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On March 25, the United Kingdom’s Financial Conduct Authority (FCA) issued a statement addressing the potential impact of Covid-19 on firms’ LIBOR transition plans. While the FCA states that the assumption that firms cannot rely on LIBOR being published after the end of 2021 is unchanged, it acknowledges that Covid-19 has impacted the timing of some aspects of the transition programs for many firms. The FCA states that it will continue to assess the impact on transition timelines and will update the market as soon as possible.
Find continuing InfoBytes coverage on LIBOR here.
On September 18, the CFPB published a notice in the Federal Register seeking comments on the use of Tech Sprints—forums which gather “regulators, technologists, financial institutions, and subject matter experts from key stakeholders for several days to work together to develop innovative solutions to clearly-identified challenges”—as a means to encourage regulatory innovation and collaborate with stakeholders on forming solutions to regulatory compliance challenges. The Bureau notes that Tech Sprints have been successfully used by the U.K.’s Financial Conduct Authority, which has organized seven Tech Sprints since 2016, resulting in a pilot project on digital regulatory reporting. The Bureau is interested in using Tech Sprints to, among other things: (i) leverage cloud solutions and other developments that may reduce or modify the need for regulated entities to transfer data to the Bureau; (ii) continue to innovate the HMDA data submission process; (iii) identify new technologies and approaches that can be used by the Bureau to provide more cost-effective oversight of supervised entities; and (iv) reduce other unwarranted regulatory compliance burdens. Comments must be received by November 8.
On March 29, the SEC and the United Kingdom (UK) Financial Conduct Authority (FCA) signed two updated Memoranda of Understanding (MOU) to continue their cooperation and information sharing with respect to the “effective and efficient oversight of regulated entities across national borders.” The MOUs will come into force on the date EU legislation ceases to have direct effect in the UK, should the UK withdraw from the EU.
The first MOU is a supervisory arrangement covering regulated entities operating across national borders. The MOU—originally signed in 2006—includes updates to increase the scope of covered firms under the MOU to include firms that carry out derivatives, credit rating, and derivatives trading repository businesses. The update will reflect “the FCA’s assumption of responsibility from the European Securities and Markets authority for overseeing credit rating agencies and trade repositories in the event of the UK’s withdrawal from the EU.”
The second MOU—originally signed in 2013—provides a supervisory cooperation and exchange of information framework related to the supervision of covered entities operating within the alternative investment fund industry. The updates ensure that covered entities including investment advisers, fund managers, and private funds “will be able to continue to operate on a cross-border basis without interruption” in the event of a withdrawal.
On January 31, the United Kingdom’s Financial Conduct Authority (FCA) announced that the Global Financial Innovation Network (GFIN) officially launched and is now seeking cross-border testing applications. As previously covered by InfoBytes, in August 2018, the FCA announced the creation of the GFIN in collaboration with 11 other global financial regulators. The network has now expanded to include 29 organizations, including financial regulators and other related entities, committed to supporting financial innovation. The GFIN has three primary functions: (i) to collaborate on innovation and to provide accessible regulatory contact information for firms; (ii) to provide a forum for joint regulation technology work; and (iii) to provide firms with an environment in which to trial cross-border solutions.
The announcement states that the network has opened a one month application window for firms interested in joining a pilot cohort for cross-border testing for new technologies. Firms interested in participating are required to meet the application requirements of all the jurisdictions in which they would like to test. Each applicable regulator will decide whether the firm’s proposed test meets the screening criteria and ensure safeguards are in place in their jurisdiction for testing. The deadline for testing applications is February 28.
On August 7, the United Kingdom’s Financial Conduct Authority (FCA) announced the creation of the Global Financial Innovation Network (GFIN) in collaboration with 11 global financial regulators, including the CFPB. As set forth in the GFIN Consultation Document, the three major functions of the initiative are: (i) information sharing among regulators on topics including emerging technologies and business models; (ii) providing a forum for joint policy work; and (iii) instituting “cross-border trials” to create a testing environment for companies as they deal with global regulatory challenges. GFIN’s intention is to serve as an efficient way for innovative fintech firms to interact with regulators and promote transparency, and plans to explore the concept of a “global sandbox” to create opportunities for these firms to test new financial services and products such as artificial intelligence, distributed ledger technology, and initial coin offerings in multiple jurisdictions.
In a press release issued the same day, the Bureau noted that the decision to join the group is a demonstration of its “commitment to promoting innovation by coordinating with state, federal and international regulators.” Acting Director Mick Mulvaney further commented, “We look forward to working closely with other regulatory authorities—whether in the United States or abroad—to facilitate innovation and promote regulatory best practices in consumer financial services.”
The working group seeks multi-jurisdictional comments on the Consultation Document to assess feedback on its proposed mission, function, and priorities. U.S. persons can submit comments through the Bureau’s Office of Innovation or through the FCA and other regulators. Comments must be received by October 14.
On April 22, the Financial Conduct Authority (FCA) fined a subsidiary of U.S.-based bank approximately £13 million ($19.8 million) for (i) improperly reporting more than 35 million various client transactions, ranging from the identity of counterparties to the trading times of such transactions; and (ii) failing to report an additional 121,000 transactions over a seven-year period. According to the final notice issued by the FCA, many of the reporting issues were self-reported to the British regulator.
On October 30, five federal agencies - the FCA, FDIC, NCUA, OCC and the Fed - issued a proposed rule regarding flood insurance. The proposed rule will amend regulations relating to loans secured by property located in special flood hazard areas. Specifically, the proposed rule would (i) establish requirements in connection with the escrow of flood insurance payments; (ii) provide certain borrowers with the option to escrow flood insurance premiums and fees; and (iii) eliminate the HFIAA requirement “to purchase flood insurance for a structure that is part of a residential property located in a special flood hazard area if that structure is detached from the primary residential structure and does not also serve as a residence.” Comments on the proposed rule are due by December 29, 2014.
On September 12, in advance of expected legislation that will restructure the United Kingdom's financial services regulatory framework, the Financial Services Authority (FSA) published the first in a series of Consultation Papers meant to support implementation of the reforms. The Parliament is expected to finalize later this year the Financial Services Bill that will abolish the FSA, create the Financial Conduct Authority (FCA) to regulate financial service provider conduct in retail and wholesale markets, and shift safety and soundness regulation to the new Prudential Regulation Authority (PRA), among other changes. The first Consultation Paper outlines changes to split the existing FSA handbook into new rulebooks for the FCA and PRA. All regulated firms are encouraged to review the Consultation Paper, and the FSA has asked for comments to be submitted by December 12, 2012.
- Daniel R. Alonso to discuss "The international compliance situation and new challenges" at the World Compliance Association Covid Compliance Conference
- Benjamin W. Hutten to discuss "Understanding OFAC sanctions" at a NAFCU webinar
- Garylene D. Javier to discuss "Navigating workplace culture in 2020" at the DC Bar Conference