consumer protection

European Commission TTIP Advisory Group Report Considers Financial Services Under TTIP

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On October 17, 2016, the European Commission published a report documenting the meeting of the Commission’s Transatlantic Trade and Investment Partnership (TTIP) Advisory Group on September 6, 2016.

Financial services are considered at section 4 of the report in the context of TTIP. The group notes that the EU tabled its offer on financial services market access in July 2016 (see Legal update, European Commission releases EU financial services offer for 14th round of TTIP negotiations: July 2016) . Discussions relating to this offer will continue during the next round of TTIP negotiations in October 2016.

The report also refers to the new joint EU-U.S. Financial Regulatory Forum, which was launched in July 2016 with the aim of making continued efforts to improve EU-U.S. regulatory coherence (see Legal update, EU and US establish joint financial regulatory forum ). The EU would like to see the work of the forum “linked into” the final TTIP agreement because, for the EU, the real issue for the financial services sector in the transatlantic context is regulatory transparency and cooperation. Diverging regulation may have negative implications on trade in financial services, financial stability, and consumer protection.

At the meeting, the group also discussed transparency (members expressed an interest in seeing documents related to financial services regulatory cooperation), domestic and international legislation (neither the U.S. nor the EU is seeking, through the forum, to revise the other’s legislation), the TTIP market access offer in financial services (prudential measures, such as capital requirements for banks, are not covered as these are out of scope) and measures to help consumers navigate transatlantic financial services (such as reduced charges for international transfers and simpler opening of bank accounts).

SEC Broker-Dealer Financial Responsibility Final Rules

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On July 31, the SEC announced the adoption of amendments to the net capital, consumer protection, books and records, and notification rules for broker-dealers.  The rule amendments will be effective 60 days after publication in the Federal Register.  SEC Release.  SEC Final Rules.

In addition, the SEC also adopted amendments to Rules 17a-5 and 17a-11 under the Securities Exchange Act of 1934 to increase compliance standards and protections for investors with assets being held by broker-dealers.  Under the rules, audit requirements for broker-dealers will be strengthened in the following ways: (i) a broker-dealer that has custody of the customers’ assets must file a “compliance report” with the SEC to verify they are adhering to broker-dealer capital requirements, protecting customer assets they hold and periodically sending account statements to customers; (ii) a broker-dealer that does not have custody of its customers’ assets must file an “exemption report” with the SEC citing its exemption from requirements applicable to carrying broker-dealers; and (iii) all broker-dealers (regardless of custody) must engage a PCAOB-registered independent public accountant to prepare a report based on an examination of certain statements in the broker-dealer’s report.  In addition, under the proposed rules, broker-dealer examinations will be enhanced by: (i) a requirement for filing a new quarterly report (Form Custody) that contains information about whether and how it maintains custody of its customers’ securities and cash and (ii) a requirement for all broker-dealers to agree to allow SEC or SRO staff to review the work papers of the independent public accountant.  The effective date for the requirement to file Form Custody and the requirement to file annual reports with SIPC is December 31, 2013.  The effective date for the requirements relating to broker-dealer annual reports is June 1, 2014.  SEC Press Release.  SEC Final Rule.