Edition Highlights:

  • A new legal framework governing the requirements applicable to investment firms, regulated markets, data reporting service providers and third country firms providing investment services or activities in the European Union.
  • The Electronic Data Gathering, Analysis, and Retrieval System Filer Manual, promulgated by the Securities and Exchange Commission (SEC), sets out the technical formatting requirements for electronic submissions.
  • A measurement of credit losses on financial instruments, replaces the existing incurred losses methodology and allows a financial institution to leverage its current internal credit risk systems as a framework for estimating expected credit losses.

Current coverage period: Through June 30, 2016

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

 

CURRENT REGULATIONS:

Monetary Authority of Singapore (MAS)(**):
Notice on Financial Market Infrastructure standards
Publication Date: June 17th 2016

Risks Covered: Compliance Risk, Conduct Risk, Operational Risk

Business Processes Impacted: Business Continuity Management, Risk Management and Stress Testing

The Notice applies to licensed trade repositories and approved clearing houses. It covers Financial Market Infrastructure (FMI) standards for legal risk management, governance management, comprehensive risk management framework, collateral, margin, settlement finality, money settlements, physical deliveries, exchange-of-value settlement systems, participant-default rules and procedures, segregation and probability, access and participation requirements, tiered participation arrangements, FMI links, communication procedures and standards, disclosure of rules, and key procedures and market data.1

 

Hong Kong Monetary Authority (HKMA)(**):
Supervisory Policy Manual (SPM): CR-G-12 Credit Risk Transfer activities
Publication Date: June 30th 2016

Risks Covered: Credit Risk, Reputation Risk

Business Processes Impacted: Capital Adequacy and Capital Planning, Risk Management and Stress Testing
This new module incorporates the most recent international standards and practices concerning the risk management of credit risk transfer (CRT) activities. It updates and replaces the existing Supervisory Policy Manual module CR-G-12 “Credit Derivatives” and Guideline No. 4.6 “Supervisory treatment on asset securitization and mortgage-backed securities.”2

 

European Commission (EC)(***):
Regulation (EU) 2016/1033 of the European Parliament and of the Council of 23 June 2016 amending Regulation (EU) No 600/2014 on Markets in Financial Instruments, Regulation (EU) No 596/2014 on Market Abuse and Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on Central Securities Depositories
Publication Date: June 30th 2016

Risks Covered: Compliance Risk, Conduct Risk

Business Processes Impacted: Clearing and Settlement – Exchange Traded and Over-the-Counter, Custodial Services, Brokerage Services
Regulation (EU) 2016/1033 amends the Markets in Financial Instruments Regulation (MiFIR), Market Abuse Regulation (MAR), and Central Securities Depositories Regulation (CSDR) in terms of certain dates.3

 

European Commission (EC)(**):
Regulation (EU) 2016/867 of the European Central Bank of 18 May 2016 on the collection of granular credit and credit risk data
Publication Date: June 1st 2016

Risks Covered: Credit Risk

Business Processes Impacted: Risk Management and Stress Testing
The Regulation (EU) 2016/867 of the European Central Bank focuses on the collection of granular credit and credit risk data from resident credit institutions and resident foreign branches of credit institutions as of December 31, 2017.4

 

Financial Conduct Authority (FCA)(***):
Enforcement (Market Abuse Regulation) Instrument 2016
Publication Date: June 30th 2016
Risks Covered: Compliance Risk, Reputation Risk

Business Processes Impacted: Audit, Legal and Compliance, Business Continuity Management
The Enforcement (Market Abuse Regulation) Instrument 2016 amends the Glossary of definitions, Decision Procedure and Penalties Manual (DEPP), and the Enforcement Guide (EG).5

 

European Securities and Markets Authority (ESMA)(**):
Memorandum of Understanding related to ESMA’s assessment of compliance and monitoring of the ongoing compliance with recognition conditions by Derivatives Clearing Organizations established in the United States
Publication Date: June 6th 2016

Risks Covered: Compliance Risk

Business Processes Impacted: Clearing and Settlement – Exchange Traded and Over-the-Counter
The memorandum of understanding establishes the cooperation agreement between ESMA and the Commodity Futures Trading Commission (CFTC), under the European Market Infrastructure Regulation (EMIR). The memorandum of understanding focuses on central counterparties (CCPs) established in the United States and registered with the CFTC.6

 

Securities and Exchange Commission (SEC)(***):
Trade acknowledgment and verification of security-based swap transactions
Publication Date: June 17th 2016
Risks Covered: Compliance Risk, Operational Risk

Business Processes Impacted: Clearing and Settlement – Exchange Traded and Over-the-Counter, Trading, Audit, Legal and Compliance
The adopted Rules 15Fi-1 and 15Fi-2 under the Securities Exchange Act of 1934 (Exchange Act) requires security-based swap dealers and major security-based swap participants to provide trade acknowledgments and to verify those trade acknowledgments in security-based swap transactions. In connection with these requirements, the SEC is also amending Rule 3a71–6 to address the potential availability of substituted compliance.7

 

Securities and Exchange Commission (SEC)(**):
Adoption of updated EDGAR Filer Manual
Publication Date: June 14th 2016
Risks Covered: IT Risk, Operational Risk

Business Processes Impacted: Reporting, Brokerage Services, Information Technology
The revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual and related revisions reflect updates to the EDGAR system.8

 

