United States: Financial Regulatory Developments Focus - 4 March 2014

In this newsletter, we provide a snapshot of the principal European, US and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.


Common Data Format for Pre-LOUs for the Sharing or Publication of Data

The Regulatory Oversight Committee ("ROC") of the Global Legal Entity Identifier System ("GLEIS") released initial details of a common data format that will be used as a standard by pre-local operating units ("pre-LOUs") when publishing pre-LEI data, reducing complexity for users of pre-LEI data. The newly released information, in the form of a data dictionary, includes precise definitions of data elements such as legal name, business register name and LEI registration status. It also sets out how funds should be treated.

The new information and dictionary is available at: http://www.leiroc.org/publications/gls/lou_20140224.pdf.


Regulatory Technical Standards on Credit Risk Adjustment Published in Official Journal

On 27 February 2014, the Regulatory Technical Standards ("RTS") specifying the calculation of specific and general credit risk adjustments under the Capital Requirements Regulation ("CRR") were published in the Official Journal of the European Union. The RTS provide for the identification and calculation of General and Specific Credit Risk Adjustments. The RTS will come into force on 19 March 2014 and will apply across the European Union.

A copy of the RTS is available at: http://new.eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.057.01.0003.01.ENG.

EBA Consults on Margin Periods for Risk Used for Treatment of Clearing Members' Exposures to Clients

On 28 February 2014, the European Banking Authority ("EBA") published a consultation paper on draft RTS for specifying the minimum margin periods of risk that clearing members may use for the calculation of their capital requirements for exposures to clients arising from cleared derivatives. Responses to the consultation are requested by 9 May 2014. The draft RTS are required under the CRR which provides for the treatment of centrally cleared derivatives. The EBA is due to submit final draft RTS to the European Commission by 30 June 2014.

The EBA's consultation paper is available at: http://www.eba.europa.eu/documents/10180/615469/EBA-CP-2014-01+%28CP+ on+RTS+on+Margin+Periods+of+Risk+CRR-304%29.pdf.

PRA Consults on Proposed Approach to Supervising International Banks

On 26 February 2014, the Prudential Regulation Authority ("PRA") published its proposed approach to supervising banks and designated investment firms operating in the UK which are not UK headquartered firms ("international banks"). The consultation paper, which includes a draft supervisory statement, proposed rules and an analysis of costs and benefits, focuses on branches of firms from outside the European Economic Area ("non-EEA firms"). The PRA intends to introduce (i) a rule requiring all international banks operating in the UK through branches to complete a new data collection return from 2015; and (ii) a requirement that all non-EEA firms take steps within their control to ensure adequate provision for UK branches is included in their resolution plans. A firm which could not comply with the latter rule would be likely to fail the Threshold Condition requiring a firm to have adequate non-financial resources to enable the firm to comply with all rules and requirements imposed by the PRA. The PRA also points out that firms from countries whose regulators are assessed by the PRA not be equivalent, will fail to meet the Threshold Condition that requires a firm to be capable of being effectively supervised by the PRA. Such firms will not be authorised to operate in the UK. Responses to the consultation are due by 27 May 2014.

The PRA consultation paper is available at: http://www.bankofengland.co.uk/pra/Documents/publications/policy/2014/branch supcp4-14.pdf.

FDIC Issues Second Quarter 2014 CRA Examination Schedule

On 28 February 2014, the Federal Deposit Insurance Corporation ("FDIC") issued the public list of institutions that it has scheduled for a Community Reinvestment Act ("CRA") examination during the second quarter of 2014. The examination schedule reflects the effects of an institution's size and CRA rating on examination frequency. Absent reasonable cause, an institution with $250 million or less in assets and a CRA rating of Satisfactory can be subject to a CRA examination no more frequently than once every 48 months. Absent reasonable cause, an institution with $250 million or less in assets and a CRA rating of Outstanding can be subject to a CRA examination no more frequently than once every 60 months.

The full FDIC CRA Exam Schedule Listing for the second quarter of 2014 is available at: http://www.fdic.gov/regulations/community/exam/q2cra14.html.

Federal Reserve Board Announces 30-Day Comment Period Extension for Proposed Rulemaking Regarding Physical Commodity Activities Conducted by Financial Holding Companies

On 27 February 2014, the Board of Governors of the Federal Reserve System ("Federal Reserve Board") announced that it is extending the public comment period on an advance notice of proposed rulemaking regarding physical commodity activities conducted by financial holding companies. Comments are now due 16 April 2014.

The full notice of advance rulemaking is available at: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20140227a1.pdf.

Federal Reserve Board Announces Release Dates for the Latest Supervisory Stress Tests Results and Related Results from the Comprehensive Capital Analysis and Review

On 25 February 2014, the Federal Reserve Board announced that results from the latest supervisory stress tests conducted as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") will be released on Thursday, 20 March 2014, and the related results from the Comprehensive Capital Analysis and Review ("CCAR"), will be released on Wednesday, 26 March 2014.

The Dodd-Frank Act stress tests are forward-looking exercises conducted by the Federal Reserve Board and large financial companies supervised by the Federal Reserve Board. The exercises help assess whether institutions have sufficient capital to absorb losses and support operations during adverse economic and financial market conditions over a period of nine quarters. The Dodd-Frank Act supervisory stress test results will include data such as post-stress capital ratios, revenue, and loss estimates under hypothetical adverse and severely adverse scenarios provided by the Federal Reserve Board.

