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Regulatory Insights Banking February 2016

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Regulatory Insights Banking February 2016 ENTERPRISE RISK SOLUTIONS FEBRUARY 2016 BANKS Regulatory Insight NEWSLETTER Managing Editor Key Developments at a Glance Pierre -Etienne Chabanel The Basel Committee on Banking Supervision (BCBS) provided updates to their Basel III monitoring Managing Director, program including revisions to their Basel III monitoring workbook; new instructions and a workbook for Regulatory & Compliance Solutions CVA QIS; and a new FAQ on Basel III Monitoring. The Irving Fisher Committee of the Bank of Contact Us International Settlements (BIS) published a working paper entitled “Big data: The hunt for timely insights and decision certainty.” Americas +1.212.553.1653 The chair of the Financial Stability Board (FSB) specified the FSB’s 2016 work programmer to the G20. [email protected] Additionally, the FSB released a report on possible measures of non-cash collateral re-use by financial Europe market participants as banks. +44.20.7772.5454 [email protected] KEY DEVELOPMENTS PER REGION Asia-Pacific (Excluding Japan) > EUROPE: The European Banking Authority (EBA) published its final guidelines on cooperation +85.2.3551.3077 agreements between Deposit Guarantee Schemes (DGS). Separately, the EBA released the methodology [email protected] and macroeconomic scenarios for the 2016 EU-wide stress tests. The European Central Bank launched a Japan public consultation on assessing the eligibility of institutional protection schemes (IPSs). +81.3.5408.4100 The European Commission (EC) presented an Action Plan to strengthen the fight against terrorist [email protected] financing; Final Rules (CIR 2016/200) on leverage ratio disclosure; and a Final Decision (CID Sign Up 2014/908/EU) on third countries and territories whose supervisory and regulatory requirements are equivalent to certain EC rules. Subscribe at www.moodysanalytics.com/regulatoryinsight Switzerland’s FINMA provided guidelines and data collection forms for use in the Net Stabilized Funds to automatically receive your monthly copy. Reporting (NSFR) due to begin in the second quarter of 2016. The Netherland’s DNB provided instructions for its semi-annual Basel III monitoring program called Basel QIS 2016 as it includes additional data requests to assess the effects of several new international policy proposals. > MIDDLE EAST AND AFRICA: The IMF published its Financial System and Stability Assessment (FSSA) and selected issues reports on Morocco. > AMERICAS: The U.S. Federal Reserve (FED) proposed to modify and update the recordkeeping and disclosure requirements for the Truth in Lending Act (Regulation Z). The FED additionally proposed revisions to the reporting requirements for US Intermediate Holding Companies of Foreign Banking Organizations (FBOs). Canada’s Office of the Superintendent of Financial Institutions (OFSI) issued guidelines on the Margin Requirements for non-centrally cleared Derivatives. > ASIA PACIFIC: The Australian Prudential Regulation Authority (APRA) issued a consultation on margining risk and risk mitigation requirements for non-centrally cleared derivatives. The Hong Kong Monetary Authority (HMKA) released, as part of its Basel III implementation rules, a Countercyclical Capital Buffer (“CCyB”) Ratio Standard Disclosure Template. The Reserve Bank of India (RBI) published, as part of its Basel III Framework on Liquidity Standards, Liquidity Coverage Ratio (LCR) calculation instructions and reporting templates; Liquidity Risk Monitoring Tools; and LCR Disclosure Standards. ENTERPRISE RISK SOLUTIONS Table of Contents International 3 Europe 6 European Union 6 Austria 17 Belgium 18 Italy 19 Netherlands 20 Switzerland 22 United Kingdom 22 Middle East and Africa 26 Morocco 26 Americas 27 United States of America 27 Canada 31 Asia Pacific 32 Australia 32 Hong Kong 33 India 34 Malaysia 35 New Zealand 35 Glossary 36 2 FEBRUARY 2016 ENTERPRISE RISK SOLUTIONS International Key Developments Work Program for Mark Carney, Chair of the Financial Stability Board (FSB), sent a letter to G20 Finance Ministers and Central 2016 Bank Governors, setting out the FSB’s priorities for 2016: - FSB » April 2016: FSB climate-related risks task force (CRRTF) will publish for consultation, its first-stage report, February 27, 2016 setting out the objectives and scope of its work. FSB will report on issues for authorities, planned next steps, and potential financial stability implications of emerging financial technology innovations. Type of Information: Report » End-June 2016: FSB member jurisdictions will report to the FSB their plans to meet their commitments to remove legal and regulatory barriers to the reporting of OTC derivatives to trade repositories and facilitate authorities’ access to