Edition Highlights:

  • US Treasury finalizes customer due diligence regulations to further strengthen the Bank Secrecy Act and to improve financial transparency.
  • The Global Code of Conduct for the Foreign Exchange Markets is being developed by a partnership between central banks and market participants from 16 jurisdictions around the globe.
  • Financial Conduct Authority meets competitive duty in relation to rule to advance consumer protection, as the rule should reduce the difficulty customers have in identifying the best-value in high-cost short-term credit, thereby encouraging customers to shop around, increasing price competition.

Current coverage period: Through May 31, 2016

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

CURRENT REGULATIONS:

European Commission (EC)(**):
Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation)
Publication Date: May 4th 2016
Risks Covered: IT Risk

Business Processes Impacted: Data Privacy
This regulation deals with the protection of natural persons with regard to the processing of personal data and the free movement of such data.1

 

European Commission (EC)(**):
Commission Implementing Regulation (EU) 2016/824 of 25 May 2016 laying down implementing technical standards with regard to the content and format of the description of the functioning of multilateral trading facilities and organised trading facilities and the notification to the European Securities and Markets Authority according to Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments
Publication Date: May 26th 2016
Risks Covered: IT Risk

Business Processes Impacted: Trading
The Commission implementing Regulation (EU) 2016/824 set out the technical standards for the content and format concerning the functioning of multilateral trading facilities, organized trading facilities and the notification to the European Securities and Markets Authority (ESMA) according to the Markets in Financial Instruments Directive (MiFID II).2

 

Monetary Authority of Singapore (MAS)(*):
Securities and Futures (Offers of Investments) (Exemption for Offers of Post-seasoning Debentures) Regulations 2016
Publication Date: May 20th 2016

Risks Covered: Operational Risk

Business Processes Impacted: Audit, Legal and Compliance
The Securities and Futures (Offers of Investments and Exemption for Offers of Post-seasoning Debentures) Regulations 2016 cover topics relating to exemptions for offers of post-seasoning debentures other than business trusts or REIT (real estate investment trust) offers, exemptions for business trusts or REIT offers, conditions for exemptions and exemption of book building activities.3

 

Financial Industry Regulatory Authority (FINRA)(**):
Risk Control Assessment (RCA) Survey
Publication Date: May 6th 2016

Risks Covered: Operational Risk, Residual Risk

Business Processes Impacted: Risk Management and Stress Testing
The RCA, an integral part of FINRA’s risk-based examination and surveillance program, helps to better understand the risks associated with business activities in which individual member firms engage, the products and services they sell, and the types of clients and counterparties they deal with.4

 

U.S. Department of the Treasury (U.S. DoT)(***):
Treasury Announces Key Regulations and Legislation to Counter Money Laundering and Corruption, Combat Tax Evasion
Publication Date: May 6th 2016
Risks Covered: Compliance Risk

Business Processes Impacted: Fraud and Financial Crime, Know Your Customer
The Customer Due Diligence (CDD) Final Rule, proposed Beneficial Ownership legislation, and proposed regulations related to foreign-owned, single-member limited liability companies (LLCs), aims to strengthen financial transparency and combat illicit activities among companies by targeting key points of access to the international financial system – when companies open accounts at financial institutions, when companies are formed or when company ownership is transferred, and when foreign-owned US companies seek to evade taxes.5

 

Federal Deposit Insurance Corporation (FDIC)(***):
Registration of Securities Transfer Agents
Publication Date: May 6th 2016

Risks Covered: Compliance Risk

Business Processes Impacted: Audit, Legal and Compliance
The final rule requires insured State savings associations and subsidiaries of such State savings associations that act as transfer agents for qualifying securities, to register with the FDIC. This is similar to the registration requirements applicable to insured State non-member banks and subsidiaries of such banks.6

 

Securities and Exchange Commission (SEC)(**):
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change to Adopt FINRA Rule 4554, Alternative Trading Systems – Recording and Reporting Requirements of Order and Execution Information for NMS Stocks
Publication Date: May 11th 2016
Risks Covered: Operational Risk

Business Processes Impacted: Trading, Brokerage Services
This order concerning FINRA’s proposed rule approves the requirement for alternative trading systems (ATSs) to submit additional order information to FINRA.7

 

Securities and Exchange Commission (SEC)(**):
Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act
Publication Date: May 10th 2016
Risks Covered: Compliance Risk

Business Processes Impacted: Audit, Legal and Compliance
The amendments revise the SEC’s rules to reflect the new, higher thresholds for registration, termination of registration and suspension of reporting that were set forth in the JOBS (Jumpstart Our Business Startups) Act and the FAST (Fixing America’s Surface Transportation) Act. The amendments also revise the definition of “held of record” in Rule 12g5-1 under the Securities Exchange Act of 1934 in accordance with the JOBS Act.8

 

Bank for International Settlements (BIS)(***):
FX Global Code: May 2016 Update
Publication Date: May 26th 2016
Risks Covered: Conduct Risk

Business Processes Impacted: Consumer / Investor Protection
The document provides an update on the first phase of the Global Code of Conduct for the Foreign Exchange Market, intended to serve as a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market.9

 

