Posts by: Elizabeth Williams

OCC, Board of the Federal Reserve and FDIC Publish Final Rule Implementing Net Stable Funding Ratio

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On February 24, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) published a final rule in the Federal Register implementing the net stable funding ratio. The rule implements a minimum stable funding requirement for covered institutions, with the intention of reducing the likelihood that disruptions to a covered institution’s regular sources of funding would affect such institution’s liquidity position in a way that could lead to systemic stress. The covered institutions include U.S. depository institution holding companies, depository institutions or U.S. intermediate holding companies of a foreign banking organization with more than $100 billion in total consolidated assets that meet certain asset size and risk factor requirements. Bulletin.

 

Board of the Federal Reserve Announces Final Rule Amending Regulation EE

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On February 18, the Board of the Federal Reserve announced a final rule amending Regulation EE, which is intended to reduce risk and increase efficiency in the financial system. The final rule applies netting protections to a broader range of financial institutions. The expanded definition of financial institutions now includes swap dealers and security-based swap dealers, nonbank systemically important financial institutions, foreign banks and qualifying central counterparties, among other new additions. The final rule also made minor clarifications to the existing activities-based test in Regulation EE, which clarify the application of the test following a consolidation of legal entities. Release.

Federal Reserve Extends Termination Date of Main Street Lending Program to January 8, 2021

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On December 29, the Federal Reserve announced it would extend the termination date of Main Street Lending program facilities to January 8, 2021. The extension will allow additional time for lenders to process and fund loans that were submitted to the Main Street lender portal on or before December 14, 2020. Release.

CFTC Approves Final Rule Exempting Certain Swaps from Swap-Clearing Requirements

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On November 2, the Commodity Futures Trading Commission (CFTC) approved a final rule exempting swaps entered into by certain financial institutions from the CFTC’s swap-clearing requirement under the Commodity Exchange Act (CEA). The exemption applies to swaps entered into by certain central banks, sovereign entities, international financial institutions, bank holding companies, savings and loan holding companies and community development financial institutions. Release.

CFTC Issues New Exemptions for Certain Foreign Futures and Options Markets

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On November 2, the CFTC issued multiple orders as part of its Part 30 exemptive program, which allows for increased access to foreign futures and options markets where foreign intermediaries are subject to comparable customer protection standards. The orders were issued with respect to the Bombay Stock Exchange, the National Stock Exchange International Financial Service Centre Limited, the Montreal Exchange, NZX Limited and UBS AG. Release.

SEC Amends Rules Governing Exempt Offerings

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On November 2, the Securities and Exchange Commission (SEC) amended its rules governing exempt offerings. The amendments intend to harmonize the “patchwork” framework currently in place that governs exempt offerings. Among other things, the amendments increase the offering limits for Regulation A, Regulation Crowdfunding and Rule 504 offerings, revise certain individual investment limits, and set clear and consistent rules regarding certain offering communications. Release.

SEC Adopts New Rules Governing Funds’ Use of Derivatives

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On November 2, the SEC adopted final rule 18f-4 under the Investment Company Act. The new rule intends to update the regulation of funds’ use of derivatives. Under the new framework, funds using derivatives will generally have to adopt a derivatives risk-management program administered by a derivatives risk manager and comply with an outer limit on fund leverage risk based on certain calculations. Final Rule.

Federal Reserve Board Adjusts Main Street Lending Program to Better Support Small Businesses

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On October 30, the Federal Reserve Board (FRB) announced adjustments to the Main Street Lending Program in an effort to better support smaller businesses. The changes include reducing the minimum required loan size to $100,000 from $250,000 and adjusting the fees to encourage eligible lenders to provide these smaller loans. Release.

CFPB Amends Records and Information Disclosure Requirements

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On October 29, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending its disclosure of records and information regulation. The new rule intends to increase protection of confidential information and improve clarity and transparency with agency partners and others. Final Rule.

Rating Agency Developments (September 3 – September 16)

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On September 16, DBRS Morningstar released an updated methodology titled Rating U.S. Wholesale Securitizations. Methodology.

On September 16, KBRA released a research report titled Global ABS Conference Recap: Day One. Report.

On September 15, KBRA released a research report titled Structured Finance: Virtual Conference: Credit & COVID-19 – Is the Worst Behind Us? Report.

On September 11, DBRS Morningstar released an updated methodology titled Third-Party Due-Diligence Criteria for U.S. RMBS Transactions. Methodology.

On September 11, KBRA released a research report titled RMBS Credit Indices: August 2020. Report.

On September 3, DBRS Morningstar released a report titled Rating European Consumer and Commercial Asset-Backed Securitizations. Methodology.