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

Current coverage period: Through June 30, 2018 

CURRENT REGULATIONS: 

Prudential Regulation Authority (PRA):
Resolution Planning: MREL Reporting 
Publication Date: June 13th 2018 

Risks Covered: Compliance Risk 

Business Processes Impacted: Funding & Liquidity Management 

The agency published a Policy Statement (PS) providing feedback to responses to CP 1/18 ‘Resolution planning: MREL reporting’. The PS also details the PRA’s final expectations for reporting on the Minimum Requirement for own funds and Eligible Liabilities (MREL).1 

Financial Conduct Authority (FCA): 

PS18/11: Sovereign Controlled Companies: Feedback to CP17/21 and Final Rules
Publication Date: June 8th 2018
Risks Covered: Compliance Risk 

Business Processes Impacted: Trading
The agency has announced the final rules which create a new category within the FCA premium listing regime and effective July 1, 2018. This will be beneficial for companies controlled by a shareholder that is a sovereign country.2 

Monetary Authority of Singapore (MAS):
Securities and Futures (Capital Markets Products) Regulations 2018
Publication Date: June 8th 2018
Risks Covered: Strategic Risk 

Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has issued the Securities and Futures (Capital Markets Products) Regulations 2018, effective July 9, 2018.3 

Office of the Comptroller of the Currency (OCC); Federal Deposit Insurance Corporation (FDIC):
Securities Transaction Settlement Cycle
Publication Date: June 7th 2018
Risks Covered: Conduct Risk 

Business Processes Impacted: Payments
The OCC and FDIC are adopting a final rule to shorten the Standard Settlement Cycle for Securities purchased or sold by national banks, federal savings associations, and FDIC-supervised institutions. This final rule is effective October 1, 2018.4 

European Commission (EC):
Commission Implementing Regulation (EU) 2018/815 of 1 June 2018 on the extension of the transitional periods related to own funds requirements for exposures to central counterparties set out in Regulations (EU) No 575/2013 and (EU) No 648/2012 of the European Parliament and of the Council
Publication Date: June 4th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Funding & Liquidity Management
On June 1, 2018, the agency has implemented regulation (EU) 2018/815 on the extension of the transitional periods related to own funds requirements for exposures to Central Counterparties, and set out in Regulations (EU) No 575/2013 and (EU) No 648/2012 of the European Parliament and of the Council.5 

Financial Stability Board (FSB):
FSB RCG for the Americas discusses RegTech, Crypto-Assets, Sovereign Risk and Work to reduce Misconduct Risk
Publication Date: June 6th 2018
Risks Covered: Sovereign Risk
Business Processes Impacted: Portfolio Advisory & Management
The agency has published a press release regarding a meeting of the Regional Consultative Group for the Americas to discuss topics relevant to the region, including RegTech, crypto-assets, sovereign risk and work to reduce misconduct risk.6 

International Financial Reporting Standards (IFRS):
IFRS 17 webinar on the Premium Allocation Approach to Support Implementation
Publication Date: June 7th 2018
Risks Covered: Cyber IT Risk
Business Processes Impacted: Data Privacy
The IFRS webcast explains the Premium Allocation Approach, including a comparison with existing accounting practice.7 

European Financial Reporting Advisory Group (EFRAG):
CFO Forum Presentation to the EFRAG Board
Publication Date: July 3rd 2018
Risks Covered: Market Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
CFO Forum has published findings from the EFRAG case study testing on IFRS 17.8 

International Association of Insurance Supervisors (IAIS):
Application Paper on Supervision of Insurer Cybersecurity 
Publication Date: June 29th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
This Application Paper provides guidance to supervisors seeking to develop or enhance their approach to supervising cyber risk and resilience. Insurers are invited to assist in developing and implementing good cyber security practices in their organizations.9 

European Financial Reporting Advisory Group (EFRAG):
IFRS 17 Insurance Contracts – EFRAG User Outreach – Preliminary results
Publication Date: June 13th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The report summarizes the feedback received by EFRAG from IFRS 17 financial statements’ users (i.e. investors and analysts).10 

Financial Conduct Authority (FCA):
FCA publishes update on wide-ranging review of retail banking sector
Publication Date: June 27th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Business Continuity Management
The agency has updated its Strategic Review of Retail Banking Business Models. Among other things, this Review examines how Personal Current Accounts are paid for, discusses the possible impact of technological and regulatory developments, and outlines the progress made on the analysis of the issues and planned next steps.11 

