, 2018. Access at: Residential mortgage requirements for Authorised Deposit-taking Institutions.
  1. Securities and Exchange Commission, Release No, 34-82451: File No. 4-698, January 5, 2018. Access at: Joint Industry Plan; Notice of Filing and Immediate Effectiveness of Amendment No. 4.
  2. “Changes in insurance reporting requirements,” Prudential Regulation Authority, Consultation Paper 2/18, January 11, 2018. Access at: Changes in Insurance Reporting Requirements.
  1. “Data protection guidelines must not overreach the GDPR,” Insurance Europe, January 23, 2018. Access at: Data Protection Guidelines must not Overreach the GDPR 
  1. “The IFRS 17 accounting model in one page, IFRS, January 17, 2018. Access at: IFRS 17 Accounting Model.
  1. “U.S. and E.U. Focus on Regulatory Cooperation,” National Association of Insurance Commissioners, January 25, 2018. Access at: S. and EU Focus on Regulatory Cooperation.
  2. “Rules Concerning Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z),” Consumer Financial Protection Bureau, January 25, 2018. Access at: Rules Concerning Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z).
  3. “PS 18/2: Client money and unbreakable deposits,” Financial Conduct Authority, January 22, 2018. Access at: PS18/2: Client Money and Unbreakable Deposits.
  4. “SR 18-2: Interagency Statement on Accounting and Reporting Implications of the New Tax Law,” Board of Governors of the Federal Reserve System, January 18, 2018. Access at: Interagency Statement on Accounting and Reporting Implications of the New Tax Law.
  5. “Regulations – Commission Delegated Regulation (EU) 2018/72 of 4 October 2017,” Official Journal of the European Union, January 18, 2018. Access at: Commission Delegated Regulation (EU) 2018/72 of 4 October 2017 supplementing Regulation (EU) 2015/751 of the European Parliament and of the Council on interchange fees for card-based payment transactions with regard to regulatory technical standards establishing the requirements to be complied with by payment card schemes and processing entities to ensure the application of independence requirements in terms of accounting, organisation and decision-making process.
  6. “Commission Delegated Regulation (EU) 2018/67 of 3 October 2017,” Official Journal of the European Union, January 17, 2018. Access at: Commission Delegated Regulation (EU) 2018/67 of 3 October 2017 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council with regard to the establishment of the conditions to assess the impact resulting from the cessation of or change to existing benchmarks.
  7. “The IAIS Risk-based Global Capital Standard (ICS): Frequently Asked Questions on the Implementation of ICS Version 2.0,” International Association of Insurance Supervisors, January 26, 2018. Access at: IAIS publishes a first list of responses to questions received following the IAIS announcement regarding the implementation of ICS 2.0.
  8. “Building cyber resilience,” Financial Conduct Authority, Speech by Robin Jones, January 26, 2018. Access at: Building Cyber Resilience.
  9. “Response to European Commission proposal for a directive amending the Solvency II Directive,” Insurance Europe, January 26, 2018. Access at: Response to European Commission proposal for a directive amending the Solvency II Directive.
  10. “Report to the European Commission on the Application of Group Supervision under the Solvency II Directive,” European Insurance and Occupational Pensions Authority, January 25, 2018. Access at: Report to the European Commission on the Application of Group Supervision under the Solvency II Directive.
  11. “Financial regulation, technological innovation and change – Gerry Cross, Director of Policy and Risk,” Central Bank of Ireland, January 17, 2018. Access at: Financial regulation, technological innovation and change – Gerry Cross, Director of Policy and Risk.
  12. “ENISA Threat Landscape Report 2017 – 15 Top Cyber-Threats and Trends,” European Union Agency for Network and Information Security, January 15, 2018. Access at: ENISA Threat Landscape Report 2017.
  13. “Applicable Jurisdictional Countercyclical Capital Buffer (CCyB) Ratio for Hong Kong to become effective on 1 January 2019,” Hong Kong Monetary Authority, January 10, 2018. Access at: Applicable Jurisdictional Countercyclical Capital Buffer (CCyB) Ratio for Hong Kong to become effective on 1 January 2019.
  14. “Consumer Leasing (Regulation M),” Board of Governors of the Federal Reserve System, January 3, 2018. Access at: Consumer Leasing (Regulation M).
  15. Rule 19b-4 under the Securities Exchange Act of 1934, Financial Industry Regulatory Authority, January 29, 2018. Access at: Proposed Rule Change Relating to Simplified Arbitration.
  16. “Bank liquidity and the cost of debt,” Bank of England, Staff Working Paper No. 707, January 19, 2018. Access at: Staff Working Paper No. 707 Bank liquidity and the cost of debt.
  17. “Regulations – Commission Delegated Regulation (EU) 2018/63 of 26 September 2017,” European Commission, January 17, 2018. Access at: Commission Delegated Regulation (EU) 2018/63 of 26 September 2017 amending Delegated Regulation (EU) 2017/571 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on the authorization, organizational requirements and the publication of transactions for data reporting services providers.
  18. “Response to consultation on EIOPA’s second set of advice to EC on Solvency II review,” Insurance Europe, January 25, 2018. Access at: Response to consultation on EIOPA’s second set of advice to EC on Solvency II review.
  19. “Insurance Distribution Directive implementation – Feedback and near-final rules CP17/23, CP17/32, CP17/33, CP17/39 and near-final rules for CP17/07,” Financial Conduct Authority, January 15, 2018. Access at: Insurance Distribution Directive implementation – Feedback and near-final rules to CP17/33 and other IDD consultations.

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

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