Financial Regulation Roundup: March 9, 2018

Rupert Eyles  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:

Regulators Scrutinize Company Diversity Initiatives

  • Efforts by US asset managers to hire and promote women and people from ethnic minority backgrounds are coming under heightened scrutiny following pressure from the US financial regulator to make diversity data more readily available. The Securities and Exchange Commission (SEC) asked asset managers in January to provide information on their workforces as it tries to better understand industry diversity. A growing body of evidence has shown that businesses with diverse staff outperform more homogenous companies. (FT: read more)

Treasury’s Plan to Fix Loophole in New Tax Law Expected to Face Legal Challenges From Hedge Funds

  • Treasury Secretary Steven Mnuchin’s plan to fix a gaping loophole for hedge funds in President Donald Trump’s new tax law could face legal challenges. Tax experts say a notice from Treasury and the Internal Revenue Service (IRS) issued Thursday fails to give the legal basis for their power to close the loophole. Congress would need to amend the statute, accountants and lawyers said, and Treasury’s attempt to do so through regulation sets the stage for a court battle by one or more hedge-fund titans with a lot of money at stake. (Bloomberg: read more)

RBS Reaches Settlement with New York Over MBS

  • The settlement announced on Tuesday by New York Attorney General Eric Schneiderman calls for the British bank to pay $100 million in cash to the state and provide $400 million of relief to homeowners and communities, including funds to build affordable housing. RBS is the sixth bank to settle similar claims with New York, resulting in roughly $3.7 billion of settlements. (Reuters: read more)

EU News:

EU markets regulator releases long-delayed list of stocks affected by Mifid II dark pool volume cap

  • The European markets regulator has finally released a long-delayed list of stocks which will be affected by the Mifid II cap on "dark pool" trading, covering the shares of some of the biggest household names across Europe. If more than four per cent of stocks are traded "in the dark" on any particular venue on a 12-month rolling period, or eight per cent market-wide, dark pool trading in that stock will be suspended for six months. Dark pools allow investors to trade without having to reveal what they are buying or selling. (City A.M.: read more)

FCA overhauls rules on credit card charges for struggling debtors

  • Lenders will have to waive credit-card fees and interest for those mired in persistent debt or face action from the watchdog, under new rules from the UK financial watchdog. The rules published by the Financial Conduct Authority on Tuesday aim to save £1.3bn a year for consumers, which would otherwise be revenue flowing to lenders. It is part of an effort to try to help some 3.3m Britons with long-lasting debt problems. (Financial Times: read more)

International:

China Becoming Global Creditor Leaves 8 Countries Financially at Risk

  • China is emerging as a massive creditor for its economic allies who are taking up projects to upgrade roads, harbors and airports, making it an increasingly important financial player on the world stage. New data from the Center for Global Development, an international think tank, estimates the program has left eight countries financially vulnerable: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan. (The Wall Street Journal: read more)

China Lowers Banks’ Liquidity Requirements

  • Chinese authorities are cutting the amount of cash banks are required to set aside to cover bad loans, a move that would boost lenders’ bottom line but potentially increase financial risk. With the sector struggling to boost profits, the country’s banking regulator will lower the provision coverage ratio for commercial banks—a requirement to safeguard their ability to weather losses—to a range of 120%-150%, from the current minimum of 150% of their bad loans. (The Wall Street Journal: read more)

Hong Kong’s Central Bank Looks Likely to Tighten Liquidity

  • Hong Kong’s central bank will probably take steps to tighten liquidity in the financial system, a survey of analysts showed, as the region’s currency approaches the weak end of its peg against the greenback. The Hong Kong Monetary Authority will offer extra Exchange Fund Bills this year, according to 15 of 19 analysts surveyed by Bloomberg from March 2-6, although not all agreed currency weakness would be a factor in the sales. (Bloomberg: read more

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