Prosek’s Financial Regulation Roundup: July 28, 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:

Federal Reserve Chair Contenders

  • President Donald Trump said he may reappoint Federal Reserve Chair Janet Yellen to a second term at the helm of the U.S. central bank, while indicating that White House aide Gary Cohn was also a top contender for the position. (read here).

MiFID II

  • According to a recent survey of 52 European and US asset managers done by trading venue operator Liquidnet, only one in four US traders are aware of their firm’s MiFID II plans, which is a four-fold increase from a year ago. (read here).

CEO Pay Restrictions

  • Several regulators have dropped pursuit of a long-running plan to restrict bonuses on Wall Street, as part of a wider effort to stop working on unfinished rules put in place after the financial crisis. (read here).

Too Big To Fail

  • On Thursday, Treasury Secretary Steven Mnuchin urged Congress to move quickly in raising the threshold at which banks are labeled as “systemically important financial institutions” (SIFIs). The threshold is currently $50 billion in assets, and raising it would provide some regulatory relief to community and regional banks that argue they didn’t cause the financial crisis and shouldn’t be subject to the increased oversight. (read here).

E.U. News:

FCA will phase out the use of Libor by 2021

  • Andrew Bailey chief executive of the FCA announced yesterday that they will phase out the key interest-rate indicator Libor by the end of 2021 after it became clear there wasn’t enough meaningful data to sustain the benchmark. The end of the London interbank offered rate, or Libor, is welcome on many levels by regulators, for whom it is been a source of scandals and multiple corruption charges. (read here).

FCA to extend regulatory regime to 47,000 firms

  • A regulatory regime intended to crack down on the behaviour of bank bosses is to be extended to 47,000 firms including dentists, gyms and tool hire companies that offer credit to customers. The Financial Conduct Authority estimated that the new regime would cost firms £550m, with up to £190m of ongoing costs for the firms involved. (read here).

BoE warns more defences may be needed against consumer credit

  • A sharp rise in personal loans could pose a danger to the UK economy, a Bank of England official has warned. The BoE said on Monday it could force banks to hold more capital as an "insurance policy" to protect the wider economy in case the rapid growth in consumer credit turns sour. Alex Brazier, the BoE's executive director for financial stability, said that while lending overall has grown in line with the British economy, outstanding car loans, credit card balances and personal loans have risen by 10pc, far outpacing rises in income. (read here).

Lords Committee launches inquiry into post-Brexit financial regulation

  • A UK parliamentary committee has been launched to look into how financial regulation and supervision could be developed in the wake of Brexit to try and preserve access to the EU's single market. The committee is due to start public hearings in September, and is asking for written evidence by September 29. (read here).

Global News:

China Regulatory Reform

  • From June 14 - 15, 2017, China held the fifth National Financial Work Conference in Beijing, manifesting a new regulatory institution. The institution is called the National Financial Stability and Development Committee, which will be the decision-making body that has the power to supervise the existing Chinese regulatory agencies. (read here).

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