Prosek’s Financial Regulation Roundup: July 3, 2017
Here are the top stories on the financial regulatory landscape in the U.S., EU and around the world over the past two weeks.
Federal Reserve Bank Stress Tests: Big banks passed the annual stress tests for the first time since the Fed began the reviews in the wake of the 2008 financial crisis. In response, several major banks, including JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp., announced plans to boost dividends and stock buybacks. (read here).
Financial Regulatory Reform: Top U.S. policy makers are set to offer Congress significant ways to ease regulation of banks, according to Senate hearings last Thursday. A key focus is how to simplify the Volcker Rule, which prevents banks from doing any proprietary trading. (read here).
Enforcement: A recent decision by the U.S. Supreme Court that curbed the government’s enforcement powers over Wall Street could hurt efforts to penalize private-equity managers over fees that the government considers were poorly disclosed to investors. (read here).
Cybersecurity: More than two dozen U.S. companies, including several big banks, have teamed up to establish shared principles that would allow them to better understand their cybersecurity ratings and to challenge them if necessary, the U.S. Chamber of Commerce said on Tuesday. Large corporations often use the ratings, the cyber equivalent of a FICO credit score, to assess how prepared the companies they work with are to withstand cyber-attacks. Insurers also look at the ratings when they make underwriting decisions on cyber liability. (read here).
FCA Asset Management Review: The Financial Conduct Authority’s final report into the UK’s asset management sector, which was published on Wednesday morning, raised plenty of fresh questions for fund managers, pension schemes, investment consultants and fund platforms. This push to reform the UK's £7 trillion asset management industry has garnered a mixed reception, with some predicting that the shake-up could drive certain managers out of the market. Designed to increase transparency and lower costs for investors, the FCA's 112-page report included recommendations that fund managers charge a single, “all-in” fee and strengthen the accountability of individuals in the organisation. (read here).
ESMA: The European Securities and Markets Authority is considering taking a tougher line on online tools popular with retail traders, while the UK financial watchdog also criticised trading firms for persistent weakness in their customer protections. In a statement, ESMA said it was “concerned” about the protections in place for armchair traders using products such as contracts for difference, which allow users to bet on the direction of a wide range of financial markets. (read here).
Financial Regulatory Reform: Ever since the financial crisis, the world’s policymakers have focused on eliminating the problem of banks that are “too big to fail”. But global regulation is set to take a new direction as top international rulemakers step down and the post crisis appetite for reform fades away. Mark Carney, Bank of England governor, is set to stand down as chairman of the Financial Stability Board, which recommends rules to the G20, by December after serving the maximum six-year term. Stefan Ingves is due to quit as chairman of the Basel Committee on Banking Supervision, which sets global minimum bank capital rules, by the end of the year. And at the Bank of International Settlements — the so-called “central banks’ central bank” that works alongside the FSB and Basel Committee in Basel, Switzerland — Agustín Carstens, governor of the Bank of Mexico, will replace Jaime Caruana as general manager in late 2017. (read here).