data by mid-2018. » July 2016: The FSB will publish its peer review on implementation of the Framework for Oversight and Regulation of Shadow Banking. » By September 2–3, 2016, the Hangzhou Summit: The International Monetary Fund (IMF), FSB, and Bank for International Settlements (BIS) will deliver to Leaders a review of international experience and lessons with macro-prudential policy frameworks and tools. Additionally, the FSB will: o deliver the second annual report on the implementation of reforms o publish a consultative document with its assessment of structural vulnerabilities associated with asset management activities and policy recommendations to address them o report its findings on the role of incentives in preventing misconduct, along with progress in addressing issues in fixed income, currency, and commodity markets o report on progress on its correspondent banking action plan o publish high-level guidance on resolution issues relating to central counterparties (CCPs) (The Committee on Payments and Market Infrastructures-International Organization of Securities Commissions, or CPMI-IOSCO will issue for public consultation additional granular guidance on CCP resilience and recovery) o deliver to Leaders a progress report on resolution reforms » End of 2016: The Task Force on climate-related risks (CRRTF) is expected to publish for consultation its recommendations for voluntary disclosure principles and leading practices. The FSB will issue for public consultation standards or guidance for CCP resolution planning, resolution strategies, and resolution tools. The Basel Committee on Banking Supervision (BCBS) will complete its work to address the excessive variability in risk-weighted assets, while aiming not to significantly increase the overall capital requirements. BCBS will also finalize the design and calibration of the leverage ratio in 2016, so that it can be implemented as a Pillar 1 measure by January 01, 2018. Furthermore, the FSB will make its annual update to the list of Global Systemically Important Insurers (G-SIIs), using the revised International Association of Insurance Supervisors (IAIS) methodology. The IAIS will also finalize in 2016, refinements to its assessment methodology for identifying global systemically important insurers and will issue, for public consultation, a first draft of its International Capital Standard. Links: Press Release, FSB Chair's Letter Keywords: G20, Roadmap Updates on Basel III BCBS updated the workbook (version 3.2.3), instructions, and frequently asked questions (FAQ) on Basel III Monitoring monitoring. Updates were also made to the workbook for Credit Valuation Adjustment Quantitative Impact Study (QIS) (version 1.0.0) and its instructions. - BCBS BCBS is monitoring the impact of Basel III global regulatory framework for more resilient banks and banking February 24, 2016 systems, Basel III leverage ratio framework and disclosure requirements, Basel III Liquidity Coverage Ratio (LCR) Type of Information: and liquidity risk monitoring tools, and Basel III Net Stable Funding Ratio (NSFR) on a sample of banks. The Statement exercise is repeated semi-annually, with end-December and end-June reporting dates. Links: Workbook 3.2.3, Basel III Monitoring: Instructions, FAQ, CVA QIS Workbook, CVA QIS Instructions Keywords: Basel III Monitoring, QIS 3 FEBRUARY 2016 ENTERPRISE RISK SOLUTIONS Principles for US and The International Swaps and Derivatives Association (ISDA) published a set of principles for achieving EU Trading Platform comparability determinations between US and EU trading platforms. Recognition The paper analyzes the regulatory frameworks in the US and EU, to determine whether EU trading platforms - ISDA should be deemed comparable with those in the United States. Underpinning the analysis is the principle that regulators should focus on broad outcomes and similarities, rather than conduct a granular rule-by-rule February 24, 2016 comparison of the two frameworks. Type of Information: Report In the EU, the revised Markets in Financial Instruments Directive and associated regulation (MIFID II/MIFIR) will introduce a requirement for certain derivatives to be traded on EU trading venues. In comparison, trade execution rules are already in place in the US, following the introduction of the swap execution facility (SEF) regime in October 2013. Under the current rules, US persons can only trade on platforms that have registered as SEFs, subject to the US Commodity Futures Trading Commission (CFTC) oversight. The paper argues that the CFTC should follow the principles outlined in a cross-border report published by the IOSCO and focus on similarities when making comparability determinations. If EU trading venues are determined to achieve the same objectives and protections as per the core principles
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