Posts by: Charlie McDonald

CFTC’s Division of Market Oversight Supplements No-Action Relief to SEFs and DCMs from Certain CFTC Regulations for Correction of Errors

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On January 8, the Commodity Futures Trading Commission (CFTC) Division of Market Oversight issued a no-action letter that provides an alternative error correction process by which swap execution facilities (SEFs) and designated contract markets (DCMs) may permit counterparties to determine that an error has occurred and correct the error, subject to ex post facto review by the SEF or DCM. The no-action letter supplements the relief provided in CFTC Letter 17-27, which provided relief from certain CFTC regulations to permit SEFs and DCMs to correct clerical or operational errors discovered after a swap has been cleared. CFTC Release.

HUD Releases Proposed Affirmatively Furthering Fair Housing Rule

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On January 7, the Department of Housing and Urban Development (HUD) published its proposed Affirmatively Furthering Fair Housing rule (AFFH Rule). The proposed AFFH Rule would replace the AFFH Rule that was finalized in 2015 to provide a process for evaluating local jurisdictions’ compliance with the Fair Housing Act’s requirement that HUD funding be used to affirmatively further fair housing. The proposed AFFH Rule revises the 2015 definition of “affirmatively furthering fair housing”, develops metrics to compare jurisdictions and requires jurisdictions to identify steps they will take over five years to comply with AFFH Rule requirements. Comments on the proposed AFFH Rule are due 60 days after publication in the Federal Register. HUD Release. Proposed Rule.

SEC Office of Compliance Inspections and Examinations Announces 2020 Examination Priorities

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On January 7, the SEC Office of Compliance Inspections and Examinations announced its 2020 examination priorities, which include a focus on risks related to retail investors (including seniors and those saving for retirement), market infrastructure, information security, anti-money laundering programs and financial technology (including digital assets and electronic investment advice), among others. The SEC publishes its examination priorities annually to enhance the transparency of its examination program and to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets. SEC Release.

Banking Agencies Amend Effective Date for Capital Simplification Final Rule for Non-Advanced Approach Banks

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On November 13, the OCC, the FDIC and the FRB amended the effective date of the Capital Simplification Final Rule issued on July 22. Banks not subject to the advanced approaches capital rule will be permitted to implement the simplified standards for calculating regulatory capital on January 1, 2020, instead of April 1, 2020, as initially provided. OCC Release. Federal Register.

 

Banking Agencies Publish Capital Simplifications for Qualifying Community Banking Organizations

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On November 13, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board (FRB) published in the Federal Register a final rule creating an optional Community Bank Leverage Ratio (CBLR) framework for measuring capital adequacy of qualifying community banking organizations. Banks that meet the qualifying criteria, including maintaining a leverage ratio greater than 9 percent, and elect to use the CBLR framework will be considered to have met the capital requirements for the “well capitalized” category under the agencies’ Prompt Corrective Action (PCA) framework and will no longer be subject to the generally applicable capital rule. The final rule will become effective on January 1, 2020. OCC Release. Federal Register.

Federal Reserve Board Proposes Extending Initial Compliance Dates for Foreign Banks Subject to Single-Counterparty Credit Limit Rule

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On November 8, the FRB invited public comment on a proposal to extend by 18 months the initial compliance dates for foreign banks subject to its single-counterparty credit limit rule. The extension would allow additional time for foreign banks to comply with the FRB’s rule via certification with a similar home country rule or standard. Under the proposal, the largest foreign banks would need to comply by July 1, 2021, while smaller foreign banks would need to comply by January 1, 2022. Comments will be accepted for 30 days after publication in the Federal Register. Release. Proposed Rule.

 

FDIC Finalizes Rules to Simplify Capital Calculation for Qualifying Community Banking Organizations

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On September 17, the Federal Deposit Insurance Corporation (FDIC) finalized a rule that introduces an optional community bank leverage ratio (CBLR) framework for measuring capital adequacy of qualifying community banking organizations. In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9 percent, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework and meets all requirements will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital. Release. Final Rule.

Treasury Releases Proposed Regulations for CFIUS Reforms under FIRMMA

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On September 17, the U.S. Department of the Treasury proposed regulations to implement provisions of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Among other things, the proposed rules would provide the Committee on Foreign Investments in the United States (CFIUS) the ability to review non-controlling investments involving critical infrastructure and sensitive data, mandate certain filings by foreign government-affiliated investors, and codify certain exceptions and exclusions to CFIUS’s jurisdiction. A separate proposal would expand CFIUS’s jurisdiction to certain real estate transactions. Comments on each of the proposed rulemakings are due by October 17. Release. NPR (General). NPR (Real Estate).