Being better informed: February 2014

In contrast to the persistent deluge and flooding outside, the regulatory agenda was a bit quieter in January than in recent months, but international and EU regulators issued some significant proposals to advance the long-running G20 initiatives.

We’ve added two catchy new acronyms to the ever-increasing alphabet soup of global financial regulation. First, the Financial Stability Board and International Organisation of Securities Commissions brought out their consultation on the methodology for determining “non-bank and non-insurer global systemically important financial institutions” – aka NBNI G-SIFIs. They think this list could include a very wide range of market participants – including key market infrastructure, investment funds, asset managers, market intermediaries and finance companies.

Then the European Commission brought us its proposed Regulation on reporting and transparency of securities financing transactions (SFTs), which captures securities lending and repurchase agreements. The Regulation calls for increased reporting to both investors and regulators on SFTs but does not really tackle any root issues in this market.

That proposal was accompanied by a proposed Regulation on structural measures improving the resilience of EU credit institutions. This measure is the EU’s attempt at reforming the banking system, similar to the Banking Reform Act in the UK and Volcker Rule in the US.

In other news in January:

  • We saw  political agreement on MiFID II, a key milestone. We would expect MiFID II to come into force in summer 2014. It will introduce new requirements on distributing products, market data reporting, corporate governance and third country firms’ access to the EU market.
  • The European Insurance and Occupational Pensions Authority (EIOPA) published its timeline for publishing Solvency II standards and guidelines ahead of the 1 January 2016 implementation date.
  • The FCA finally completed the Alternative Investment Fund Managers Directive for firms by publishing its AIFM Remuneration Code and accompanying guidance.
  • The PRA published its first consultation on a new PRA Rulebook, which will replace the joint FCA/PRA rulebook which has been in use since the FSA was split up last April.  

Finally, the Basel Committee published a number of updates to its liquidity coverage ratio, net stable funding ratio and leverage ratio. Our feature this month will provide you with an in-depth review of the changes and how they will impact banks. 

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