Edition Highlights:

  • The Monetary Authority of Singapore consults on draft amendments to enhance the resolution regime for financial institutions in Singapore.
  • The Financial Conduct Authority, in its Business Plan 2016/17, outlines the operational objectives and priority themes focusing on the organization’s core responsibilities to achieve desired goals.
  • The Federal Deposit Insurance Corporation introduces amendments to the deposit insurance assessment system for small (federally) insured depository institutions.

Current coverage period: Through April 30, 2016

Note: Anticipated business impact for covered regulations is shown using the following rating legend:       (*Low) (** Medium) (*** High)

CURRENT REGULATIONS:

European Banking Authority (EBA)(***):
Joint Committee Report on Risks and Vulnerabilities in the EU Financial System
Publication Date: Apr 7th 2016
Risks Covered: Conduct Risk
Business Processes Impacted: Risk Management and Stress Testing
The Joint Committee Report on Risks and Vulnerabilities in the European Union Financial System focuses on the low profitability of financial institutions in low yield conditions and associated risks, rising interconnectedness of bank and non-bank organizations and probable contagion from developing markets such as China and others.1

European Commission (EC)(***):
Commission Delegated Regulation of 25.4.2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
Publication Date: Apr 25th 2016
Risks Covered: Compliance Risk, Operations Risk, Conduct Risk
Business Processes Impacted: Reporting, Consumer and Investor Protection
The objective of the Delegated Regulation is to specify exemption rules, organizational requirements for investment firms, data reporting services providers, conduct of business obligations in providing investment services, order execution on conditions most advantageous for the client, client order handling, small and medium-sized enterprise (SME) growth markets, position reporting obligation thresholds and the criteria for considering trading venue operations in a host Member State as substantially important for the functioning of securities markets and protection of investors.2

European Commission (EC)(***):
Commission Delegated Directive (EU) …/… of 7.4.2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits
Publication Date: Apr 7th 2016
Risks Covered: Compliance Risk, Operational Risk

Business Processes Impacted: Consumer and Investor Protection
This Delegated Directive focuses on rules specific to: safeguarding of clients’ financial instruments and funds, product governance obligations for investment firms manufacturing and/or distributing financial instruments and provision or reception of fees, commissions or any monetary/non-monetary benefits.3

International Swaps and Derivatives Association (ISDA)(***):
ISDA EMIR Classification Letter
Publication Date: Apr 12th 2016
Risks Covered: Compliance Risk, Counterparty Credit Risk
Business Processes Impacted: Audit, Legal and Compliance, Clearing and Settlement – Exchange Traded and OTC, Reporting
The European Market Infrastructure Regulation (EMIR) directs financial and non-financial counterparties to comply with certain regulatory obligations, the application of which depends largely on the classification of both parties to a given transaction. The cited Classification Letter serves to facilitate the communication of classification status between counterparties, thus ensuring EMIR compliance.4

Monetary Authority of Singapore (MAS)(*):
Proposed Legislative Amendments to Enhance the Resolution Regime for Financial Institutions in Singapore
Publication Date: Apr 29th 2016
Risks Covered: Compliance Risk, Conduct Risk
Business Processes Impacted: Risk Management and Stress Testing, Audit, Legal and Compliance
MAS proposes issuing a Notice and Guidelines on recovery and resolution planning for banks. Also proposed are amendments to the Monetary Authority of Singapore (Control and Resolution of Financial Institutions) Regulations 2013 to include safeguards such that set-off and netting arrangements are not affected by the implementation of resolution powers under the MAS Act.5

Financial Conduct Authority (FCA)(**):
Guidance on Small and Medium Sized Business (Credit Information) Regulations
Publication Date: Apr 8th 2016

Risks Covered: Compliance Risk, Credit Risk, Liquidity Risk
Business Processes Impacted: Funding and Liquidity Management, Audit, Legal and Compliance
This Guidance requires, with relevant small and medium-sized enterprise (SME) permission, that designated banks share credit information about SMEs with designated credit reference agencies (the required information to be provided to finance providers upon request). The schedule to the Regulations specifies the nature and content of the credit information to be shared.6

Financial Conduct Authority (FCA)(***):
Business Plan 2016 / 17
Publication Date: Apr 5th 2016

Risks Covered: IT Risk, Fraud Risk, Credit Risk, Compliance Risk, Conduct Risk
Business Processes Impacted: Funding and Liquidity Management, Audit, Legal and Compliance, Know Your Customer, Information Technology, Consumer and Investor Protection
The Risk Outlook, being a core input to the Business Plan, identifies market trends and firms regulated by the FCA, and risks requiring response from the FCA. The report also sets out the operational context and plays an influential role in defining priorities for the year ahead.7

Commodity Futures Trading Commission (CFTC)(***):
Division of Market Oversight Guidance Regarding the Terms “Owner” and “Controller” in the Ownership and Control Reporting (OCR) Final Rule
Publication Date: Apr 8th 2016
Risks Covered: Compliance Risk, Fraud Risk, Reputation Risk
Business Processes Impacted: Fraud and Financial Crime, Data Privacy, Trading, Brokerage Services
Post the adoption of the Ownership and Control Reporting (OCR) Final Rule, the Commission’s Division of Market Oversight continues to work with reporting parties to facilitate compliance and an effective transition to the OCR reporting regime. This Guidance aims at providing reporting parties clarity on “owner” and “controller,” the terms as used in Form 102A and 102B in the final rule.8

Federal Deposit Insurance Corporation (FDIC)(*):
FDIC Adopts Final Rule to Amend How Small Banks are Assessed for Deposit Insurance
Publication Date: Apr 26th 2016
Risks Covered: Market Risk, Operational Risk
Business Processes Impacted: Finance and Performance Management
This amendment, Part 327, revises the financial ratios method and bases this on a statistical model instead, estimating the failure probability over three years; updates the financial measures accordingly for consistency; and eliminates risk categories for established small banks and uses the financial ratios method to determine assessment rates for all such banks.9

