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

Current coverage period: Through November 30, 2018

CURRENT REGULATIONS:

European Commission (EC):
Guidelines for Assessing the Materiality of Credit Obligations Past Due
Publication Date: November 26th 2018

Risks Covered: Credit Risk

Business Processes Impacted: Data Quality Management

The agency exercises the discretion conferred in relation to the threshold for assessing the materiality of credit obligations past due. The Guideline took effect on December 16, 2018.1

The Board of Governors of the Federal Reserve System (The Fed); Consumer Financial Protection Bureau (CFPB):

Consumer Leasing (Regulation M)
Publication Date: November 23rd 2018

Risks Covered: Operational Risk

Business Processes Impacted: Lending & Investment
The multiple regulator bodies are finalizing amendments to the official interpretations and commentary for the agencies’ regulations that implement the Consumer Leasing Act. This final rule went into effect on January 1, 2019.2

Her Majesty’s Treasury (HMT):
Draft Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019

Publication Date: November 22nd 2018
Risks Covered: Credit Concentration Risk

Business Processes Impacted: Business Continuity Management
The regulator has published the Draft Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019, which set out proposed amendments to UK legislation following the EU (Withdrawal) Act concerning the framework for financial services. This is expected to impact primary as well as secondary legislation.3

The Board of Governors of the Federal Reserve System (The Fed):
Large Financial Institution Rating System; Regulations K and LL (Federal Register)

Publication Date: November 21st 2018
Risks Covered: Credit Risk

Business Processes Impacted: Pricing & Valuation
The agency is adopting a new rating system for large financial institutions in order to align with its current supervisory programs and practices for these firms. The agency is expected to assign initial ratings under the new rating system in 2019 for bank holding companies and U.S. intermediate holding companies subject to the Large Institution Supervision Coordinating Committee framework and in 2020 for all other large financial institutions.4

Securities and Exchange Commission (SEC):
Investment Company Swing Pricing

Publication Date: November 18th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Pricing & Valuation
The agency is adopting amendments to Rule 22c-1 under the Investment Company Act.5

Financial Reporting Council (UK) (FRC):
Recommendations on a comprehensive set of IFRS 9 Expected Credit Loss disclosures
Publication Date: November 26th 2018
Risks Covered: Credit Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The agency has published a report with recommendations for a comprehensive set of International Financial Reporting Standards (IFRS) 9 Expected Credit Loss disclosures.6

European Commission (EC):
Amending Implementing Regulation in the scope of application of the template for Disclosing premiums, Claims and Expenses by Country
Publication Date: November 26th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency brings amendments to implementing Regulation (EU) 2015/2452 with respect to the application of the template for disclosing premiums, claims and expenses by country. The Regulation entered into force on December 16, 2018 and binds in its entirety and is directly applicable to all Member States.7

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA republishes monthly technical information for Solvency II Relevant Risk Free Interest Rate Term Structures – end-October 2018
Publication Date: November 19th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Recovery & Resolution planning
The regulator republished technical information in relation to the relevant Risk Free Interest Rate term structures (RFR).8

Australian Prudential Regulation Authority (APRA):
APRA launches review of capital requirements for Private Health Insurers
Publication Date: November 16th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency commenced a review of the capital standards for Private Health Insurers (PHI) to confirm they can sufficiently protect policyholders and has accordingly updated stakeholders on APRA’s planned approach to reviewing the capital framework.9

The Board of Governors of the Federal Reserve System (The Fed):
Large Financial Institution Rating System; Regulations K and LL
Publication Date: November 2nd 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Data Quality Management
The agency is adopting a new rating system for large financial institutions in order to align with the Federal Reserve’s current supervisory programs and practices for these firms. The final rule is effective on February 1, 2019.10

Bank of England (BoE):
The leverage ratio, risk-taking and bank stability
Publication Date: November 9th 2018
Risks Covered: Residual Risk
Business Processes Impacted: Clearing & Settlement – Exchange Traded & OTC
The agency has published a Staff Working Paper entitled “The leverage ratio, risk-taking and bank stability.” The document focuses on the trade-off between additional loss-absorbing capacity and the potentially higher bank risk-taking associated with the Basel III leverage ratio.11

Securities and Exchange Commission (SEC):
Regulation of National Market System Stock Alternative Trading Systems (Federal Register)
Publication Date: November 13th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
The Commission adopted amendments to the regulatory requirements in Regulation Alternative Trading Systems (ATSs) under the Securities Exchange Act of 1934 pertaining to alternative trading systems that trade National Market System stocks. These include, among other items, Form ATS–N.12

Prudential Regulation Authority (PRA):
Securitisation: The new EU framework and Significant Risk Transfer
Publication Date: November 15th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has published a supervisory statement providing feedback to responses to its Consultation Paper 12/18 “Securitisation: The new EU framework and Significant Risk Transfer.”13

