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Financial Regulation Roundup – April 20, 2018

Ben Shapiro  Follow

Here are the top stories on the financial regulatory landscape in the U.S., EU and around the world over the past two weeks.

U.S. News:

Financial Regulatory Actions Under Trump Fall to Historic Lows

  • The issuance of financial regulations has dropped to a 40-year low, new data shows, a sign that the Trump administration is fulfilling its deregulatory agenda. Companies that track financial regulations started to see a slight drop in the volume of regulations last year with a major drop-off in issuances and revisions in the first quarter. Regulators now are issuing or revising two to four items a week, a dramatic drop from the five to seven items a week, on average, that companies have had to comply with for years, according to Continuity. (Credit Union Journal: read more)

Wall Street Faces Higher Capital Demands Under Fed Proposal

  • Wall Street banks could face higher capital hurdles under a Federal Reserve proposal that would mark the most significant rewrite of requirements put in place after the 2008 financial crisis. The new “stress capital buffer” announced by the Fed on Tuesday is meant to streamline competing regulatory demands on lenders and better tailor standards to each bank’s specific business. The central bank’s proposal would also relax parts of its annual stress tests. (Bloomberg: read more)

SEC Preparing Cryptocurrency Fraud Crackdown, Jay Clayton’s Biggest Enforcement Move Yet

  • The Securities and Exchange Commission has launched a massive crackdown on alleged fraud in the cryptocurrency business that could result in dozens of enforcement actions against companies and individuals in the next year over the sale and promotion of this burgeoning and under-regulated industry, FOX Business has learned. The SEC crackdown largely focuses on so-called initial coin offerings, or ICOs, in which startups raise capital through the sale of cryptocurrencies, and accept payment from investors in the form of other cryptocurrencies such as bitcoin. (Fox Business: read more)

Cap on Mini-IPOs to Stay at $50 Million

  • The mini-IPO won’t be getting any bigger. A handful of small companies have used a regulatory shortcut to sell limited amounts of stock and list their shares on a national exchange. Dozens more have sold shares using the exemption without getting a coveted exchange listing. But the results aren’t enough to sway regulators to raise the amount firms can seek in small initial public offerings. The Securities and Exchange Commission this week declined to increase the $50 million offering cap for so-called Regulation A+ sales, according to a letter released by two SEC commissioners who wanted it raised. (The Wall Street Journal: read more)

Wells Fargo Will be Fined $1B as Early as Friday

  • Federal regulators plan to fine Wells Fargo as much as $1 billion as early as Friday for abuses tied to its auto-lending and mortgage businesses, The New York Times and other news outlets reported, citing unnamed sources. The potential $1 billion fine would be largest ever imposed by the Office of the Comptroller of the Currency, the bank's main national regulator, and the Consumer Financial Protection Bureau, the federal watchdog bureau set up after the Great Recession. (New York Daily News: read more)

EU News:

FCA Warns Companies Over Preference Shares After Aviva Outcry

  • Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), has told companies to make it clear to investors whether their preference shares can be redeemed for less than the market price. In a letter to chief executives on Thursday, Mr Bailey said: “The FCA wants to ensure investors have access to the information that they require in order to properly assess the risks and rewards attaching to such shares.” The letter follows controversy at Aviva, the insurance company, which provoked an outcry last month when it said it was considering cancelling its irredeemable preference shares. (Financial Times: read more)

The Bank of England Moves With the Fintech Times as Transferwise Granted Settlement Account

  • Around 60,000 City workers are in fintech – an industry that barely existed a decade ago. London is hoovering up global investment in this sector, reaping the rewards of a framework that has been developed by City regulators in recent years. The Bank of England and the FCA have won praise from the tech sector for the way in which they’ve worked to make the UK a fintech powerhouse. Yesterday, a significant milestone was reached it was revealed Transferwise (the global money transfer provider) has become the first non-bank payment service provider to be granted a settlement account with the Bank of England’s Real Time Gross Settlement (RTGS) system. The announcement constitutes a significant moment in the City’s story and could herald, in the words of governor Mark Carney, a new wave of competition and innovation. (City A.M.: read more)

International News:

White House Plans to Escalate Trade Pressure on China

  • China will steadily reform and further open its financial sector while putting "equal emphasis" on preventing risks through regulation and supervision, the new central bank governor said on Sunday. In his first public speech since becoming central bank chief last week, Yi Gang told the China Development Forum in Beijing that opening up leads to progress, while closure points to backwardness. (CNBC: read more)

China Suspends OTC Options Market to Curb risks

  • China has halted its loosely-regulated and fast-growing over-the-counter (OTC) options market in the government’s latest effort to reduce risk in the financial system, according to sources at brokerage firms. The Securities Association of China has ordered suspension of the derivative business, effective on Wednesday, two sources who had received the notice from the association told Reuters. No new option contracts will be allowed, while existing ones will be discontinued upon expiration. (Reuters: read more)

China to Ease Rules on Foreign Auto Makers After U.S. Calls for Even Playing Field

  • China said Tuesday it will phase out rules requiring foreign auto makers to share their factory ownership and profits with Chinese companies by 2022, answering U.S. calls for a level playing field in the world’s biggest auto market. China now forces foreign auto makers to set up 50-50 joint ventures with Chinese partners if they want to locally produce cars to avoid 25% tariffs. The government said these rules will be eliminated this year for companies building electric vehicles — a move that could benefit Tesla Inc. — and for all vehicles by 2022. (MarketWatch: read more)

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