Securities and Exchange Commission (SEC)(**):
Adoption of Updated EDGAR Filer Manual
Publication Date: Apr 22nd 2016

Risks Covered: Compliance Risk, IT Risk
Business Processes Impacted: Brokerage Services, Trading, Reporting
The SEC is formally approving revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual and related rules in line with the updates to the EDGAR system.10

Securities and Exchange Commission (SEC)(***):
Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants
Publication Date: Apr 14th 2016
Risks Covered: Conduct Risk, Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance, Consumer and Investor Protection, Trading
The new rules adopted by the Securities and Exchange Commission, under the Securities Exchange Act of 1934, intend to implement Title VII provisions regarding business conduct standards and the designation of a chief compliance officer for security-based swap dealers and major security-based swap participants.11

 

FORTHCOMING REGULATIONS:

Bank for International Settlements (BIS)
Basel Committee on Banking Supervision: Tenth progress report on adoption of the Basel regulatory framework
The tenth progress report shows the adoption status of Basel III standards for each Basel Committee on Banking Supervision (BCBS) member jurisdiction as of the end of March 2016. This is the most recent update to the Basel Committee’s progress reports which have been semiannually published since October 2011.12

Federal Deposit Insurance Corporation (FDIC)
Guidance for 2017 §165(d) Annual Resolution Plan Submissions By Domestic Covered Companies that Submitted Resolution Plans in July 2015
This guidance sets out the expectations of the Board and the FDIC with regards to the domestic covered companies that submitted their 2017 resolution plans. It points out certain areas where more details are required and where specific capabilities or optionality should be enhanced to clearly show that each firm has fully taken into account obstacles that might impede the implementation of the preferred strategy and that the firm is prepared to mitigate such occurrences.13

 

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

 

References:

  1. “Joint Committee Report on Risks and Vulnerabilities in the EU Financial System,” European Insurance and Occupational Pensions Authority, European Banking Authority, European Securities and Markets Authority, Joint Committee of the European Supervisory Authorities, March 11, 2016. Access at: http://www.eba.europa.eu/documents/10180/1315397/JC+Risks+and+Vulnerabilities+Report+%28JC+2016+17%29%20-+Spring+2016.pdf
  1. “Supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive,” European Commission, Commission Delegated Regulation (EU) of April 25, 2016. Access at: http://ec.europa.eu/finance/securities/docs/isd/mifid/160425-delegated-regulation_en.pdf
  1. “Supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits,” European Commission, Commission Delegated Directive (EU) of April 7, 2016. Access at: http://ec.europa.eu/finance/securities/docs/isd/mifid/160407-delegated-directive_en.pdf
  1. “Explanatory memorandum to the form of the ISDA EMIR Classification Letter,” International Swaps and Derivatives Association, April 13, 2016. Access at: http://assets.isda.org/media/6b3143db-2/9fa1be3f-pdf/
  1. “Proposed Legislative Amendments to Enhance the Resolution Regime for Financial Institutions in Singapore,” Monetary Authority of Singapore, Consultation Paper, April 29, 2016. Access at: http://www.mas.gov.sg/~/media/MAS/News%20and%20Publications/Consultation%20Papers/Proposed%20Legislative%20Amendments%20to%20Enhance%20Resolution%20Regime%20for%20FIs%20in%20Singapore.pdf
  1. “Guidance on Small and Medium Sized Business (Credit Information) Regulations, Financial Conduct Authority, Finalised guidance, April 2016. Access at: http://www.fca.org.uk/static/documents/fg16-4.pdf
  1. “Business Plan 2016/17,” Financial Conduct Authority. Access at: http://www.fca.org.uk/static/documents/corporate/business-plan-2016-17.pdf
  1. “Division of Market Oversight Guidance Regarding the Terms “Owner” and “Controller” in the Ownership and Control Reporting (OCR) Final Rule,” U.S. Commodity Futures Trading Commission, April 8, 2016. Access at: http://www.cftc.gov/idc/groups/public/%40newsroom/documents/file/ocrguidance040816.pdf
  1. “Final Rule, Assessments,” Federal Deposit Insurance Corporation. Access at: https://www.fdic.gov/news/board/2016/2016-04-26_notice_dis_b_fr.pdf
  1. “Final Rule, Adoption of Updated EDGAR Filer Manual, 17 CFR Part 232,” Securities and Exchange Commission. Access at: https://www.sec.gov/rules/final/2016/33-10071.pdf
  1. “Final Rule, Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants,” Securities and Exchange Commission. Access at: https://www.sec.gov/rules/final/2016/34-77617.pdf
  1. “Tenth progress report on adoption of the Basel regulatory framework,” Basel Committee on Banking Supervision, April 2016. Access at: http://www.bis.org/bcbs/publ/d366.pdf
  1. “Guidance for 2017 §165(d) Annual Resolution Plan Submissions By Domestic Covered Companies that Submitted Resolution Plans in July 2015,” Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System. Access at: https://www.fdic.gov/news/news/press/2016/pr16031b.pdf

About the Monthly Regulatory Tracker

The tracker is the monthly initiative aimed at updating the Finance and Risk community with the most recent regulatory changes impacting Banks and Capital Markets firms. We update our comprehensive regulatory database every month by tracking more than 40 regulatory and industry bodies covering North America, Europe and Asia Pacific. Every month, we will highlight approximately 10 regulations shortlisted on the basis of geography of coverage and anticipated business impacts. Our summaries 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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