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 Banking Agencies Approve Bank of America to Begin Using Advanced Approaches Framework to Calculate Risk-Based Capital Requirements
On September 3, 2015, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency announced their approval of Bank of America and its subsidiary national banks to use the "advanced approaches" capital framework. The advanced approaches framework requires banks to meet certain criteria for risk-measurement and risk-management when calculating risk-based capital standards as developed by the Basel Committee on Banking Supervision. In order to use the advanced approaches framework, banks are required to conduct a satisfactory "parallel run" under the framework in order to show the relevant regulators that the bank is able to comply with the framework for at least four consecutive calendar quarters. Bank of America, along with its subsidiary national banks, fulfilled the parallel run requirement and will begin using the advanced approaches framework to calculate and disclose their risk-based capital measures beginning in the fourth quarter of 2015.
The FRB press release is available at: http://www.federalreserve.gov/newsevents/press/bcreg/20150903a.htm and the OCC press release is available at: http://www.occ.gov/news-issuances/news-releases/2015/nr-ia-2015-122.html.
Cyber Security
US Deputy Comptroller Discusses Cybersecurity
On August 31, 2015, the OCC's Deputy Comptroller for Compliance Operations and Policy, Grovetta Gardineer, discussed the cybersecurity assessment tool issued by the Federal Financial Institutions Examination Council in June 2015. According to Gardineer, the tool provides a common framework for assessment across institutions and represents a step forward in terms of supervision of banks and thrifts in cybersecurity. While the use of the cybersecurity tool is optional for financial institutions, it will be used by OCC examiners to supplement their exam work and to obtain a stronger and more complete understanding of the cybersecurity risks faced by financial institutions.
The press release is available at: http://www.occ.gov/news-issuances/news-releases/2015/nr-occ-2015-120.html and the remarks are available at: http://www.occ.gov/news-issuances/speeches/2015/pub-speech-2015-120.pdf.
Derivatives
Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions Consult on Harmonization of Key OTC Derivatives Data Elements
On September 2, 2015, the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions published a consultative report on the harmonization of a first batch of key OTC derivatives data elements, focusing on key data considered to be important for consistent and meaningful aggregation on a global basis, as OTC derivatives become required to be reported to trade repositories in many jurisdictions globally. The consultation seeks views on matters including: (i) proposed definitions of key data elements; (ii) whether the proposed definitions cover different market practices globally; and (iii) whether any alternative approaches to those mentioned in the report would better achieve the goals of the report. Comments are due by October 9, 2015.
The report is available at: http://www.iosco.org/library/pubdocs/pdf/IOSCOPD503.pdf.
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