Financial Stability Board (FSB):
FSB RCG for Europe discusses Recovery and Resolution, Interest Rate benchmarks and Market-based Finance
Publication Date: June 27th 2018
Risks Covered: Interest Rate Risk (non-trading book)
Business Processes Impacted: Recovery & Resolution planning
The agency has published a press release regarding a meeting of the Regional Consultative Group (RCG) for Europe to discuss topics relevant to the region, including the FSB’s approach to recovery and resolution, interest-rate benchmarks in individual jurisdictions within the RCG Europe, and the pros and cons of market-based finance.12 

Securities and Exchange Commission (SEC):
Amendments to the Commission’s Freedom of Information Act Regulations
Publication Date: June 25th 2018
Risks Covered: Strategic Risk
Business Processes Impacted: Information Technology
The agency is adopting amendments to the Commission’s regulations under the Freedom of Information Act (FOIA). The Commission is amending the FOIA regulations to reflect changes required by the FOIA Improvement Act of 2016 (“Improvement Act”) and to clarify, update, and streamline the regulations.13 

Financial Reporting Council (UK):
Blockchain and the Future of Corporate Reporting — How does it Measure Up?
Publication Date: June 21st 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Reporting
The agency has published a report regarding the use of Blockchain in corporate reporting, discussing the ways in which digital and corporate reporting frameworks will have to be amended to accommodate the usage of distributed ledgers and cryptocurrency.14 

Japan Financial Services Agency (JFSA):
Partial Amendment (Draft) of the Capital Adequacy Ratio Regulation (Third Pillar)
Publication Date: June 18th 2018
Risks Covered: Residual Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has announced the Partial Amendment (draft) of the Capital Adequacy Ratio regulation (Third Pillar). Opinions and comments on this proposal were to be submitted by July 19, 2018.15 

China Insurance Regulatory Commission (CBIRC):
CBIRC Notice on Permitting Foreign Investors to Operate Insurance Agency Business in China
Publication Date: June 28th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Lending & Investment
The agency has issued a CBIRC Notice on permitting foreign investors to operate an insurance agency business in China. Effective June 28, 2018, specialized insurance agencies in China invested in and established by foreign investors, and which have been in operation for more than three years may apply to operate an insurance agency business.16 

European Insurance and Occupational Pensions Authority (EIOPA):
Opinion on disclosure of information to customers about the impact of the withdrawal of the United Kingdom from the European Union 
Publication Date: June 28th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: KYC
The agency has published its opinion in relation to the disclosure of information to customers concerning the impact of the UK’s withdrawal from the European Union.17 

Insurance Europe (IE):
Survey shows Solvency II brings benefits but deters long-term business
Publication Date: June 26th 2018
Risks Covered: Market Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has issued survey findings of insurers from across Europe. The survey has shown that over three quarters of respondents have seen a positive effect from the EU’s 2016 Solvency II regulation on their risk management and governance practices and their management of assets and liabilities.18 

Financial Reporting Council (UK) (FRC):
IFRS 17 Event Summary – June 2018
Publication Date: June 18th 2018
Risks Covered: Business Cycle Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The agency has released a document discussing the effects of the European Financial Reporting Advisory Group’s research on IFRS 17 Insurance Contracts.19 

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA’s InsurTech Insight Survey
Publication Date: June 30th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
The agency is collecting views on InsurTech, technology-enabled innovation in insurance that could result in new business models, applications, processes or products with an associated material effect on the provision of insurance products and services.20 

 

FORTHCOMING REGULATIONS: 

Financial Stability Board (FSB)
Monitoring the Technical Implementation of the FSB Total Loss-Absorbing Capacity (TLAC) Standard: Call for public feedback
The agency has published a call for public feedback on the standard issued in November 2015 pertaining to the Adequacy of the Total Loss-Absorbing and re-capitalization capacity for Global Systemically Important Banks in resolution (TLAC standard). Specifically, the agency has requested opinions and evidence on the technical implementation of the standard.21 

Federal Reserve (The Fed) 
Agencies ask for public comment on Proposal to Simplify and Tailor “Volcker rule”
Five federal financial regulatory agencies announced that they are jointly asking for public comment on a proposal that would simplify and tailor compliance requirements relating to the “Volcker rule.” By statute, the Volcker rule generally restricts banking entities from engaging in prohibited proprietary trading and from owning or controlling hedge funds or private equity funds.22 

European Commission (EC)
An amendment to the Solvency 2 delegated regulation
The agency has issued a proposal to amend Delegated Regulation (EU) 2015/35 as regards the calculation of regulatory capital requirements for securitizations and simple, transparent and standardized securitizations held by insurance and reinsurance undertakings.23 

