Prosek’s Financial Regulation Roundup: December 4, 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:

Powell begins to make his mark: Trump’s choice to head the U.S. Federal Reserve, Jerome Powell, asserted that lightening regulation of the financial sector should be a priority as he takes over from former chair Janet Yellen. This echoes sentiment made by Yellen prior to her departure. Other statements made by Powell indicated that his thinking regarding prevailing fed policy of low interest rates to stimulate growth and a gradual wind-down of the balance sheet is in line with his predecessor as well. Powell did, however, decline to comment on his expectations for the impact of the tax reform bill widely expected to be voted on today. (Reuters: read more)

Bitcoin soars: Bitcoin prices hit $11,000 / coin earlier in this week, an astronomical high from it’s price at EOY 2017 of approximately $900. Prices were further spurred on earlier Friday by the announcement that the US CFTC (Commodity Futures Trading Association) has allowed the Chicago Mercantile exchange to begin to offer Bitcoin futures. (Fortune: read more) Marking the occasion, The Verge published a retrospective on Bitcoin’s entry into the mainstream global financial ecosystem. (The Verge: read more)

MiFID II pushing up compliance costs: Greenwich Associates reports that US and European banks are now spending a combined $20b a year on technology to keep up with the requirements of MiFID II – for fixed income alone. The report argues that compliance is beginning to obstruct “effective servicing” of clients, and that 96% of traders are now spending more time on compliance than trading. (Bloomberg: read more)

E.U. News:

FCA boss calls for urgent Brexit transition deal: The head of the UK’s financial regulator has called for a legally binding agreement between Britain and the rest of the European Union on a Brexit transition deal as soon as possible. Andrew Bailey, the head of the Financial Conduct Authority, told a parliamentary hearing on Wednesday that a transition deal needed to be agreed “PDQ” (pretty damn quick), even if a signed agreement before Christmas was not likely. Mr Bailey suggested this could be done through a commitment from both the UK and the EU after the European Council meets in December. (FT: read more)

Commission sets deadline for banks to meet new payment standards: European banks and service providers have been given an 18-month deadline to adopt new security measures and provisions for customer data exchange as mandated by the EU's revised Payments Service Directive (PSD2). Although PSD2 comes into effect on January 2018, two of the most contentious measures in the rule-book, relating to more stringent security measures for payments transactions and the abolition of 'screen-scraping', will now be considered actionable 18-months after the relevant Regulatory Technical Standards (RTS) are published in the Official Journal of the EU, scheduled for September, 2019. (Finextra: read more)


Micro-lending in China under scrutiny: Phone app-based micro-lenders in China are now under a great deal of pressure from regulators to introduce better practices in the country’s $150b market. Requirements that are second nature in EU and US markets (credit checks, due diligence) are still quite lacking, and allegations of Ponzi schemes have hit several large peer-to-peer lending services. Still, many Chinese consumers prefer these apps as state-controlled banks are unable to keep up with consumer loan demand. (Bloomberg: read more)

Global hacking threats on the rise: A report from global financial data/communications network SWIFT indicated that hackers have become increasingly sophisticated in their orchestration of attacks on financial hubs. The report noted that the Financial Conduct Authority was the victim of 89 cyberattacks in 2016, up from 5 in 2014. However, the report mentions that the pressing threat is not being ignored by top officials, including new Fed Secretary Powell.  (Insurance Journal: read more

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