Insurance Europe:
Response to FATF consultation on risk-based approach guidance for life insurance sector
Publication Date: November 2nd 2018
Risks Covered: Liquidity Risk
Business Processes Impacted: Fraud and Financial Crime
The agency has responded to a consultation paper by the Financial Action Task Force (FATF) on its initiative to update its risk-based approach guidance for the life insurance sector.14

European Banking Authority (EBA); European Securities and Markets Authority (ESMA); European Insurance and Occupational Pensions Authority (EIOPA):
Joint Consultation Paper concerning amendments to the PRIIPs KID
Publication Date: November 8th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
A joint consultation paper regarding amendments to Commission Delegated Regulation (EU) 2017/653 on key information documents (KID) for packaged retail and insurance-based investment products (PRIIP)s.15

European Insurance and Occupational Pensions Authority (EIOPA):
Joint Statement: EU and U.S. insurance regulators continue the dialogue on cyber security, cyber insurance, the use of big data and intra-group transactions
Publication Date: November 14th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Recovery & Resolution planning
The document covers multi-agency discussions on challenges and opportunities related to topics including: cyber risks; and intra-group transactions in multi-national insurance groups.16

Monetary Authority of Singapore (MAS):
Consultation Paper on Sandbox Express
Publication Date: November 14th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Fraud and Financial Crime
Regulator has published a consultation paper regarding the proposed guidelines for creating pre-defined sandboxes (Sandbox Express) and the proposed constructs for the initial set of these.17

FORTHCOMING REGULATIONS:

Securities and Exchange Commission (SEC)
List of Rules To Be Reviewed Pursuant to the Regulatory Flexibility Act (Federal Register)

The agency has published a list of rules to be reviewed pursuant to Section 610 of the Regulatory Flexibility Act. Comments were to be submitted on or before December 27, 2018.18

Office of the Superintendent of Financial Institutions (OSFI)
Revisions to the Leverage Ratio Disclosure Requirements Guideline

The agency has released the final version of its Leverage Ratio Disclosure Requirements guideline.19

European Insurance and Occupational Pensions Authority (EIOPA)
Consultation Paper on Technical Advice on the integration of sustainability risks and factors in the delegated acts under Solvency II and IDD

The agency has published for consultation its draft technical advice on the integration of sustainability risks and factors in the Solvency II and Insurance Distribution Directive. The deadline for submitting comments to the consultation was set for January 30, 2019.20

Financial Accounting Standards Board (FASB)
FASB issues narrow-scope improvements to Credit Losses Standard

The agency has issued an Accounting Standards Update that amends the transition requirements and scope of the credit losses standard issued in 2016.21

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC)
Joint Release/Agencies Issue Proposal to Streamline Regulatory Reporting for Qualifying Small Institutions

The multiple regulators are inviting comment on a proposed rule that would implement section 205 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.22

The Board of Governors of the Federal Reserve System (The Fed)
Potential Federal Reserve Actions To Support Interbank Settlement of Faster Payments, Request for Comments

The agency is seeking input on potential actions that the Federal Reserve could take to promote ubiquitous, safe, efficient and faster payments in the United States by facilitating real-time interbank settlement of faster payments.23

International Association of Insurance Supervisors (IAIS)
Timeline of ComFrame Development and ICPs Revisions
The agency has updated its timeline of ComFrame Development and Insurance Core Principles (ICP) revisions.24

Department of the Treasury (US)
Terrorism Risk Insurance Program 2019 Data Call

The agency has issued a notice from the Federal Insurance Office (FIO) requesting public feedback on the proposed data collection forms for use in the 2019 Terrorism Risk Insurance Program Data Call (2019 TRIP Data Call).25

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

References:

