Financial Regulation Roundup: January 16, 2018

Rupert Eyles  Follow

Below 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:

  • Bitcoin regulation on the horizon: H. Rodgin Cohen, the dean of Wall Street lawyers, says it’s just a matter of time until U.S. regulators launch a sweeping response to bitcoin. As global banks increasingly help investors bet on virtual currencies, federal authorities will develop a joint strategy for policing the burgeoning market, Cohen predicted in an interview. It would make sense for the Financial Stability Oversight Council -- a group of regulators led by the Treasury Department -- to take the lead, he said. (Bloomberg: read more)
  • Federal Reserve Governor proposes sweeping new banking regulations: The Minneapolis Federal Reserve proposed a set of sweeping new regulations this week aimed at reducing the risk big banks pose to the economy. At the core of the recommendations are higher capital requirements for the nation's largest financial institutions as well as a reduction in burdens for smaller regional and community banks. The proposals also take aim at so-called shadow banks — nonbank lenders — which are targeted for sharp taxes on the bigger firms. (CNBC.com: read more)
  • Regulators push back on White House proposal to loosen environmental regulation: In a rare regulatory defeat, all five members of the Federal Energy Regulatory Commission (FERC) quashed a White House move that would have kept some struggling coal and nuclear plants running. Aside from a sound policy consideration that saves consumers money, the real impetus behind FERC’s move may have been opposition from a politically powerful coalition of natural gas, oil and alternative energy producers. Cheap, plentiful gas, along with some environmental rules, has played a big role in the decline of coal and nuclear power. (The Wall Street Journal: read more)

EU News:

  • MiFID II implementation hit by fresh delays: Only a week after the implementation of MiFID II, the European Securities and Markets Authority (ESMA) publicly confirmed that they did not receive adequate data to calculate the new dark trading limits for the equity markets which were expected to take effect today. ESMA said in their statement that, "The current quality and completeness of the data does not allow for a sufficiently meaningful and comprehensive publication of double volume cap calculations.” The new caps are expected to be enforced in March instead. Despite the setback, there has already been an indication that trading patterns have begun to shift in anticipation of the dark caps. (Financial News: read more)
  • The UK Financial Conduct Authority confirms new Chairman: Last Friday the FCA announced that former corporate lawyer Charles Randell is set to be their next chairman. Randell will also chair the Payment Systems Regulator, which oversees the UK payment systems industry. Randell is set to take the reins in April, at a time when the regulator is grappling with the enormous task of assisting the Treasury in transposing existing EU financial regulations into domestic legislation ahead of Brexit. (Financial Times: read more)

International:

  • China suggests move to greater market influence over currency: China’s move to tweak its management of the yuan fixing mechanism shows authorities’ desire to further liberalize the exchange rate, according to an adviser to the People’s Bank of China. “The counter-cyclical factor was designed to reduce irrational herd mentality,” said Huang Yiping, a professor at Peking University and a member of the PBOC’s Monetary Policy Committee, in an interview in New York. Now that the exchange rate “has stabilized for quite some time, the market force should play a bigger role,” he said. (Bloomberg: read more)
  • Investors anticipate ETF innovations to open Chinese market: Investors are eagerly awaiting another "connect" program that will allow them to invest in the Chinese market as exchange-traded funds become the next product to join the party. Following launches of the Shanghai- and Shenzhen-Hong Kong Connect programs in the last few years, Chinese regulators now have plans for international and mainland investors to trade in ETF products in the Special Administrative Region, Shanghai and Shenzhen, Hong Kong media reported. That could come as soon as 2018. (CNBC.com: read more

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