Financial Regulatory Forum

IA brief: Accuracy on assets reporting is crucial for upcoming amendment filing

By Jason Wallace, Compliance Complete

NEW YORK, Mar. 11 (Thomson Reuters Accelus) - The end of March is a crucial milestone of the annual compliance program for most registered investment advisers and exempt reporting advisers (ERA’s).

Every registered adviser and ERA must update their Forms ADV Part 1 and 2A within 90 days of its fiscal-year end, and that is March 31, 2014 for advisers whose fiscal year ended December 31. (more…)

Compliance Insight: The challenge of implementing new international credit derivatives definitions

By Abel Picardi, Compliance Complete

NEW YORK, Mar. 6 (Thomson Reuters Accelus) – The International Swaps and Derivatives Association, Inc. (ISDA) has announced that its 2014 ISDA Credit Derivatives Definitions will go live from September 2014, creating a challenge for firms to implement the necessary operational and infrastructure changes.

In a press release earlier this month, ISDA highlighted that the revised version of the 2003 ISDA Credit Derivatives Definitions will contain the basic terms used in the documentation of most credit derivatives transactions. Furthermore, the announcement also indicated that the ISDA Credit Steering Committee (CSC) has been working over the past three months with infrastructure providers and clearing houses to develop an appropriate implementation schedule, “including an assessment of the various changes to existing infrastructure that are necessary to support the change.” (more…)

“Big data” tools will improve regulatory oversight, FINRA’s di Florio says

By Stuart Gittleman, Compliance Complete

NEW YORK, Feb. 25 (Thomson Reuters Accelus) - The Financial Industry Regulatory Authority is developing a suite of “big data” information sources and analytics to improve regulatory oversight of securities firms, according to Carlo di Florio, FINRA’s chief risk officer and head of strategy.

Leveraging technology and analytics can make for a “unique moment in regulation [that lets regulators] see things they couldn’t have seen or understood as well before,” di Florio said at an event this week hosted by the Securities Industry and Financial Markets Association compliance and legal society. (more…)

Regulators have several options in dealing with CLOs under Volcker rule – law firm analysis

 By Henry Engler, Compliance Complete

NEW YORK, Feb. 20 (Thomson Reuters Accelus) – In assessing what to do with collateralized loan obligations under the Volcker rule, regulators have several options, some that are better than others for the banking industry, a leading law firm advised clients on Monday this week.

The five regulatory agencies charged with implementation of the Volcker rule have come under fire from U.S. legislators over the Volcker rule’s treatment of collateralized loan obligations (CLOs), an issue the regulators said was at the top of their list of unintended consequences. In essence, CLOs are treated as hedge fund investments under the rule, which was finalized on December 10, 2013. Such treatment came as shock to the industry, and led to a sharp decline in new issuance, with RBS reporting a 60 percent drop in January. (more…)

Volcker rule enforcement: Regulators attempt a united front

By Henry Engler, Compliance Complete

NEW YORK, Feb. 19 (Thomson Reuters Accelus) - The question of which regulator will take the lead in enforcing the complex Volcker rule took center stage this week, as U.S. lawmakers voiced concern over the lack of clear leadership among the five agencies in charge of the statute.

In testimony before the House Financial Services Committee on Wednesday, the heads of the five agencies — the Federal Reserve, Office of the Comptroller of the Currency, Securities Exchange Commission, FDIC, and Commodities Futures Trading Commission – found themselves questioned repeatedly over which agency was at the helm. (more…)

Big banks fall short on data requirements, but regulators may share in the blame

By Bora Yagiz, Compliance Complete

NEW YORK, FEB. 11 (Thomson Reuters Accelus) – An international study for a bank regulators’ group has found deficiencies in the way banks measured and reported counterparty exposures. But the regulators themselves may share responsibility for the shortcomings, as they have provided little specific guidance for the banks.

The report by the Senior Supervisors Group (SSG) –a forum of senior officials from banking regulatory agencies of several countries– found that 19 participating large banks fall short in some areas of data aggregation and quality. The report was based on the banks’ own self-assessments. (more…)

IA brief: SEC examiners give first look at hedge fund exam findings

By Jason Wallace, Compliance Complete

NEW YORK, Feb. 11 (Thomson Reuters Accelus) - Last week, representatives of the Securities and Exchange Commission gave the first of many reports concerning its “presence exam” initiative for conducting initial regulatory exams of private advisers, and reported a lower rate of deficiencies compared with regular exams. The panel highlighted exam findings and staff observations concerning investment conflicts, marketing, valuation and custody.

The Dodd-Frank Act required approximately 1,500 private advisers to register with the SEC in 2012 – resulting in a current population of approximately 4,000 registered private advisers. (more…)

Financial Regulation in 2014: The Dust Hasn’t Settled For Compliance

By Compliance Complete, Thomson Reuters Accelus staff

The year 2013 saw a raft of new legislation stemming from regulators worldwide and 2014 looked like the year in which the dust would settle and that compliance professionals could spend focusing on implementing those changes. However, this has not been the case and compliance staff are still operating in a changing environment, where political pressures and cultural inertia mean that it is hard to pause for breath.

This year will still be one of implementation in a world that in some respects has not changed over the past seven years. A number of serious challenges will have to be tackled in 2014. They range from the international reach of the U.S. Foreign Account Tax Compliance Act, the Volcker rule and cross-border derivatives regulations, to the minute complexities of the European Market Infrastructure Regulation.

Read this in-depth special report from Thomson Reuters that looks at an array of regulatory initiatives and their impact on the current global economy and political world. Gain a better understanding of what 2014 will bring to market participants and how businesses should prepare to face the regulatory changes.

Small banks await regulatory fix on Trust Preferred Securities portion of the Volcker rule for capital decisions

By Bora Yagiz, Compliance Complete

NEW YORK, Jan. 24 (Thomson Reuters Accelus) - Banks that have relied over the years on a special type of assets to fulfill their capital requirements may soon have to restructure their investment portfolios to bring it in line with the Volcker rule limiting risky trading by banks. At stake is the treatment of the Trust Preferred Securities (TRuPS), whose inclusion as “investments in entities referred to as covered funds” such as collateralized loan obligations and collateralized debt obligations, would oblige banks to divest them in compliance with the Volcker rule.

The intent behind the complex Volcker rule is clear. It is aimed at limiting the exposure of banks to certain type of “covered funds” such as hedge funds or private equity funds to 3 percent, and to prevent them from engaging in proprietary trading, namely, trading with their customers’ funds for their own short term gains rather than trade on their clients’ behalf. It is, therefore, a rule to make banks’ investments less risky and more transparent. (more…)

Regulators release public portions of resolution plans for smaller banks

By Bora Yagiz, Compliance Complete

NEW YORK, Jan. 16 (Thomson Reuters Accelus) – The Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) released the public portions of resolution plansfor 116 institutions that submitted plans for the first time in December 2013, a group comprising smaller banks affected by Dodd-Frank requirements for winding-up plans.

The Dodd-Frank Act requires that bank holding companies (and foreign companies treated as bank holding companies) with total consolidated assets of $50 billion or more and nonbank financial companies designated for enhanced prudential supervision by the Financial Stability Oversight Council periodically submit resolution plans to the Federal Reserve Board and the FDIC. Each plan must describe the company’s strategy for rapid and orderly resolution in the event of material financial distress or failure of the company, and include both a public and confidential section. (more…)

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