The Washington Report for week ended December 15, 2017 | KPMG | US

Washington Report 360 | December 15, 2017

The Washington Report for week ended December 15, 2017

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Highlights

  • The Federal Reserve requested comment on proposals to increase the transparency of its stress testing program, including transparency in the models used to estimate hypothetical losses.
  • The CFTC exempted certain EU-authorized trading facilities from requirements to register as swap execution facilities and issued MiFID II-related interpretive guidance clarifying commodity trading adviser registration requirements. MIFID-II requirements become effective January 3, 2018.
  • The FTC and FCC announced a new MOU to coordinate enforcement of internet service providers’ consumer protection compliance. Interestingly, this comes at a time when the FCC voted to adopt its Restoring Internet Freedom Order, which repeals net neutrality rules.
  • SEC Chairman Jay Clayton warned "main street investors" and "market professionals" of the risks of investing in cryptocurrencies and initial coin offerings (ICOs). CFTC Chairman Christopher Giancarlo followed Clayton in this warning to market participants.

Financial services policy news

The FTC and FCC announced they will enter into an MOU to coordinate enforcement of internet service providers’ consumer protection compliance. The MOU takes effect upon the effective date of the Restoring Internet Freedom Order.

SEC Chairman Jay Clayton warned "main street investors" and "market professionals" of the risks of investing in cryptocurrencies and initial coin offerings (ICOs). CFTC Chairman Christopher Giancarlo supported the statement and said investors should be aware that these markets are largely unregulated and have the potentially for high volatility and risk.

The Federal Reserve will remove the Strength of Support Assessment (SOSA) from its supervision of foreign banking organizations (FBO) and has proposed amendments to its Payment System Risk Policy to remove reliance on an FBO’s SOSA rankings or financial holding company status.

The Federal Reserve announced final plans to publish three new reference rates in the second quarter of 2018, based on Treasury-backed overnight repurchase agreement transactions.

FINRA issued a report on recent examinations that highlight its findings in six areas: cybersecurity, outside business activities and private securities transactions, anti-money laundering, product suitability, best execution, and market access controls.

The FDIC and the EU's Single Resolution Board concluded a Cooperation Arrangement to exchange information and cooperate in resolution planning for financial services organizations with EU and U.S. operations.

 

Financial services legislative and regulatory news

The Federal Reserve requested comment on proposals to increase the transparency of its stress testing program, including information for a range of loss rates, portfolios of hypothetical loans, and detailed descriptions of the models used to estimate losses.

The CFTC exempted certain EU-authorized trading facilities from requirements to register with the CFTC as swap execution facilities, based on a determination that requirements under EU laws satisfy the U.S. standard.

The CFTC issued interpretive guidance clarifying MiFID II commodity trading advisor registration requirements, which states that a futures commission merchant (FCM), swap dealer (SD), or introducing broker (IB) that receives separate payment for trading advice is not required to register as an advisor if the advice is "solely incidental" to the FCM's or SD's business or “solely in connection with” the IB’s business.

The House of Representatives passed the Financial Institution Customer Protection Act of 2017, which would generally require federal banking agencies to provide written justification of a request to terminate or restrict a customer’s account. It also passed the Investor Clarity and Bank Parity Act to allow a hedge fund or private equity fund to share a name with a bank-affiliated investment adviser that manages the fund.

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