Consumer Financial Protection Bureau (CFPB)(**):
Truth in Lending (Regulation Z) annual threshold adjustments (CARD ACT, HOEPA and ATR/QM)
Publication Date: June 17th 2016
Risks Covered: Conduct Risk

Business Processes Impacted: Consumer and Investor Protection, Lending and Investment
This final rule amends the regulatory text and official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau will be required to calculate every year the dollar amounts for a number of provisions in Regulation Z. This final rule revises (when applicable) the dollar amounts for provisions implementing amendments to TILA under the Credit Card Accountability Responsibility and Disclosure Act of 2009, the Home Ownership and Equity Protection Act of 1994, and the Dodd-Frank Wall Street Reform and Consumer Protection Act.9

 

Board of Governors of the Federal Reserve System (the Fed)(***):
Interagency guidance on the new accounting standard on financial instruments – Credit losses
Publication Date: June 17th 2016
Risks Covered: Credit Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The Federal Reserve, along with the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC), have issued a joint statement to provide supervised institutions with initial information and supervisory views on the new accounting standard for credit losses recently issued by the Financial Accounting Standards Board (FASB).10

 

FORTHCOMING REGULATIONS:

International Organization Of Securities Commissions (IOSCO)
Survey report on audit committee oversight of auditors
The Audit Quality Task Force (AQTF) of the Board of the International Organization of Securities Commissions (IOSCO) had undertaken a survey of its ordinary members to better understand existing legal, regulatory and other requirements such as soft law requirements related to the audit committee’s oversight of the auditor and the audit process of domestic, publicly listed entities in IOSCO member jurisdictions. IOSCO has published its report which summarizes the results of the survey and is intended to inform interested stakeholders and IOSCO members about audit committee requirements in existence as of December 31, 2014. It could also be used to help identify audit committee practices to improve audit quality.11

 

Financial Conduct Authority (FCA)
PSR regulatory fees 2016/17
The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have jointly issued a policy statement on the PSR regulatory fees for 2016 and 2017.12

 

Securities and Exchange Commission (SEC)
Office of the Investor Advocate report on objectives for FY 2017
The Securities and Exchange Commission’s (SEC) Office of the Investor Advocate has published its report on objectives for the fiscal year 2017.13

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

 

References:

  1. “Securities and Futures Act (Cap. 289), Notice on Financial Market Infrastructure Standards,” Monetary Authority of Singapore, June 17, 2016. Access at: Notice on Financial Market Infrastructure standards
  2. “Supervisory Policy Manual (SPM): CR-G-12 Credit Risk Transfer Activities,” Hong Kong Monetary Authority, June 30, 2016. Access at: Supervisory Policy Manual (SPM): CR-G-12 Credit Risk Transfer activities
  3. “Legislation amending Regulation (EU) No 600/2014 on Markets in Financial Instruments, Regulation (EU) No 596/2014 on Market Abuse and Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on Central Securities Depositories,” Official Journal of the European Union, June 30, 2016. Access at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R1033&from=EN
  1. “Legislation on the collection of granular credit and credit risk data (ECB/2016/13),” Official Journal of the European Union, June 1, 2016. Access at: Regulation (EU) 2016/867 of the European Central Bank of 18 May 2016 on the collection of granular credit and credit risk data
  1. “Enforcement (Market Abuse Regulation) Instrument 2016,” Financial Conduct Authority, June 30, 2016. Access at: Enforcement (Market Abuse Regulation) Instrument 2016
  1. “Memorandum of Understanding related to ESMA’s assessment of compliance and monitoring of the ongoing compliance with recognition conditions by Derivatives Clearing Organizations established in the United States,” European Securities and Markets Authority, U.S. Commodity Futures Trading Commission, June 6, 2016. Access at: Memorandum of Understanding related to ESMA’s assessment of compliance and monitoring of the ongoing compliance with recognition conditions by Derivatives Clearing Organizations established in the United States
  2. “Trade acknowledgment and verification of security-based swap transactions,” Federal Register, Final rule, June 17, 2016. Access at: Trade acknowledgment and verification of security-based swap transactions
  3. “Adoption of Updated EDGAR Filer Manual, Final rule” Securities and Exchange Commission,” June 14, 2016. Access at: Adoption of updated EDGAR Filer Manual
  1. “Truth in Lending (Regulation Z) Annual Threshold Adjustments (CARD Act, HOEPA and ATR/QM),” Federal Register, June 17, 2016. Access at: Truth in Lending (Regulation Z) annual threshold adjustments (CARD ACT, HOEPA and ATR/QM)
  2. “Interagency Guidance on the New Accounting Standard on Financial Instruments – Credit Losses,” Board of Governors of the Federal Reserve System, Supervision and Regulation Letters, June 17, 2016. Access at: Interagency guidance on the new accounting standard on financial instruments – Credit losses
  1. “Survey Report on Audit Committee Oversight of Auditors,” The Board of the International Organization of Securities Commission, May 2016. Access at: Survey report on audit committee oversight of auditors
  1. “PSR regulatory fees 2016/17,” Financial Conduct Authority, Decision on 2016/17 PSR regulatory fees for the funding of the PSR’s FSBRA and IFR functions, June 2016. Access at: PSR regulatory fees 2016/17
  1. “Report on Objectives, Fiscal Year 2017,” Office of the Investor Advocate, U.S. Securities and Exchange Commission. Access at: Office of the Investor Advocate report on objectives for FY 2017

 

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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