The Washington Report for week ended December 21, 2017 | KPMG | US
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Washington Report 360 | December 21, 2017

The Washington Report for week ended December 21, 2017

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Highlights

Multiple issuances related to stress testing and resolution and recovery:

  • The Federal Reserve adopted its proposal to extend for three years its capital assessments and stress testing information collection.
  • The FDIC and Federal Reserve accepted the resolution plans of the eight largest domestic banking organizations.
  • The Basel Committee released a consultative document on stress testing principles and a range of practices report on supervisory and bank stress testing.
     

Heightened regulatory attention on cryptocurrency, as evidenced in CFTC and FSOC issuances.

  • CFTC issued a Customer Advisory on the risks of purchasing virtual currencies (similar to the recent statement by SEC Chairman Clayton). CFTC also issued a Proposed Interpretation of its authority over retail commodity transactions involving virtual currency transactions.
  • In its annual report, the SOC encouraged regulators to study and monitor the impacts of new products, including virtual currencies, on consumers and the markets.

Financial services policy news

The Financial Stability Oversight Council (FSOC) published its 2017 annual report, which discussed potential threats from cyberattacks as well as new products, such as cryptocurrencies, recommended measures to minimize regulatory overlap and tailor regulations to financial institutions, and recommended continued evaluation and assessment of rules and standards applicable to financial market utilities and central counterparties, and money market mutual funds.

Financial services legislative and regulatory news

  • The Federal Reserve adopted its proposal to extend for three years its capital assessments and stress testing information collection (FY Y-14A/Y/M) as well as to include certain large U.S. intermediate holding companies (IHCs) of foreign banking organizations in the global market shock component of stress testing.
  • The FDIC and Federal Reserve accepted the resolution plans of the eight largest domestic banking organizations. Four firms had "shortcomings" in their plans, which will require additional work in their next plan. All firms need to do more work on intra-group liquidity; internal loss-absorbing capacity; derivatives; and payment, clearing, and settlement activities.
  • The Basel Committee released two reports related to stress testing: a consultative document on stress testing principles, which proposes to replace the principles published in May 2009, and a range of practices report on supervisory and bank stress testing, which reports significant advances in stress testing methodologies and infrastructure among banks and authorities

Attention on cyrptocurrency:

  • The CFTC issued a Proposed Interpretation of the “actual delivery” exception to CFTC oversight as it would apply to retail commodity transactions involving virtual currency transactions.
  • The CFTC released a Customer Advisory that details the risks of purchasing virtual currencies in the cash, futures, and options markets. Separately, the CFTC launched a virtual currency web page to function as a central repository for Commission-produced resources about virtual currencies.

The Federal Reserve published a final rule to repeal its Regulation C (Home Mortgage Disclosure), which was superseded by CFPB rules, and a proposed rule to revise its Regulation M (Consumer Lending) to limit the scope of Regulation M in response to the CFPB's rulemaking authority for the Consumer Leasing Act.

The House of Representatives passed a bill to replace the $50 billion SIFI designation threshold with activity based standards consistent with the Treasury's recommendations. The bill now goes to the Senate for consideration, however, earlier this month the Senate separately passed its own bipartisan bill that would raise the SIFI threshold to $250 billion.

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