Financial Regulation Roundup – May 4, 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:

Stock Exchanges Get Warning Shot From SEC Over Data Profits: U.S. regulators blocked stock exchanges’ request to raise some fees for market data, an unusual step suggesting closer scrutiny of an increasingly important slice of their businesses. The fees that firms including NYSE Group Inc., Nasdaq Inc. and Cboe Global Markets Inc. wanted to boost are relatively obscure. (Bloomberg: read more)

Fed Holds Rates Steady but Points to Higher Inflation: The Federal Reserve kept its benchmark interest rate unchanged Wednesday but acknowledged that inflation is beginning to creep higher. In a widely expected move, the central bank's Federal Open Market Committee held the funds rate at a target of 1.5 percent to 1.75 percent. However, there were several tweaks to the post-meeting statement that market participants likely will find instructive. Markets that already were anticipating that the Fed would move to a more aggressive posture this year got more to chew on. (CNBC: read more)

House May Vote on Dodd-Frank Changes in May: Majority Leader: The U.S. House of Representatives could vote in May on a bill easing bank rules adopted after the 2007-2009 global financial crisis, a leading Republican lawmaker said on Monday. The comments by Representative Kevin McCarthy, the House majority leader, marked the strongest sign yet a deal could soon be reached between the House and Senate to pass the first rewrite of the 2010 Dodd-Frank financial reform law. The Senate voted 67-32 last month in favor of a bipartisan bill that would ease oversight of small and mid-sized banks. House Republicans have stalled voting on the Senate bill on the grounds that additional provisions should be included to further lower the regulatory burden on banks and make it easier for small companies to raise capital. (Reuters: read more)

Trump Postpones Decision on Steel Tariffs for Allies and EU for Another Month: President Trump has decided to postpone for another month the decision about whether to impose steep tariffs on steel and aluminum imported from Canada, Mexico and the European Union, the White House announced Monday evening. The decision, coming just a few hours before the previous temporary tariff exemption was set to expire at midnight, will prolong the uncertainty and to some degree the tensions that have built up since Trump issued 25% tariffs on imported steel and 10% on aluminum from all but a handful of countries and the large EU trading bloc. (Los Angeles Times: read more)

Venture Capitalists Seeks ‘Safe Harbor’ for Virtual Currencies: Venture capitalists and entrepreneurs have been lobbying federal regulators to protect at least some virtual currencies from being categorized as securities, a designation that would carry significantly more oversight. The venture capital firm Andreessen Horowitz helped assemble a group of investors and lawyers that met with the Securities and Exchange Commission in late March. They also proposed a “safe harbor” for some virtual currencies, according to a copy of the proposal reviewed by The New York Times and three people briefed on the effort who agreed to speak on the condition of anonymity because the proceedings were confidential. (The New York Times: read more)

EU News:

FCA Reveals Plan to Shake-Up Mortgage Market: The Financial Conduct Authority has identified a number of ways it wants the mortgage market to work better for those buying a property. The regulator's interim findings on the state of the mortgage market, published today (4 May), showed high levels of choice and consumer engagement. Over three quarters of consumers switched to a new mortgage deal within six months of moving onto a reversion rate. (FT Adviser: read more)

Bank of England is Teaming up With the European Central Bank on Financial Services Protection from Brexit risks: The Bank of England and the European Central Bank are teaming up for work on protecting the financial services industry from Brexit risks. The European Commission and the Treasury have asked the two to set up a "technical working group" on risk management in the period around 30 March 2019. It will be chaired by the President of the ECB Mario Draghi, and Mark Carney, the governor of the Bank of England. (City A.M.: read more)

International News:

U.S. Weighs Curbs on Chinese Telecom Firms Over National-Security Concerns: The Trump administration is considering executive action that would restrict some Chinese companies’ ability to sell telecommunications equipment in the U.S., based on national-security concerns, said several people familiar with the matter. The move, if it happens, would represent a significant escalation of a growing feud between the U.S. and China over tech and telecommunications. The affected firms likely would include Huawei Technologies Co. and ZTE Corp., two of the world’s leading telecommunications equipment makers. They have found themselves increasingly in an international crossfire. (The Wall Street Journal: read more)

China Issues Rules for Securities Ventures by Foreign Firms: China’s securities regulator issued guidelines on the country’s previously announced move to allow foreign firms to own a majority stake in local securities joint ventures. The China Securities Regulatory Commission published the rules on its website on Saturday. The watchdog had been seeking public comment on the plan since March. China surprised the financial industry in November when it announced that it would raise the foreign ownership cap to 51 percent on the ventures, which provide underwriting and trading services. The move is a key part of President Xi Jinping’s pledge to open China’s $40 trillion financial sector. (Bloomberg: read more)

Bank of Japan Ditches Inflation Target Date: The Bank of Japan has abandoned its attempt to predict when the nation will reach 2% inflation, another sign that Japan has yet to fully escape its long period of falling prices. The central bank removed on Friday a forecast date for 2% inflation from its economic outlook, the first time it has done so since Gov. Haruhiko Kuroda introduced his “bazooka” of radical monetary easing five years ago. Mr. Kuroda offered a target date shortly after taking office in 2013, saying he thought inflation would hit 2% within two years. The BOJ had delayed that date six times, most recently until March 2020. The move “shows difficulties trying to reach 2% any time soon, just by monetary policy itself,” said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. (The Wall Street Journal: read more)

Australian Regulator Backs Massive Increase in Fine for Corporate Wrongdoing: Australia’s competition watchdog on Monday supported massive increases in financial penalties for companies caught doing the wrong thing, after widespread misconduct was exposed by an ongoing inquiry into the financial sector. Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims said the government was correct to propose penalties of up to 10 percent of turnover, potentially running into hundreds of millions of dollars. (Reuters: read more

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