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Prosek’s Financial Regulation Roundup – May 5, 2017

Rupert Eyles

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:


  • The House Financial Services Committee passed the Financial CHOICE act this week, intended to repeal large swathes of the Dodd-Frank Act. Specifically, the bill would relieve banks of some regulatory requirements as long as they meet certain capital standards. It would also subject banks to stress tests biennially instead of every year; repeal the Volcker rule, which restricts how banks invest taxpayer-insured deposits; and force failing firms to go through bankruptcy. (read here).

Puerto Rico

  • With its creditors at its heels and its coffers depleted, Puerto Rico sought bankruptcy relief in federal court on Wednesday. This is the first time in history that an American state or territory has taken the extraordinary measure. (read here).


  • On Tuesday, the Senate approved the nomination of Jay Clayton to lead the Securities and Exchange Commission. He will enter office without a checklist of regulations mandated by Congress, and instead will prioritize finding ways to reverse a trend of the government implementing new regulations on public companies. (read here).


  • According to a survey by corporate finance adviser Duff & Phelps, just 36% of financial services firms that are subject to MiFID II are confident they will be able to comply with the regulation by the January 2018 implementation date. (read here).

AI in Regulation

  • Following IBM Watson’s progress in the healthcare space, the AI is now turning its gargantuan machine learning intellect towards financial regulation. This follows IBM’s acquisition last year of Promontory Financial Group, a global compliance consultancy run by former top level regulators, who will combine their expertise with Watson's cognitive abilities. (read here).

E.U. News:

 Bank of England Code of Conduct

  • The Bank of England is calling on all participants in the UK’s money markets, from banks to local authorities and hedge funds, to sign up to a code of conduct intended to clean up the City of London’s reputation following a series of benchmark-rigging scandals. As part of the code, all participants in the money markets, whether they are regulated financial firms or not, sign up to six core principles around ethics, governance, information-sharing and confidentiality. (read here).

London’s Euro-Clearing Market

  • This week a draft communication has been leaked to the press stating that the European Commission is preparing to issue legislative proposals that would impose restrictions on London’s huge market for clearing euro-denominated financial transactions. This draft Commission policy communication, that is reportedly due to be published as early next week, advocates that current supervisory arrangements are enhanced. The full legislation could follow in June. (read here).

Regulation on Whistleblowers

  • On Wednesday, the FCA announced that foreign banks with a British branch will be expected to inform UK-based staff that they can blow the whistle in confidence to the FCA or its sister regulator, the Bank of England’s Prudential Regulation Authority. However, the FCA has confirmed it will not be pursing the US style ‘bounty’ system favoured by the SEC despite suggestions made during the consultation period. (read here).


The FCA has published final rules on PRIIPs (Packaged Retail and Insurance-based Investment Products), clarifying which investment vehicles will be exempt from the new regulations. In a new paper, the regulator laid out which products will be affected following feedback to its consultation paper issued last July. Europe-wide PRIIPs legislation requires firms to prepare, publish and provide a Key Information Document (KID) for each PRIIP manufactured, however implementation of the regime was delayed until 1 January 2018 as the European regulatory authorities disagreed about what information should be included in the documents (read here). 

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