  1. “Regulation (EU) 2018/1845 of the European Central Bank of 21 November 2018 on the exercise of the discretion under Article 178(2)(d) of Regulation (EU) No 575/2013 in relation to the threshold for assessing the materiality of credit obligations past due (ECB/2018/26),” Official Journal of the European Union, November 26, 2018. Access at: Guidelines for Assessing the Materiality of Credit Obligations Past Due.
  2. “Consumer Leasing (Regulation M),” Final rule, The Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, November 23, 2018. Access at: Consumer Leasing (Regulation M).
  3. “Draft Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019,” HM Treasury, November 22, 2018. Access at: Draft Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019.
  4. “Large Financial Institution Rating System; Regulation K and LL,” The Board of Governors of the Federal Reserve System, Final rule, November 21, 2018. Access at: Large Financial Institution Rating System; Regulations K and LL (Federal Register).
  5. “Investment Company Swing Pricing,” Final rule, Securities and Exchange Commission, November 18, 2018. Access at: Investment Company Swing Pricing.
  6. “Recommendations on a comprehensive set of IFRS 9 Expected Credit Loss disclosures,” Financial Reporting Council, November 26, 2018. Access at: Recommendations on a comprehensive set of IFRS 9 Expected Credit Loss disclosures.
  7. “Regulations – Commission Implementing Regulation (EU) 2018/1843 of 23 November 2018 amending Implementing Regulation (EU) 2015/2452 as regards the scope of application of the template for disclosing premiums, claims and expenses by country”, Official Journal of the European Union, November 26, 2018. Access at: Amending Implementing Regulation in the scope of application of the template for Disclosing premiums, Claims and Expenses by Country.
  8. “EIOPA republishes monthly technical information for Solvency II Relevant Risk Free Interest Rate Term Structures – end-October 2018,” European Insurance and Occupational Pensions Authority, November 19, 2018. Access at: EIOPA republishes monthly technical information for Solvency II Relevant Risk Free Interest Rate Term Structures – end-October 2018.
  9. “Roadmap for APRA’s Review of the Private Health Insurance Capital Framework,” Australian Prudential Regulation Authority, November 16, 2018. Access at: APRA launches review of capital requirements for Private Health Insurers.
  10. “Federal Reserve Board finalizes new supervisory rating system for large financial institutions,” The Board of Governors of the Federal Reserve System, November 2, 2018. Access at: Large Financial Institution Rating System; Regulations K and LL.
  11. “The leverage ratio, risk-taking and bank stability,” Staff working paper No. 766, Bank of England, November 9, 2018. Access at: The leverage ratio, risk-taking and bank stability.
  12. “Regulation of NMS Stock Alternative Trading Systems,” Securities and Exchange Commission, November 13, 2018. Access at: Regulation of NMS Stock Alternative Trading Systems (Federal Register).
  13. “Securitisation: The new EU framework and Significant Risk Transfer,” Prudential Regulation Authority, November 15, 2018. Access at: Securitisation: The new EU framework and Significant Risk Transfer.
  14. “Insurance Europe response to the FATF consultation on the risk-based approach guidance for the life insurance sector,” Insurance Europe (IE), November 2, 2018. Access at: Response to FATF consultation on risk-based approach guidance for life insurance sector.
  15. “Joint Consultation Paper concerning amendments to the PRIIPs KID,” European Banking Authority; European Securities and Markets Authority; European Insurance and Occupational Pensions Authority, November 8, 2018. Access at: Joint Consultation Paper concerning amendments to the PRIIPs KID.
  16. “Joint Statement: EU and U.S. insurance regulators continue the dialogue on cyber security, cyber insurance, the use of big data and intra-group transactions,” European Insurance and Occupational Pensions Authority, November 14, 2018. Access at: Joint Statement: EU and U.S. insurance regulators continue the dialogue on cyber security, cyber insurance, the use of big data and intra-group transactions.
  17. “Sandbox Express – Consultation Paper P015 – 2018,” Monetary Authority of Singapore, November 14, 2018. Access at: Consultation Paper on Sandbox Express.
  18. “List of Rules To Be Reviewed Pursuant to the Regulatory Flexibility Act,” Securities and Exchange Commission, November 27, 2018. Access at: List of Rules To Be Reviewed Pursuant to the Regulatory Flexibility Act (Federal Register).
  19. “Revisions to the Leverage Ratio Disclosure Requirements Guideline,” Office of the Superintendent of Financial Institutions Canada, November 20, 2018. Access at: Revisions to the Leverage Ratio Disclosure Requirements Guideline.
  20. “Consultation Paper on Technical Advice on the integration of sustainability risks and factors in the delegated acts under Solvency II and IDD,” European Insurance and Occupational Pensions Authority, November 26, 2018. Access at: Consultation Paper on Technical Advice on the integration of sustainability risks and factors in the delegated acts under Solvency II and IDD.
  21. “FASB Issues Narrow-Scope Improvements to Credit Losses Standard,” Financial Accounting Standards Board, November 15, 2018. Access at: FASB issues narrow-scope improvements to Credit Losses Standard.
  22. “Reduces Reporting for Covered Depository Institutions,” Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit Insurance Corporation, October 17, 2018. Access at: Joint Release/Agencies Issue Proposal to Streamline Regulatory Reporting for Qualifying Small Institutions.
  23. “Potential Federal Reserve Actions to Support Interbank Settlement of Faster Payments, Request for Comments” The Board of Governors of the Federal Reserve System, November 15, 2018. Access at: Potential Federal Reserve Actions To Support Interbank Settlement of Faster Payments, Request for Comments.
  24. “Timeline of ComFrame Development and ICP Revisions,” International Association of Insurance Supervisors, November 28, 2018. Access at: Timeline of ComFrame Development and ICPs Revisions.
  25. “Terrorism Risk Insurance Program 2019 Data Call,” Department of the Treasury, November 9, 2018. Access at: Terrorism Risk Insurance Program 2019 Data Call.

 

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.

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