Formal Regulatory Remedies - Center for the Study of Financial Market Evolution (CSFME)

Regulators Want ESG Funds to Justify their Strategies

by David Schwartz J.D. CPA | Thursday, October 29, 2020 | All, Formal Regulatory Remedies

Today the Department of Labor (DOL) issued final rules clarifying the regulatory guideposts for fiduciaries of private-sector retirement and other employee benefit plans in light of recent trends involving environmental, social, and governance (ESG) investing. The DOL is not the only regulator with ESG funds in their cross-hairs. The Securities and Exchange Commission (SEC) has begun verifying asset managers’ and mutual funds’ ESG strategies through examination and is considering amending the mutual fund “name test rule” to ensure funds are living up to their ESG promises to shareholders.

ESMA Takes a Look at Tax Withholding Schemes

by David Schwartz J.D. CPA | Tuesday, March 19, 2019 | All, Formal Regulatory Remedies, Procedural Changes

The European Securities and Markets Authority (ESMA) has published the findings of its preliminary study of multiple withholding tax (WHT) reclaim schemes. ESMA conducted this preliminary study at the request European Parliament (EP) and has launched another more formal inquiry to gather further evidence from national competent authorities (NCAs) on the supervisory practices and experience regarding those schemes.

The study published on July 2, 2019 assesses how widespread WHT reclaim schemes are across the EU and any potential methods for preventing and detecting them. While WHT schemes are not strictly illegal and “do not necessarily imply breaches of the market abuse or short selling regimes, they may affect the integrity of securities markets and individual firms.” ESMA found that WHT reclaim transactions are being investigated in Germany, Denmark, and Austria.

BIS Issues Further LCR Guidance

by David Schwartz J.D. CPA | Tuesday, December 19, 2017 | All, Change Overview and Rationale, Formal Regulatory Remedies

On June 8, 2017, the Basel Committee on Banking Supervision (BIS) issued a second set of frequently asked questions (FAQs) and answers on Basel III’s Liquidity Coverage Ratio (LCR).

Fed Reports Post-Crisis Regulation Affecting Bond Market Liquidity

by David Schwartz J.D. CPA | Thursday, October 19, 2017 | All, Change Overview and Rationale, Formal Regulatory Remedies

In its semi-annual Monetary Policy Report submitted to Congress on July 7, 2017, the Federal Reserve Board indicated that regulatory reforms since the global financial crisis “have likely altered financial institutions’ incentives to provide liquidity.” The Fed found that In recent years, market participants have been particularly concerned with liquidity conditions in the corporate bond market.

GOP Congressmen Warn the Fed to Freeze their Rules

by David Schwartz J.D. CPA | Tuesday, September 19, 2017 | All, Change Overview and Rationale, Formal Regulatory Remedies

On February 23, 2017 House Financial Services Committee Chairman Rep. Jeb Hensarling (R-TX) and 33 GOP members of the Committee sent a letter to Federal Reserve Chair Janet Yellen requesting that the Fed “neither propose nor adopt any new rules until the U.S. Senate confirms a [Federal Reserve] Vice Chairman for Supervision.”

BIS Issues New Consultation on G-SIBs

by David Schwartz J.D. CPA | Tuesday, September 19, 2017 | All, Formal Regulatory Remedies

On March 30, 2017, the Basel Committee on Banking Supervision (BIS) issued a consultation proposing changes to the framework employed to designate global systemically important banks (G-SIBs). The consultation also proposes higher capital requirements on G-SIBs. The revised G-SIB assessment framework supersedes the framework proposed by BIS in July of 2013, a process BIS has committed to revisit every three years. This latest revision maintains the previously adopted system assessing the relative systemic importance of internationally active banks based on 12 indicators in five categories, resulting in a score that measures the systemic importance of each bank. The bank’s overall score is then mapped to buckets that are associated with a higher loss absorbency (HLA) capital requirement.

Fed Chair Rejects Regulatory Roll-back

by David Schwartz J.D. CPA | Sunday, August 27, 2017 | All, Change Overview and Rationale, Formal Regulatory Remedies

Federal Reserve Chairwoman Janet L. Yellen strongly defended post-crisis financial reforms, saying that new regulations have strengthened the U.S. financial markets and wholesale roll-back would be unwise. In remarks delivered at a symposium sponsored by the Fed in Jackson Hole, Wyoming Yellen made the case for the success of these reforms, summarizing indicators and research that show the improved resilience of the U.S. financial system, due, she said, “importantly to regulatory reform as well as actions taken by the private sector.”

FSB Issues Recommendations for Asset Management Vulnerabilities

by David Schwartz J.D. CPA | Saturday, August 19, 2017 | All, Formal Regulatory Remedies

On January 12, 2017, the Financial Stability Board (FSB) published its Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities. The FSB published a consultation on this topic in June of 2016, and the January publication incorporates comments received from over 50 respondents including asset managers and their trade associations, banks, pension funds, other financial intermediaries, and individuals. These policy recommendations are part of the FSB’s larger effort launched in 2015 to understand and address potential financial stability risks from structural vulnerabilities associated with the rapidly growing global asset management industry. The recommendations are designed to provide authorities and asset management entities with the tools and data to effectively detect and address the identified risks.

Risk Management Still at the Heart of Financial Regulation

by David Schwartz J.D. CPA | Monday, August 07, 2017 | All, Change Overview and Rationale, Formal Regulatory Remedies

In an August 2, 2017 address, President and CEO of the Federal Reserve Bank of Cleveland Loretta J. Mester advocated a fresh risk assessment to recalibrate financial regulations and right-size them to ease the burden on smaller banks. Ms. Mester proposed “tiering of oversight by risk,” thereby relieving community banks from much of the regulation intended for larger banks whose activities present different and larger risks to the greater financial system than those of smaller institutions.

Fed Nominee Favors Regulatory Refinement and Transparency

by David Schwartz J.D. CPA | Thursday, July 27, 2017 | All, Formal Regulatory Remedies

At his July 27, 2017 confirmation hearing before the Senate Banking Committee, Randal Quarles testified that if confirmed he would advocate not for a rollback, but a reexamination of post-crisis reforms. He also advocated for better transparency on the part of regulators, and promised to approach the position with an open mind and in cooperation with the members of the Committee.

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Formal Regulatory Remedies