Financial Regulation Roundup: July 27, 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:

SEC Votes to Improve Oversight of ‘Dark Pools’

  • The US Securities and Exchange Commission has voted to improve the transparency and regulatory oversight of stock market trading venues often called “dark pools”, after rising concerns that their opacity allows for predatory practices. Money managers use dark pools — which are formally called “alternative trading systems” — to discretely trade bigger blocks of shares without moving the market, but their use broadened over the years. These venues aren’t full exchanges like Nasdaq or the New York Stock Exchange, and are therefore subject to less regulatory oversight and transparency. (The Financial Times: read more)

House Passes Hensarling's 'JOBS Act 3.0'

  • The full House on Tuesday night passed by a 406-4 vote the JOBS and Investor Confidence Act of 2018, also known as House Financial Services Committee Chairman Jeb Hensarling’s “JOBS Act 3.0,” which includes a package of 32 bills, some of which make changes to the Dodd-Frank law. “What we’re trying to do, and do it on a bipartisan basis, is ensure that our entrepreneurs at least don’t face the challenge of having the capital they need to launch their companies,” said Rep. Jeb Hensarling, chairman of the House Financial Services Committee, lead sponsor of the bill, during comments on the House floor. (ThinkAdvisor: read more)

SEC Delays Decision on Asset Manager's Bitcoin ETFs Until September

  • The U.S. Securities and Exchange Commission (SEC) has delayed making a decision on whether to approve five bitcoin-related exchange-traded funds (ETFs) until September, public documents reveal on Tuesday. In the latest edition of the Federal Register, the SEC explains that it is postponing any decision over the possible approval of ETF proposals filed by Direxion Investments in January – one of which will match bitcoin's price and four of which are based on the cryptocurrency's price movements. (Coindesk: read more)

Watkins to Lead new CFPB Division

  • Paul Watkins has been chosen to lead the Consumer Financial Protection Bureau’s (CFPB) new Office of Innovation. Bureau Acting Director Mick Mulvaney recently announced the decision, citing Watkin’s expertise, track record of protecting consumers, and commitment to innovation to the Bureau. Watkins joined the Bureau from the Arizona Office of the Attorney General, where he was in charge of the office’s fintech initiatives and managed the FinTech Regulatory Sandbox, the first state fintech sandbox in the country, which allowed a company limited access to the marketplace in exchange for relaxing some regulations (Financial Regulation News: read more)

EU News:

EU/US Trade enters a ‘new phase’

  • The US and EU have agreed to avoid an all-out trade war and work to lower tariffs, following a series of talks in Washington on Wednesday. US President Donald Trump hailed the talks as demonstrating "a very strong understanding", and alongside European Commission chief Jean-Claude Juncker announced a "new phase" in EU-US relations. The joint statement said EU imports of LNG would increase, to diversify Europe's energy supply whilst Mr Trump's threat to impose tariffs on European cars was abated. (BBC News: read more)

FCA suggests 'basic savings rate' to boost returns

  • Banks could be forced to set a minimum interest rate on their savings accounts, the Financial Conduct Authority (FCA) has suggested. The FCA said it was concerned that savers who stay with the same bank or building society for a long time get poor returns on their money. Some banks currently pay just 0.05% a year on instant access accounts. The Basic Savings Rate (BSR) would apply to all easy access cash ISA products, as well as savings accounts. (BBC: read more)

FCA calls for industry input on under-fire PRIIPs regulation

  • The FCA has initiated its review into the unintended consequences of PRIIPs regulation, which came into force in January, by asking for feedback on areas including performance scenarios and transaction cost calculations. The call for evidence, which closes on 29 September, will form the basis of the FCA's supervisory work on the regulation as well as a feedback statement it will publish in the first quarter of 2019. PRIIPs requires asset managers to provide a Key Information Document (KID), which has been heavily criticised due to its controversial requirement to provide predictions of future performance as well as estimations of transaction costs. (Investment Week: read more)

International News:

Following the Fed, Central Banks Are Ready to Raise Rates

  • A growing number of the world’s central banks are poised to join the U.S. Federal Reserve in lifting interest rates in coming months amid solid global growth, though those plans could be scrambled by rising trade tensions between the major economies. Between its first postcrisis rate rise at the end of 2015, and its fifth in December 2017, the Fed ploughed a largely lonely furrow. But in the first quarter of this year, it was joined by six other central banks in tightening policy, and that number rose to seven in the March through June period. A similar number of central banks are set to follow its lead in the three months through September, although for some the path is less certain than for others. A marked slowdown in growth could upset such plans, but that remains an increasing risk rather than a likely prospect. (The Wall Street Journal: read more)

Trump: ‘Ready to go’ with tariffs on all Chinese imports

  • President Trump in an interview that aired Friday said he’s “ready to go” with $500 billion in tariffs on China after already slapping the country with a series of tariffs. Trump said in an interview with CNBC that the U.S. is “down a tremendous amount” in terms of trade with China, saying that China “can’t match us because otherwise we’re always going to be behind the eight ball.” (The Hill: read more)

Japan Overhauls Financial Watchdog for Fintech Age

  • Japan revamped the Financial Services Agency effective Tuesday to make the watchdog more suited for responding to new challenges in the field, such as the rise of cryptocurrencies. The newly created Strategy Development and Management Bureau replaced the Inspection Bureau, a powerful arm tasked with containing financial crises. The bureau will devise financial policy strategy and handle tasks that encompass wide-ranging fields, such as financial technology, virtual currencies and money laundering. (Nikkei Asian Review: read more)

China Traders Barred From Buying Xiaomi Through Stock Link

  • China’s stock exchanges said they won’t allow mainland investors to buy shares with weighted-voting rights in Hong Kong, sending Xiaomi Corp. shares slumping. The bourses will also bar trading in foreign companies and stapled securities via the Hong Kong stock link, according to a statement by the Shanghai Stock Exchange on Saturday, which said many investors don’t understand the risks associated with new products. Xiaomi tumbled as much as 9.6 percent before paring declines to 1.9 percent at the close. The move comes before the three classes of shares are included in the city’s Hang Seng Composite Index in the third quarter, which would otherwise have made them eligible for the stock connect. (Bloomberg: read more)

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