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Financial Regulation Roundup: December 14, 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 last two weeks.

U.S. News:

  • SEC Commissioner Calls for Closer Look at Voting by Index Giants: Passive mutual funds often leave investors in the dark on corporate-governance issues, threatening their ability to gain information on proxy voting decisions, a top U.S. regulatory official said. SEC Commissioner Robert Jackson said the SEC should “more closely examine whether funds should have to disclose information about proxy voting in a different manner” to allow informed decisions by retail investors. The commissioner was speaking at a Federal Trade Commission conference on competition and consumer protection at New York University. (Read more: Bloomberg)
  • Congress May Have Accidentally Freed Nearly All Banks From the Volcker Rule: A few double negatives buried in legislative text may have inadvertently freed nearly all U.S. banks from a regulation known as the Volcker Rule, which sought to curb risky behavior in response to the 2008 financial crisis. The text in question comes from a package bill passed in May that pared back portions of the Dodd-Frank post-crisis financial regulatory framework. One of the many provisions of the bill offered an exemption from the Volcker Rule to smaller community banks that policymakers felt were burdened by the regulation, which limited banks’ proprietary trading, or trading for their own accounts. (Read more: Yahoo! Finance)
  • Banks Get Kinder, Gentler Treatment Under Trump: After years of acrimony, the nation’s top banking regulators are seeking a detente with the firms they oversee. Two Trump-appointed officials have spent several months touring the country, visiting bank examiners in regional offices and asking them to adopt a less-aggressive tone when flagging risky practices and pressing firms to change their behavior. The officials—the Federal Reserve’s Randal Quarles and the Federal Deposit Insurance Corp.’s Jelena McWilliams—aim to change policy in a subtle but significant way and reshape regulators’ relationship with banks, which officials have said was too contentious during the Obama years that followed the financial crisis. (Read more: The Wall Street Journal)
  • Trump Taps Two Nominees for Senior Financial Regulatory Posts: President Donald Trump on Tuesday announced two nominees for top posts at a U.S. financial markets regulator and the federal housing agency. Trump will nominate Heath Tarbert, a senior Treasury Department official, to be the next chairman of the Commodity Futures Trading Commission, the White House said in a statement. Reuters reported Trump’s decision on Monday. (Read more: Reuters)
  • Bitcoin ETF Seekers Met With SEC Monday In Latest Pitch for Approval: Members of VanEck, SolidX and the Cboe BZX Exchange met with U.S. Securities and Exchange Commission (SEC) staff earlier this week to present a new argument on why the bitcoin market is ready for an exchange-traded fund (ETF). In the latest push to convince the regulator to approve a rule change which would open the door for the country’s first bitcoin ETF, the three firms met with the SEC’s Division of Corporation Finance, Division of Trading and Markets, Division of Economic and Risk Analysis and Office of General Counsel. Notably, Monday’s effort differed from previous presentations, which took more of a regulatory focus. (Read more: Coindesk)

EU News:

  • Europe Stands Firm on Brexit Despite May’s Push for Help: British Prime Minister Theresa May, having overcome a bruising leadership challenge from her own party, ran into fresh trouble in Brussels on Thursday, with her efforts to persuade her European Union counterparts to sweeten the Brexit deal effectively running aground. Some EU leaders said Mrs. May had failed to set out clearly what assurances she wanted. Others said she was effectively asking for them to re-open the Brexit agreement, something they have repeatedly ruled out doing. (Read more: The Wall Street Journal)
  • FCA Issues New Rules for Banks Receiving Fraudulent Payments: The FCA has published new rules allowing victims of authorised push payment fraud to complain to the payment services provider (PSP) receiving their payment. In the case of APP fraud - where an account holder is duped into making a payment - the PSP is often a bank which holds the accounts of either the victim or fraudster. (Read more: Financial Reporter)
  • European Open Banking Grows Through Smart Regulation: If you want to see what open banking will look like in the United States, eventually, look to Europe where banking regulators are not as timid as their American counterparts. Conny Dorrestijn, co-founder of BankiFi, said European regulators decided after 2008 that banks needed more competition. Or to be more precise, consumers needed more competition among banking providers. Regulators said “We are going to open up the market and given consumers a choice to bank with you or take services that you do quite badly away from you and give it to somebody else.” (Read more: Forbes)

International News:

  • China Prepares Policy to Increase Access for Foreign Companies: China is preparing to replace an industrial policy savaged by the Trump administration as protectionist with a new program promising greater access for foreign companies, people briefed on the matter said. China’s top planning agency and senior policy advisers are drafting the replacement for Made in China 2025, President Xi Jinping’s blueprint to make the country a leader in high-tech industries including robotics, information and clean-energy cars. (Read more: The Wall Street Journal)
  • Council on Financial Regulators Sees Credit Squeeze Risks: Australia’s top financial regulators have expressed concern that a reduction in bank lending in response to the royal commission into financial services and tougher regulations will cut the flow of credit required to help the economy grow. An inaugural public statement on Thursday following the quarterly meeting of the Council of Financial Regulators also observed that as banks pulled back, lending by lightly regulated non-banks had picked up significantly including for property development. The council, which met on Monday, vowed to more closely scrutinise lending by so-called shadow banks. (Read more: Australian Financial Review)
  • China Consults on Rules for Financial Holding Companies: Sources: China’s central bank has started seeking internal feedback on draft rules regulating financial holding companies, targeting big-name conglomerates that hold multiple financial licenses, said two sources with direct knowledge of the matter. Financial holding conglomerates subject to the rules will not only face new requirements on capital adequacy, but may also be forced to restructure and put part of their non-financial assets in a separate entity, the sources told Reuters on Monday, declining to be named due to the sensitivity of the matter. (Read more: Reuters

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