Wednesday, February 25, 2015

Basel Banking Supervision Committee Priorities for 2015-2016

Author: David Schwartz J.D. CPA
The Basel Committee on Banking Supervision has announced its planned areas of focus for 2015 and 2016 as it continues to propose and finalize the remaining elements of its Basel III regulatory reform agenda. The Committee will continue to pursue its post-crisis reform agenda, but will now look toward restoring confidence in capital ratios, ensuring consistency across the regulatory framework, monitoring and assessing the implementation of the framework, and improving the overall effectiveness of supervision. 
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Wednesday, October 23, 2013

In With the New: Federal Reserve and OCC Issue Final Risk-Based and Leverage Capital Rules

Author: David Schwartz J.D. CPA

The Office of the Comptroller of the Currency (OCC) and Board of Governors of the Federal Reserve System (Fed), published final rules in the Federal Register on October 11, 2013 revising risk-based and leverage capital requirements for banking organizations and replacing existing interim rules. The final rules consolidate three separate notices of proposed rulemaking that the OCC, Board, and FDIC published in the Federal Register on August 30, 2012, with selected changes. The rules establish a new regulatory capital framework that incorporates Basel III standards and other elements. The rule applicable to all national banks and federal savings associations "strengthens the definition of regulatory capital, increases risk-based capital requirements, and amends the methodologies for determining risk-weighted assets." Pursuant to a schedule of transition periods, the rule is effective for advanced approaches banks on January 1, 2014, and for all other banks on January 1, 2015.

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Sunday, October 14, 2012

Global Derivatives Reforms. Getting it Right the First Time.

Author: David Schwartz J.D. CPA
[G]lobal interconnections within the swap markets require cross-border regulatory cooperation and harmonization, as no one national regulator is equipped with the resources necessary to regulate comprehensively every participant in its local market nor every market in which its local institutions participate. At the same time, these global interconnections increase the potential for conflicting national implementation of regulatory reform to have adverse effects on the markets and market participants, especially if applied extraterritorially.
              -- August 27, 2012 Letter from the IIB to the CFTC

Concern mounts among regulators, legislators, and industry players about the international effects of regulating OTC derivatives.  Principally, they are worried about the lack of coordination among the CFTC, SEC, and their global counterparts, and the effect conflicting rules may have on the derivatives markets and the activities of firms with international operations.  As the deadlines loom for Dodd-Frank and Volker Rule implementation, influential voices are raising the alarm about potential harm to the US economy and investors, and making the case for a more coordinated and thoughtful regulatory effort with regard to OTC derivatives.
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Wednesday, July 25, 2012

Basel and IOSCO Float Margin Requirements for Non-centrally-cleared Derivatives

Author: David Schwartz J.D. CPA
The Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) jointly have published a consultative paper on margin requirements for non-centrally-cleared derivatives. The paper presents the initial policy proposals emerging from the Basel Committee and IOSCO joint Working Group on Margining Requirements. 

The new margin requirements contemplated by the consultative paper are intended to articulate with other G-20 measures to reduce the systemic risk posed by the growing OTC derivatives market. Similar to the swaps and OTC rules recently adopted by the SEC and CFTC in the United States, these Basel and IOSCO proposals include mandatory central clearing and electronic trading of standardised OTC derivatives, and trade reporting of all OTC derivatives contracts.
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