CCAR is an annual exercise by the Federal Reserve Board to help assess whether the companies have robust, forward-looking capital planning processes that account for their unique risks and are supported by the firms' risk-measurement and -management practices. CCAR results will include post-stress capital ratios under hypothetical adverse and severely adverse scenarios provided by the Federal Reserve Board and will reflect the capital actions the companies plan to undertake during the nine-quarter period. In addition to the quantitative results, the Federal Reserve Board will indicate whether it has objected to a firm's capital plan based on qualitative grounds.

Financial Services ECB Decision on Procedure for Admitting Non-Eurozone Member States to the SSM

On 27 February 2014, the European Central Bank ("ECB") published its decision (dated 31 January 2014) on the procedural aspects for requests by Member States outside of the Eurozone to become a part of the Single Supervisory Mechanism. The decision covers the requests, the assessment by the ECB and the ECB's decision as well as the procedure for termination of such arrangements.

The ECB's decision is available at: http://www.ecb.europa.eu/pub/pdf/other/en_dec_2014_05_fen.pdf?5105e4c768e8 86be0f5844b03a868418.

ESMA Introduces "One-Stop-Shop" EU-wide Consolidated Registers of Regulated Companies

The European Securities and Markets Authority ("ESMA") has established and launched Consolidated Registers ("CRs") which ESMA describes as a "one-stop shop for EU regulated investment information".

The CRs are user-friendly reference tools which provide lists of:

  1. MiFID investment firms;
  2. UCITS management companies;
  3. alternative investment fund managers;
  4. sanctions; and
  5. prospectuses.

The CRs are compiled by ESMA, using information currently published on the websites of 31 EEA National Competent Authorities ("NCAs"). The NCAs will bear full responsibility for the accuracy and completeness of the data provided and ESMA will be working with the NCAs to ensure that complete up-to-date sets of data are available in the CRs.

The aim of the CRs is to enhance investor protection by providing public access to official information, and as a result, improving transparency within the single financial market.

The newly launched register can be found at: http://registers.esma.europa.eu/publication/start.

FCA Provides Guidance on its Role in Regulating Commodity Markets

The Financial Conduct Authority (the "FCA") published, on 27 February 2014, two documents on regulation of the commodity markets. The first, "Commodity Market Update", sets out the FCA's priorities in this area. The second, "Regulating the commodity markets: a guide to the role of the FCA" explains the regulatory framework, the role of the FCA and the key European legislation (EMIR, MiFID II, the Market Abuse Regulation and the proposed Benchmark Regulation) that will impact the commodity markets.

The FCA documents are available at: http://www.fca.org.uk/your-fca/documents/commodity-market-update-1402.


Political Agreement on UCITS V Reached

The European Parliament and Council of the European Union have reached political agreement on the European Commission's proposal to reinforce the rules for Undertakings for Collective Investment in Transferable Securities ("UCITS"). The new UCITS V rules aim to strengthen the level of protection for UCITS investors following the financial crisis and focuses on (i) clarification of the UCITS depositary's functions and liability in circumstances where assets are lost in custody, (ii) rules governing remuneration policies which UCITS will be obliged to introduce and (iii) the harmonisation of the minimum administrative sanctions regime across Member States.

The European Commission's statement is available at: http://europa.eu/rapid/press-release_STATEMENT-14-27_en.htm.


FCA Fines Forex Capital Markets and FXCM Securities for Breach of Principles

On 24 February 2014, the FCA fined Forex Capital Markets Limited ("FXCM Ltd") and FXCM Securities Limited ("FXCM Securities") for breaches of the FCA's Principles of Business, in particular the principles that a firm must treat its customers fairly and must deal with the FCA in an open and cooperative way, and must disclose to the FCA appropriately anything relating to the firm of which the regulator would reasonably expect notice. The FCA found that FXCM Ltd had failed to treat its customers fairly because it failed to pass on favourable price movements to its customers and instead retained the benefit. Both FXCM Ltd and FXCM Securities had failed to disclose to the FCA that the US authorities had begun to investigate an FXCM Group company in July 2010 and the decision by the FXCM Group company to settle with the US authorities and pay redress to its US customers. The FCA considered that such information was important to it because it revealed weaknesses in the systems and controls of both firms and would have allowed the regulator to assess any potential impact on their UK customers. The FCA issued a joint fine of £4,000,000 (subsequently reduced by 20% to account for early settlement) and required both companies to pay redress to their UK customers (the final agreed amount was US$9,941,970).

A copy of the final notice is available at: http://www.fca.org.uk/static/documents/final-notices/forex-capital-markets-limited.pdf.


5 March 2014: US House of Representatives Committee on Financial Services hearing entitled "The Growth of Financial Regulation and its Impact on International Competitiveness".

5 March 2014: US House of Representatives Committee on Financial Services hearing entitled "Data Security: Examining Efforts to Protect Americans' Financial Information".

27 March 2014: EBA public hearing on draft RTS on margin periods for risk for the calculation of a clearing members' exposure to clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Barnabas W.B. Reynolds
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions