Financial Regulation Roundup: November 3, 2017

Eamon Levesque  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:

Fed Chair Race

  • Months of speculation came to an end on Thursday as President Trump announced Jerome H. Powell to the Federal Reserve Chair. A member of the Fed’s Board of Governors since 2012, Powell’s votes have been in lock-step with Yellen’s throughout her tenure, and is widely viewed as a centrist choice likely to continue the policies of his predecessor. Differences that may emerge in their outlooks, if any, will likely be in regards to banking regulation, which Yellen famously spearheaded after the 2007 crash. (New York Times: read more, Bloomberg: read more)

T-Minus Two to MiFID II

  • Regular readers of Financial Regulation Update will recall several articles in the last several months about the US’s general unpreparedness to comply with MiFID II. With less than 60 days to go before the roll-out, it seems there’s still a ways to go. Many US asset managers are still unaware of the extent to which it will affect their business, while the governing bodies in Brussels are not helping the situation by still withholding regulatory decisions on issues like dark pools and rules clashes with foreign markets. Much needs to be resolved in the coming days if international trading is to continue un-interrupted in 2018. (Bloomberg: read more)

Beneficial Ownership Rule

  • The US Treasury Department will soon roll out the Customer Due Diligence rule, requiring banks to collect information about the “true” owners of legal entity accounts, in order to combat fraud and money laundering. A number of last-minute increased expectations from the regulatory body behind the rule (FinCEN) has sent banks scrambling to ensure their compliance plans are adequate, and a number of questions remain about when it becomes appropriate to collect info on longstanding customers. (Reuters: read more)

E.U. News:

FCA drops $9 trillion bond-rigging probe

  • The Financial Conduct Authority has closed a two-year investigation into possible manipulation of the $9 trillion (£6.7 trillion) agency bond market, according to people with knowledge of the situation. The regulator wrote to traders at the centre of the probe, who worked at lenders including Bank of America and Credit Suisse, in September to inform them of the decision, according to four people, who didn’t want to be identified because the letters aren’t public. A US Justice Department probe is still open, two of the people said. (The Independent: read more)

European Commission Settles PSD2 Technical Standards

  • The European Commission has finalised revisions to regulatory technical standards on strong authentication and third-party account access. The standards will eventually accompany the revised Payment Services Directive (PSD2) across the EU, and are now unlikely to take effect before August 2019. After a row between banks and third-party providers over whether some form of screen scraping should still be allowed under PSD2, the commission has proposed a compromise. (PaymentsCompliance: read more)

Norway to adopt MiFID and MiFIR

  • The Financial Supervisory Authority of Norway reiterated on Friday it would be adopting the European Union’s MiFID II and MiFIR rules into Norwegian regulations despite them entering into force on January 3rd 2018 before they are incorporated into the EEA Agreement. (Reuters: read more)


 Chinese Consumer Lending:

  • While the Chinese government is looking to grow household income relative to GDP and views increased consumer lending as a part of this strategy, several online lenders have come under scrutiny for less-than-savory business practices targeting newer consumers. The Chinese central regulatory body will now draft a comprehensive framework on guidelines for internet consumer lending, which may impede some of these companies from their planned US launches. (Financial Times: read more)

AI Needs Human Oversight

  • The global Financial Stability Board (FSB) produced its first report on AI and machine learning, enumerating several risks it said needed monitoring. These included the potential impact of having AI-calculated credit scores, and the substantial job losses in the compliance sector that are predicted to be caused by AI adoption. Data privacy among these entities is also a listed as a concern. (Reuters: read more)

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