Industry Developments

Accenture Publishes Report on 2019 LIBOR Survey

 

Accenture recently published a report entitled “LIBORATION: A practical way to thrive in transition uncertainty.” The report, based on a survey of 177 firms across the financial services and corporate industries, found that although most market participants have LIBOR transition plans in place, there is still uncertainty and a lack of preparation among financial providers, who have expressed concern with a number of unresolved commercial and regulatory issues. The report outlines various recommendations for the transition process, including “10 No Regret Immediate Transition Actions.” Read the full report here.

SEC Releases Guidance on Investment Advisers’ Proxy Voting Responsibilities

 

On August 21, the Securities and Exchange Commission (SEC) provided guidance for investment advisers in fulfilling their proxy voting responsibilities. The Commission also issued an interpretation that proxy voting advice provided by proxy advisory firms generally constitutes a “solicitation” under the federal proxy rules. Release.

SEC Proposes to Modernize Disclosures of Business, Legal Proceedings and Risk Factors Under Regulation S-K

 

On August 8, the SEC announced that it has voted to propose rule amendments to modernize and simplify certain disclosures required pursuant to Regulation S-K since the regulation was first adopted over 30 years ago. The proposal addresses Items 101(a) (description of the general development of the business), 101(c) (the narrative description of the business) and 105 (risk factors). The proposal has a 60-day public comment period following the proposal’s publication in the Federal Register. Release. Proposal.

Federal Reserve Announces Plan to Develop a New Round-the-Clock Real-Time Payment and Settlement Service to Support Faster Payments

 

On August 5, the Federal Reserve Board announced that the Federal Reserve Banks will develop a new round-the-clock real-time payment and settlement service, called the FedNow℠ Service, to support faster payments in the United States. The rapid evolution of technology presents a pivotal opportunity for the Federal Reserve and the payment industry to modernize the nation’s payment system and establish a safe and efficient foundation for the future. The Federal Reserve believes faster payment services, which enable the near-instantaneous transfer of funds day and night, weekend and weekdays, have the potential to become widely used and to yield economic benefits for individuals and businesses by providing them with more flexibility to manage their money and make time-sensitive payments. Release.

HUD Announces Agency Efforts to Reduce Risk From Cash-Out Refinance Lending

 

On August 1, the U.S. Department of Housing and Urban Development (HUD) announced joint policy actions designed to reduce risk associated with cash-out refinance lending. The changes preserve homeowners’ ability to convert home equity to cash via a government-sponsored mortgage but also improves the risk profile of HUD’s housing finance programs. To address these concerns, the Federal Housing Administration (FHA) will lower its maximum loan-to-value (LTV) requirements for cash-out refinance transactions from 85 percent to 80 percent. This policy change will be effective for loans with case numbers assigned on or after September 1, 2019 and aligns with the maximum cash-out LTV allowed by the Government Sponsored Enterprises (GSEs). Release.

EBA Publishes Opinion on Eligibility of Deposits, Coverage Level and Co-Operation Between Deposit Guarantee Schemes Under the DGSD

 

On August 8, the European Banking Authority (EBA) published an opinion (EBA-Op-2019-10) on the eligibility of deposits, coverage level and co-operation between deposit guarantee schemes (DGS) under the Deposit Guarantee Schemes Directive (DGSD) (2014/49/EU).

The opinion outlines a number of general and specific proposals for the European Commission to consider when preparing its mandated report on the progress made towards implementing the DGSD and if the Commission prepares a proposal for a revised DGSD.

The opinion sets out the EBA’s proposals on a range of topics, including:

  • Home-host co-operation, and co-operation agreements between DGS
  • DGS’ co-operation with various stakeholders
  • Transfer of contributions
  • Coverage level
  • Current list of exclusions from eligibility and current provisions on eligibility

It includes a report that provides a detailed analysis of each topic, including the background, methodology, data sources, options to address the issues identified and conclusions.

EBA Publishes Feedback on Review of Single Rulebook Q&A

 

On August 6, the EBA published feedback following a review of the use, usefulness and implementation of its single rulebook Q&A.

The review was carried out in the second half of 2018 using questionnaires addressed to competent authorities and selected industry representatives. It was limited to Q&A relating to the Capital Requirements Regulation (CRR) ((EU) No 575/2013) and the Capital Requirements Directive (CRD) (2013/36/EU), which (at the time) accounted for about one third of final Q&A.

The EBA’s main findings include the following:

  • There are limited cases of non-application of Q&A identified by survey participants.
  • Competent authorities and institutions (to a slightly lesser extent) are, overall, satisfied with the utility of the single rulebook Q&A tool and the answers. However, they suggest various improvements relating to matters including response times, the search function and the presentation of the final answers.
  • There are similarities in terms of the measures taken by competent authorities at the institution level or by institutions internally to promote the Q&A tool and the use of answers.
  • Competent authorities use regular or ad hoc measures to encourage the use of the Q&A tool internally.

Based on its review, the EBA has provided non-prescriptive good practice guidance that institutions could adopt with respect to the use of Q&A (see chapter 4).

In addition, the EBA will consider the comments and suggestions received on the process, tool and answers, with a view to developing realistic and workable proposals for improvements. The EBA is also considering the reported cases of non-application in more detail to better understand the obstacles and issues in relation to the Q&A. It expects follow-up actions to be limited to informal exchanges and ad hoc queries to relevant competent authorities.

European Commission Requests the EIOPA Advise on PEPP Regulation Delegated Acts

 

On August 5, the Council of the EU published a cover note, which attaches a call for advice from the European Commission to the European Insurance and Occupational Pensions Authority (EIOPA) (dated July 31) on possible delegated acts concerning the Regulation on a Pan-European Personal Pension Product (PEPP Regulation) ((EU) 2019/1238).

The Commission requests advice relating to:

  • The criteria and factors to determine when there is a significant PEPP saver protection concern under Article 64(9).
  • The specification of additional information for supervisory reporting under Article 40(9) of the PEPP Regulation.

The PEPP Regulation was published in the Official Journal of the EU on July 25.

The Commission requests the final version of the advice by August 14, 2020.