Fee Rate Advisory #3 for Fiscal Year 2015

On January 15, the SEC announced that starting on Feb. 14, 2015, the fee rates applicable to most securities transactions will be set at $18.40 per million dollars.  Each SRO will continue to pay the Commission a rate of $22.10 per million for transactions occurring on charge dates through Feb. 13, 2015, and a rate of $18.40 per million for transactions occurring on charge dates on or after Feb. 14, 2015.  ReleaseOrder.

The Fed Forms Advisory Council

On January 16, the Fed announced the formation of a new advisory council that will be comprised of individuals with consumer- and community development-related expertise.  The council will meet semiannually with the Fed’s board to offer perspective on community and consumer needsRelease.

CFPB Finalizes Minor Changes to “Know Before You Owe” Rules

 On January 20, CFPB finalized two minor modifications to the “Know Before You Owe” mortgage disclosure rules. The changes, which were proposed in October 2014, address when consumers will receive updated disclosures after locking in an interest rate, and how consumers receive information regarding certain construction loans. The “Know Before You Owe” mortgage disclosure rule, including the changes finalized today, will be effective August 1, 2015ReleaseFinal Rule.

Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) Regulations 2015 Published

On January 13, 2015, the Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) Regulations 2015 were published.

The Regulations amend the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014 to introduce a systemic risk buffer (SRB) that will apply to ring-fenced banks (RFBs) and certain large building societies. This measure implements Articles 133 and 134 of the Capital Requirements Directive IV (CRD IV).

The Financial Policy Committee (FPC) will be responsible for setting out the framework for determining which institutions should hold the buffer and, if so, how large the buffer should be. It will need to publish this methodology by May 31, 2016. The Prudential Regulation Authority (PRA) will be responsible for applying the framework and will have ultimate discretion over which firms must hold the buffer and its size.

The Regulations were made on January 12, 2015 and come into force, unless otherwise stated, on May 31, 2016. The systemic risk buffer is applicable from January 1, 2019.  Regulations.

FCA Launches Consultation on Competition Powers

The Financial Conduct Authority (FCA) obtains concurrent competition powers on April 1, 2015, enabling it to enforce the prohibitions on anti-competitive behaviour in the Competition Act 1998 (CA98) and the Treaty on the Functioning of the European Union (TFEU) in relation to the provision of financial services. The FCA will also have powers to carry out market studies, and make market investigation references to the Competition and Markets Authority (CMA) under the Enterprise Act 2002 (EA02), in relation to the provision of financial services.

 On January 15, 2015, the FCA launched a consultation seeking views on draft guidance papers and amendments to the FCA handbook in relation to their exercise of these powers. Consultation closes on March 13, 2015.  Consultation.

JP Morgan Reaches Agreement in Principle to Settle Dispute Over $17.6B in MBS

On January 8, 2015, plaintiffs in a class action lawsuit against JP Morgan Chase informed the court that the parties had an agreement in principle to settle the case. The suit was initially commenced against Bear Stearns in August of 2008, and alleged that the bank misrepresented the underwriting process and the quality of the underlying loans in connection with $17.6 billion in RMBS. The settlement will be subject to approval by Judge Swain of the United States District Court for the Southern District of New York. Preliminary papers seeking such approval are scheduled to be filed on February 2, 2015.  Endorsed Status Report.

Delaware Chancery Court Revives Repurchase Litigation

On January 12, 2015, Vice Chancellor Laster of the Delaware Chancery Court granted the plaintiff’s motion for reargument and revived the breach of contract claims that the court had previously held to be untimely in Bear Stearns Mortgage Funding Trust 2006-SL1 v. EMC Mortgage Corp. and JPMorgan Chase Bank, N.A.. First, the court concluded that a controlling Delaware Supreme Court decision the parties had not previously identified required application of New York’s six year statute of limitations, rather than Delaware’s three-year limitation period. The lawsuit was commenced within six years of the alleged breach, rendering it timely under New York law. Second, the court alternatively reasoned (in dicta) that even assuming Delaware law applied, the action would be timely due to the contract’s accrual provision, which stated that the repurchase claims would not accrue until the plaintiff’s demands were refused. This constituted a “condition precedent” to the action that tolled accrual under Delaware law, a position New York courts have to date rejected. The Court further concluded that the accrual provision validly extended the statute of limitations as permitted by a recent Delaware statute, which permits parties to extend the period up to 20 years (under New York law, parties are not permitted to extend the limitations period by agreement).  Order.

FHFA Issues 2015 Scorecard for Fannie, Freddie and Common Securitization Solutions

On January 14, FHFA released the 2015 Scorecard​ outlining specific priorities for Fannie Mae, Freddie Mac and their joint venture, Common Securitization Solutions, LLC.  The Scorecard assesses Fannie and Freddie’s performance under FHFA’s Strategic Plan for Fannie and Freddie and furthers the goals outlined thereunder, including building a new single-family securitization infrastructure for use by the Enterprises.  ReleaseScorecardStrategic Plan.

ECON Publishes Draft Reports on Regulation on Banking Structural Reforms and Regulation on Securities Financing Transactions

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published two draft reports on (i) the proposed Regulation on banking structural reforms and (ii) the proposed Regulation on securities financing transactions.

Each of the draft reports contains a European Parliament legislative resolution on each of the Regulations which set out suggested amendments to the European Commission’s original proposals. The draft reports are to be considered by ECON during March 2015 and the European Parliament is scheduled to consider the Regulations at its plenary session on April 27 – 30, 2015.  Report (i)Report (ii).

ESMA Publishes Final Technical advice on the MiFID II Directive and MiFIR

On December 19, 2014, the European Securities and Markets Authority (ESMA) published final technical advice (ESMA/2014/1569) to the European Commission and a consultation paper (ESMA/2014/1570) on the MiFID II Directive (2014/65/EU) and MiFIR (the Markets in Financial Instruments Regulation (Regulation 600/2014).

The consultation paper includes draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the MiFID II Directive and MiFIR.  The consultation paper invites responses to the draft RTS and ITS by March 2, 2015, and responses will be used to finalise the draft RTS which will be sent to the Commission for endorsement by the middle of 2015.  Technical AdviceConsultation Paper.