Financial Conduct Authority (FCA)(**):
Consumer Credit: Proposals in Response to the CMA’s Recommendations on High-cost Short-term Credit
Publication Date: May 26th 2016
Risks Covered: Credit Risk, Counterparty Risk
Business Processes Impacted: Consumer / Investor Protection, Lending and Investment
The policy statement details the main issues that arose from the FCA’s consultation paper on proposals for additional standards for price comparison websites, which compare high-cost short-term credit products, and lays out the final rules in this regard.10

 

FORTHCOMING REGULATIONS:

Federal Reserve System (The Fed)
Net Stable Funding Ratio: Liquidity Risk Measurement Standards and Disclosure Requirements
The proposed NSFR (Net Stable Funding Ratio) requirement aims to reduce the likelihood that disruptions to a banking institution’s regular sources of funding would not compromise its liquidity position. The proposed rule also promotes improvements in the measurement and management of liquidity risk and amends certain liquidity coverage ratio rule definitions applicable to the NSFR.11

 

European Commission (EC)
Call for Advice to the EBA to Assist the Commission’s Implementation of the Standardised Approach for Counterparty Credit Risk Under the CRR Review
The European Commission is mandated to review the application of Article 275 of the counterparty credit risk (CRR) and submit a report to the European Parliament and the Council, and if necessary, a legislative proposal. The main purpose of the EBA’s call for advice is to gather information on the use of existing standardized approaches and assess the potential impact of introducing the SA-CCR (standardized approach for counterparty credit risk) in the European Union as a replacement for them.12

 

The International Accounting Standards Board (IASB)
Annual Report 2015: Focusing on the Future
The International Financial Reporting Standards (IFRS) Foundation has published its Annual Report for the year ended December 31, 2015. With the theme of Focusing on the future, the report provides an updated overview of the Foundation’s strategic objectives, focused on the following priorities: Develop a single set of high-quality, globally enforceable accounting standards; pursue global adoption of IFRS Standards; support consistent application and implementation of IFRS Standards; and ensure continued independence, stability and accountability of the IFRS Foundation.13

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

 

References:

  1. “Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC,” Official Journal of the European Union, May 4, 2016. Access at:
    Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation)
  2. “Commission Implementing Regulation (EU) 2016/824 of 25 May 2016,” Official Journal of the European Union, May 26, 2016. Access at:
    Commission Implementing Regulation (EU) 2016/824 of 25 May 2016 laying down implementing technical standards with regard to the content and format of the description of the functioning of multilateral trading facilities and organised trading facilities and the notification to the European Securities and Markets Authority according to Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments
  3. “Securities and Futures Act (Chapter 289), No. S 224,” Government Gazette, May 19, 2016. Access at: Securities and Futures (Offers of Investments) (Exemption for Offers of Post-seasoning Debentures) Regulations 2016
  1. “2016 Risk Control Assessment,” Financial Industry Regulatory Authority, May 6, 2016. Access at: Risk Control Assessment (RCA) Survey 
  1. “Regulations and Legislation to Counter Money Laundering and Corruption, Combat Tax Evasion,” Letter from the Secretary of the Treasury, May 5, 2016. Access at: Treasury Announces Key Regulations and Legislation to Counter Money Laundering and Corruption, Combat Tax Evasion
  1. “Registration of Securities Transfer Agents,” Federal Deposit Insurance Corporation, May 6, 2016. Access at:
    Registration of Securities Transfer Agents
  2. “Order Approving a Proposed Rule Change to Adopt FINRA Rule 4554, Alternative Trading Systems – Recording and Reporting Requirements of Order and Execution Information for NMS Stocks,” Securities And Exchange Commission, May 10, 2016. Access at:
    Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change to Adopt FINRA Rule 4554, Alternative Trading Systems – Recording and Reporting Requirements of Order and Execution Information for NMS Stocks
  3. “Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act,” Securities and Exchange Commission, May 10, 2016. Access at:
    Changes to Exchange Act Registration Requirements to Implement Title V and Title VI of the JOBS Act
  1. “FX Global Code: May 2016 Update,” Bank for International Settlements, May 26, 2016. Access at:
    FX Global Code: May 2016 Update
  2. “Feedback on CP15/33, Consumer credit: proposals in response to the CMA’s recommendations on high-cost short-term credit,” Financial Conduct Authority, Policy Statement, May 26, 2016. Access at:
    Consumer Credit: Proposals in Response to the CMA’s Recommendations on High-cost Short-term Credit
  1. “Net Stable Funding Ratio: Liquidity Risk Measurement Standards and Disclosure Requirements,” Office of the Comptroller of the Currency, Department of the Treasury; Board of Governors of the Federal Reserve System; and Federal Deposit Insurance Corporation. Access at: Net Stable Funding Ratio: Liquidity Risk Measurement Standards and Disclosure Requirements
  1. “Call for advice to the EBA to assist the Commission’s implementation of the standardised approach for counterparty credit risk under the CRR review,” European Commission, Directorate General Financial Stability, Financial Services and Capital Markets Union. Access at: Call for Advice to the EBA to Assist the Commission’s Implementation of the Standardised Approach for Counterparty Credit Risk Under the CRR Review
  1. “Annual Report 2015, Focussing on the future,” IFRS Foundation. Access at: Annual Report 2015: Focusing on the Future

 

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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