Implementation of Volcker Rule

On November 17, the Fed issued a proposed rule which would implement the conformance period (generally two years) during which banking entities and nonbank financial companies under the Fed’s supervision must comply with the Volcker Rule imposed by the Dodd-Frank Act.  Comments on the proposed rule must be submitted within 45 days after publication in the Federal Register. Fed ReleaseProposed Rule.

Rating Agency Updates

On November 18, Fitch noted that restrictions in dialogue between U.S. CMBS special servicers and rating agencies caused by SEC Rule 17g-5 may have the unintended consequence of producing unnecessary rating volatility. Fitch Release.

On November 16, S&P clarified its methodology and assumptions for assessing borrower-level SPEs in U.S. CMBS pools. S&P Release.

On November 17, Fitch updated its criteria for surveillance of U.S. fixed-rate CMBS transactions. Fitch Release.

On November 15, Fitch updated its criteria report outlining its methodology to analyze the credit quality of derivative product companies. Fitch Release. Fitch Report.

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Fed Guidelines for Bank Holding Company Proposals

On November 17, the Fed issued guidelines for evaluating proposals by large bank holding companies (BHCs) to undertake capital actions, such as increasing dividend payments or repurchasing or redeeming stock. The criteria provide a common approach to ensure that BHCs hold adequate capital to maintain ready access to funding, continue operations, and continue to serve as credit intermediaries under adverse conditions. Fed Release.

Rating Agency Developments

On November 9, Moody’s issued a request for comment on its proposed rating treatment of debt payment delays that are quickly remedied and do not result in realized losses to bondholders. The proposal is prompted by pending changes by DTC under which late or non-compliant payments by issuers or their agents to DTC will result in delayed payments to bondholders. Comments should be submitted by December 10.  Moody’s Release.

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: Free registration is required for Moody’s releases and reports.

Temporary Unlimited Coverage for Noninterest-Bearing Transaction Accounts

On November 9, the FDIC approved a final rule to implement Section 343 of the Dodd-Frank Act which provides temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts.  The coverage becomes effective on December 31, 2010 and ends on December 31, 2012. FDIC ReleaseFDIC Rule.

FDIC Proposals on Assessment Changes

On November 9, the FDIC proposed two rules which amend the deposit insurance assessment regulations.  The proposed rules would: (i) implement a provision in the Dodd-Frank Act that changes the assessment base so that it is based on assets rather than domestic deposits and (ii) change the deposit insurance assessment system for large institutions.  The proposed rules would be effective on April 1, 2011.  Comments on both proposed rules must be submitted within 45 days of publication in the Federal Register. FDIC ReleaseFDIC Proposed Rule 1. FDIC Proposed Rule 2.

SEC Approves Rules Prohibiting Market Maker Stub Quotes

On November 8, the SEC approved new rules to strengthen the minimum quoting standards for market makers and effectively prohibit “stub quotes” in the U.S. equity markets.  Executions against stub quotes represented many of the trades executed at extreme prices on May 6 and subsequently broken.  The rules require market makers in exchange-listed equities to maintain continuous two-sided quotations during regular market hours that are within a certain percentage band of the national best bid and offer.  The requirements become effective on December 6. SEC Release. SEC Rule.