International Financial Reporting Standards (IFRS)
Preparing the Market for IFRS 17
The IFRS 17 Insurance Contracts was issued by the International Accounting Standards Board in 2017 and comes into effect in 2021. The document takes a look at what the new Standard means for the investor community.24 

Commodity Futures Trading Commission (CFTC)
CFTC Proposes Amendments to Ease Regulatory Burdens for Self-Regulatory Organizations
The agency has announced that it has unanimously approved proposed amendments to its regulations and that simplify obligations imposed on a Self-Regulatory Organization (SRO) when carrying out its financial surveillance program for Futures Commission Merchants (FCMs).25 

European Commission (EC)
Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (Fifth AMLD)
The agency has issued an amendment on the Fifth AMLD. Amendments include requiring Member States to prohibit their credit institutions and financial institutions from keeping anonymous accounts, anonymous passbooks or anonymous safe-deposit boxes in the light of recent terrorist attacks which brought light to the way in which terrorist groups finance and conduct their operations. This Directive enters into force on July 9, 2018. Member States have until January 10, 2020 to bring into force the necessary laws, regulations and administrative provisions to comply with the Directive.26 

European Insurance and Occupational Pensions Authority (EIOPA)
Draft Regulatory Technical Standards adapting the base euro amounts for professional indemnity insurance and for financial capacity of intermediaries under the Insurance Distribution Directive Letter to Olivier Guersant, Director-General of DG FISMA, European Commission
The agency has published draft Regulatory Technical Standards (RTS), required by the European Commission before June 30, 2018 under the Insurance Distribution Directive (IDD), and which adapts the base euro amounts for Professional Indemnity Insurance (PII) and Financial Capacity.27 

European Insurance and Occupational Pensions Authority (EIOPA)
EIOPA outlines key financial stability risks
The agency has published its June 2018 Financial Stability Report (FSR) of the (re)insurance and occupational pensions sectors for the European Economic Area.28 

 

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

 

References:  

