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Prosek’s Financial Regulation Roundup: August 11, 2017

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:


  • After months of speculation that unpreparedness for MiFID II would cause havoc in the US, reality seems to have sunk in. The question of how investors, particularly in fixed income, will absorb the additional costs required by the regulation is a looming, unanswered question for US investors with clients/a presence in the EU. (read here)
  • MiFID II’s requirement to report the budget and costs for all analyst research has led some firms in the US, such as Vanguard (more here) and J.P. Morgan (more here), to decide to simply absorb these expenses, rather than investing in a new infrastructure to record and bill clients.
  • Additionally, the stress of MiFID II’s increasingly specific transaction reporting requirements will put a massive strain on the data management architecture of buy-side firms. (read here)

Federal Reserve Requirements

  • The Federal Reserve, as part of the current administration's mandate to trim back regulations, will examine reducing the compliance requirements for bank directors, removing smaller rules so managers can focus on “big-picture” risk management. (read here)

Fiduciary Rule

  • The Department of Labor is seeking an 18-month delay in the implementation of the Fiduciary Rule, pushing the roll-out date to July 1, 2019, on account of the possibility that the rule’s requirements will be revised shortly after it was originally introduced. (read here)
  • By directing their consumers away from commsion-based products and towards fee-based investment vehicles, several firms have actually begun to see a profit on the fiduciary rule. (read here)


  • After years of debate over the provisions of Dodd-Frank, one of the central provisions it was designed to address goes largely unanswered: how should the government break up banks that are “too big to fail?” The LA Times break down the competing approaches this week. (read here)

E.U. News:

FCA steps up advice charges focus

  • The Financial Conduct Authority (FCA) has contacted advisers for more information on their ongoing charges after a review raised concerns about how such charges are disclosed to clients. The Assessing Suitability review, published in May, found that 40% of IFAs fell short of the regulator's expectations on disclosure. The review looked at around 650 advice firms. (read here)

ESMA updates MiFID II guidelines

  • The European Securities and Markets Authority (ESMA) has issued an update of its Guidelines on transaction reporting, order record keeping and clock synchronisation under the Markets in Financial Instruments Directive (MiFID II). The updates corrects some unintended factual mistakes, typos and inconsistencies in the technical part of the Guidelines. (read here)

Global News:

China and online payments

  • Beijing has established a central clearinghouse for all financial transactions, in a move to increase oversight and reduce financial crime. The rapid rise of electronic payments have been met with growing pains in a country that is still largely cash-based. Companies are required to comply with the regulation by October 15 of this year. (read here)

2008 Financial Crisis Review

It’s already been 10 years since the onset of the worst financial crisis of most of our lifetimes. August 9, 2007 marks the date that BNP Paribas closed two funds heavily invested in subprime mortgages, setting off a chain of events that would lead to the closure of Lehman and several major bank bailouts around the globe. The BBC published a retrospective with thoughts on the current state of regulation designed to prevent another such crash. (read here)


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