While most of us basked in the holiday spirit, the regulatory Grinches were hard at work. In the two-week period between 19 December and 2 January, regulatory bodies in the UK, EU and US alone published over 40 critical documents.
JWG’s tracking revealed a broad range of subjects. CRD IV/CRR, BRRD, UCITS V, MiFID II/MiFIR, CPMI/IOSCO, Dodd-Frank and the Jobs Act are all covered – as well as a number of themes including capital buffers, credit ratings, internet payments, recovery and resolution, benchmarks, accountability, liquidity coverage ratios, capital floors and common equity tier one capital … to name but a few.
In total, our two-week break saw regulators pump out in excess of 4,000 pages. Needless to say, for those of you in the regulatory implementation field, the holiday is well and truly over.
We’ve pulled together a few highlights to ease you back into work mode.
In the UK, Parliament published two legislative orders implementing a number of recovery and resolution policies, in line with the EU Bank Recovery and Resolution Directive which came into force on 2 July 2014. The orders make several amendments to pre-existing UK legislation, including the definition of “financial institutions” to now include mixed activity holding companies, enabling the BoE to cancel building society members’ rights and shares in the event of a bail-in and mandating that the BoE review group resolution plans at least once a year.
Remaining in the UK, the FCA and PRA published their second consultation paper regarding the incoming Senior Managers Regime (SMR). The 332-page document sets out changes to the Handbook and Rulebook as a result of the proposals in the July CP, transitional arrangements for relevant firms and affected individuals and the necessary forms for the implementation of the regime. The SMR is set to introduce a raft of changes and increasing pressures on senior managers. See our earlier article for a breakdown of the proposed reforms. Responses for the newest consultation are due 27 February.
Across the pond, the Federal Reserve, the SEC and the Comptroller of the Currency continued their rulemaking hangover from Dodd-Frank. They adopted a joint rule that will force securitisers of asset-backed securities to retain not less than 5 percent of the credit risk of the assets collateralising the asset-backed securities. A major exemption has been granted under the rule, however, waiving the 5% retention rate for residential mortgage loans meeting the new QRM standard under Dodd-Frank title IX.
Back in Europe and the EBA was busy publishing 12 significant documents over the holiday period. Five guidance documents detail disclosure requirements for financial institutions under CRR, the convergence of supervisory practices across ESAs and national authorities, guidelines on internet payments in light of the upcoming Payments Services Directive 2 and resolvability measures under the BRRD. As well as this, the EBA have published two consultations, one on notification requirements under the BRRD (due 20 March) and another regarding firms’ reliance on credit ratings (due 27 February).
Potentially the most important publications to come in over the period were ESMA’s 2,069 pages for MiFID II/MiFIR. Presumably to ease the download strain for such a huge file, the consultation paper was split into three distinct documents, with another technical advice document released as well. Alas, this did not prevent the ESMA website from crashing for around 20 minutes after the documents were published, resulting in some very nervous JWG analysts frantically refreshing web browsers for any signs of life.
The 245 questions must be submitted to ESMA by 2 March. We’ll be following up with another article soon and providing a much more detailed analysis of the MiFID II/MiFIR consultation.
Of course this ‘Christmas Dump’ didn’t contain all of the Grinches’ gifts to us. Reflecting back on the rest of December, we find a significant number of new fines – including a prison sentence, various speeches about the 2015 agenda and lots of noise about new threats like cyber security.
It looks as though we begin the New Year as we finished the old, digging out from under … The good news is that we’ve just released an exciting new programme for 2015 which members will be able to read about in the January RegBeacon which will be published next week.