  1. “Resolution planning: MREL reporting,” Prudential Regulation Authority, June 13, 2018. Access at: Resolution Planning: MREL Reporting
  2. “Sovereign controlled companies – Feedback to CP17/21 and Final Rules,” Financial Conduct Authority, June, 2018. Access at: PS18/11: Sovereign Controlled Companies: Feedback to CP17/21 and Final Rules.
  3. Securities and Futures (Capital Markets Products) Regulations 2018,” Monetary Authority of Singapore, June 8, 2018. Access at: Securities and Futures (Capital Markets Products) Regulations 2018.
  4. “Securities Transaction Settlement Cycle,” Office of the Comptroller of the Currency; Federal Deposit Insurance Corporation, June 7, 2018. Access at: Securities Transaction Settlement Cycle. 
  5. “Commission Implementing Regulation (EU) 2018/815 of 1 June 2018 on the extension of the transitional periods related to own funds requirements for exposures to central counterparties set out in Regulations (EU) No 575/2013 and (EU) No 648/2012 of the European Parliament and of the Council,” Official Journal of the European Union, June 4, 2018. Access at: Commission Implementing Regulation (EU) 2018/815 of 1 June 2018 on the extension of the transitional periods related to own funds requirements for exposures to central counterparties set out in Regulations (EU) No 575/2013 and (EU) No 648/2012 of the European Parliament and of the Council.
  6. “FSB RCG for the Americas discusses RegTech, crypto-assets, sovereign risk and work to reduce misconduct risk,” Financial Stability Board, June 6, 2018. Access at: FSB RCG for the Americas discusses RegTech, Crypto-Assets, Sovereign Risk and Work to reduce Misconduct Risk. 
  7. “Premium Allocation Approach: example with comparison to existing accounting practice,” International Financial Reporting Standards, June 7, 2018. Access at: IFRS 17 webinar on the Premium Allocation Approach to Support Implementation.  
  8. “CFO Forum Presentation to the EFRAG Board – EFRAG testing results,” European Financial Reporting Advisory Group, July 3, 2018. Access at: CFO Forum Presentation to the EFRAG Board. 
  9. “Draft Application Paper on Supervision of Insurer Cybersecurity,” International Association of Insurance Supervisors, June 29, 2018. Access at: Application Paper on Supervision of Insurer Cybersecurity.
  10. “IFRS17 Insurance Contracts – User Outreach – Preliminary results,” European Financial Reporting Advisory Group, June 13, 2018. Access at: IFRS 17 Insurance Contracts – EFRAG User Outreach – Preliminary results.
  11. “FCA publishes update on wide-ranging review of retail banking sector,” Financial Conduct Authority, June 27, 2018. Access at: FCA publishes update on wide-ranging review of retail banking sector.
  12. “FSB RCG for Europe discusses recovery and resolution, interest rate benchmarks and market-based finance,” Financial Stability Board, June 27, 2018. Access at: FSB RCG for Europe discusses Recovery and Resolution, Interest Rate benchmarks and Market-based Finance.
  13. “Amendments to the Commission’s Freedom of Information Act Regulations,” Securities and Exchange Commission, Final Rule, June 25, 2018. Access at: Amendments to the Commission’s Freedom of Information Act Regulations.
  14. “Blockchain and the future of corporate reporting – How does it measure up?,” Financial Reporting Council, June 21, 2018. Access at: Blockchain and the Future of Corporate Reporting — How does it Measure Up?.
  15. On the announcement of a partial amendment (draft) notice etc. concerning capital adequacy ratio regulation (third pillar), Japan Financial Services Agency, June 18, 2018. Access at: Partial Amendment (Draft) of the Capital Adequacy Ratio Regulation (Third Pillar).
  16. Notice on permitting foreign investors to operate insurance agency business in China, China Insurance Regulatory Commission, June 28, 2018. Access at: International Accounting Standards Board (IASB) meeting.
  17. “Opinion on disclosure of information to customers about the impact of the withdrawal of the United Kingdom from the European Union,” European Insurance and Occupational Pensions Authority, June 28, 2018. Access at: Opinion on disclosure of information to customers about the impact of the withdrawal of the United Kingdom from the European Union.
  18. “Survey shows Solvency II brings benefits but deters long-term business,” Insurance Europe, June 26, 2018. Access at: Survey shows Solvency II brings benefits but deters long-term business.
  19. “FRC Panel Discussion: Benefits and barriers to implementation of IFRS 17 Insurance Contracts – 24 April 2018,” Financial Reporting Council, June 18, 2018. Access at: IFRS 17 Event Summary – June 2018.
  20. “EIOPA’s InsurTech Insight Survey,” European Insurance and Occupational Pensions Authority, June 30, 2018. Access at: EIOPA’s InsurTech Insight Survey.
  21. “Monitoring the Technical Implementation of the FSB Total Loss-absorbing Capacity (TLAC) Standard – Call for public feedback,” Financial Stability Board, June 6, 2018. Access at: Monitoring the Technical Implementation of the FSB Total Loss-Absorbing Capacity (TLAC) Standard: Call for public feedback.
  22. “Agencies ask for public comment on proposal to simplify and tailor “Volcker rule,” Board of Governors of the Federal Reserve System, Press Release, June 5, 2018. Access at: Agencies ask for public comment on Proposal to Simplify and Tailor “Volcker rule.” 
  23. “Amending Delegated Regulation (EU) 2015/35 as regards the calculation of regulatory capital requirements for securitisations and simple, transparent and standardised  securitisations held by insurance and reinsurance undertakings,” European Commission, June 1, 2018. Access at: An amendment to the Solvency 2 delegated regulation.
  24. “Preparing the market for IFRS 17,” International Financial Reporting Standards, June 11, 2018. Access at: Preparing the Market for IFRS 17.
  25. “CFTC Proposes Amendments to Ease Regulatory Burdens for Self-Regulatory Organizations,” U. S. Commodity Futures Trading Commission, Release Number 7746-18, June 28, 2018. Access at: CFTC Proposes Amendments to Ease Regulatory Burdens for Self-Regulatory Organizations.
  26. “Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU,” Official Journal of the European Union, June 19, 2018. Access at: Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (Fifth AMLD).
  27. “Draft Regulatory Technical Standards adapting the base euro amounts for professional indemnity insurance and for financial capacity of intermediaries under the Insurance Distribution Directive,” European Insurance and Occupational Pensions Authority, June 26, 2018. Access at: Draft Regulatory Technical Standards adapting the base euro amounts for professional indemnity insurance and for financial capacity of intermediaries under the Insurance Distribution Directive Letter to Olivier Guersant, Director-General of DG FISMA, European Commission. 
  28. “EIOPA Outlines Key Financial Stability Risks,” European Insurance and Occupational Pensions Authority, Press Release, June 25, 2018. Access at: EIOPA outlines key financial stability risks. 

 

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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