In this week's newsletter, we provide a snapshot of the principal US, European and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructure providers, asset managers and corporates.
Bank Prudential Regulation & Regulatory Capital
US Federal Reserve Board Issues Final Rule Providing Information on Revised Capital Rules for Non-Traditional Stock Corporations
On December 4, 2015, the US Board of Governors of the Federal Reserve System issued a final rule clarifying the application of the revised capital framework, originally issued in June 2013, to depository institution holding companies that are organized as non-stock entities, such as limited liability companies and partnerships. The final rule illustrates how capital instruments that are issued by firms that are not organized as traditional stock corporations may qualify as regulatory capital under the revised regulatory capital framework. The final rule, which is substantively similar to the proposed rule issued in December 2014, goes into effect January 1, 2016. Separately, the final rule notes the Federal Reserve Board's intention to issue separate regulatory capital rules to clarify how: (i) depository institution holding companies that are employee stock ownership plans; and (ii) savings and loan holding companies that are personal or family trusts, rather than business trusts, in each case, will be treated under the capital rules.
The final rule is available at: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20151204a1.pdf.
US Federal Reserve Board Finalizes Revised FR Y-15 Reporting Requirements and Seeks Comments on Section 165-Related Revisions to Form FR Y-7
On December 11, 2015, the Federal Reserve Board published a final rule to revise certain elements of its "Banking Organization Systemic Risk Report" (Form FR Y-15) that will become effective as of December 31, 2015. However, the new requirement to file the form on a quarterly basis has been extended until June 30, 2016, and the effective date of the new requirements for reporting short-term wholesale funding (Schedule G) has been extended to December 31, 2016. While the preamble to the final rule notes that reporting requirements for Intermediate Holding Companies that foreign banking organizations are required to designate or establish under Dodd-Frank Act Section 165 have not yet been proposed, under current requirements IHCs with a US bank subsidiary and $50 billion or more in total consolidated assets would be required to file the FR Y-15 beginning with the next filing date following its establishment. Commenters requested an extension for IHCs, but the Federal Reserve Board indicated it would invite comment on this issue when reporting requirements for IHCs are proposed.
On December 2, 2015, the Federal Reserve Board proposed certain new line items to its "Annual Report of Foreign Banking Organizations" (Form FR Y-7) to collect information from foreign banking organizations required to comply with the enhanced prudential standards for foreign banking organizations prescribed by Section 165 of the Dodd-Frank Act. Specifically, the proposed revisions would collect information applicable to the US risk committee and home country capital stress testing requirements.
The final rule for Form FR Y-15 is available at: https://www.federalregister.gov/articles/2015/12/14/2015-31356/agency-information-collection-activities-announcement-of-board-approval-under-delegated-authority.
The proposed revisions to Form FR Y-7 are available at: https://www.federalregister.gov/articles/2015/12/02/2015-30538/proposed-agency-information-collection-activities-comment-request.
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