This newsletter covers some of the more recent regulatory changes impacting Banking, Capital Markets, Insurance, Energy, Utilities, Life Sciences, Communications & Media and Software & Platforms firms. We track more than 100 regulatory and industry bodies across North America, Europe and Asia Pacific. The shortlisted entries highlight the risks covered and business processes affected by the regulatory reforms.

CURRENT REGULATIONS:

Securities and Exchange Commission (SEC):
SEC Adopts Final Rules for the Disclosure of Payments by Resource Extraction Issuers
Publication Date: December 16th 2020

Risks Covered: Operational Risk
Business Processes Impacted: Payments
The agency has voted to adopt final rules that would require resource extraction issuers that are required to file reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 to disclose payments made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas, or minerals.1

Federal Reserve (The Fed); Federal Deposit Insurance Corporation (FDIC):
Guidance for Resolution Plan Submissions of Certain Foreign-Based Covered Companies
Publication Date: December 22nd 2020

Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The final guidance is meant to assist these firms in developing their resolution plans, which are required to be submitted pursuant to Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act). The final guidance reflects a number of changes to the proposal in response to comments received by the agencies and further analysis by the agencies.2

Financial Conduct Authority (FCA):
FCA publishes final Brexit instruments and Temporary Transitional Power (TTP) directions
Publication Date: December 22nd 2020
Risks Covered: Sovereign Risk
Business Processes Impacted: Business Continuity Management
The authority has published the final on-shoring instruments and the related guidance and Temporary Transitional Power (TTP) that applies at the end of the Brexit transition period.3

HM Treasury (HMT):
Banking Act 2009: Special resolution regime code of practice (revised December 2020)
Publication Date: December 17th 2020
Risks Covered: Conduct Risk
Business Processes Impacted: Data Privacy
The agency has published a revision to its code of practice, outlining the tools and powers available under the Banking Act 2009. This version of the Code applies to use of the special resolution regime following the end of the UK’s Brexit Transition Period on 31 December 2020 as defined in the European Union (Withdrawal Agreement) Act 2020.4

Financial Reporting Council (UK) (FRC):
Amendments to accounting standards – UK exit from the EU and IBOR Phase 2
Publication Date: December 21st 2020
Risks Covered: Liquidity Risk
Business Processes Impacted: Audit, Legal & Compliance
These amendments update UK and Republic of Ireland accounting standards to accommodate changes in legislation following the UK’s exit from the European Union that come into effect when the transition period ends.5

Monetary Authority of Singapore (MAS):
Notice 133 Valuation and Capital Framework for Insurers
Publication Date: December 23rd 2020
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The authority has released Notice 133 regarding the Valuation and Capital Framework for Insurers, which outlines the requirements under the risk-based capital framework for all licensed insurers, including the way in which assets and liabilities are to be valued.6

Monetary Authority of Singapore (MAS):
Guidelines on Environmental Risk Management for Insurers
Publication Date: December 9th 2020
Risks Covered: Systemic Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has issued the ‘Guidelines on Environmental Risk Management for Insurers’ to enhance the insurance sector’s resilience to and management of environmental risk through outlining sound risk management practices. The guidelines cover governance and strategy, risk management, underwriting, investment and disclosure of environmental risk information.7

Hong Kong Monetary Authority (HKMA):
Enhanced Competency Framework on Operational Risk Management
Publication Date: December 18th 2020
Risks Covered: Interest Conduct Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has announced launch of the Enhanced Competency Framework on Operational Risk Management (ECF-ORM) to set out competency standards for raising the professional competence of relevant practitioners working in the operational risk management function of authorised institutions (AIs).8

European Banking Authority (EBA):
EBA updates reporting framework 3.0 and technical standards on Pillar 3 disclosure
Publication Date: December 22nd 2020
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
The agency has published a set of updates to the reporting framework 3.0 and the Implementing Technical Standards (ITS) on institutions’ Pillar 3 public disclosures.9

International Swaps and Derivatives Association (ISDA); Association for Financial Markets in Europe (AFME):
Recalibration SA-CCR to mitigate increased hedging costs for end-users
Publication Date: December 24th 2020
Risks Covered: Counterparty Credit Risk
Business Processes Impacted: Clearing & Settlement – Exchange Traded & OTC
The agency issued a press release regarding the replacement of the Current Exposure Method (CEM) and the Standardized Method (SM) for the calculation of Counterparty Credit Risk (CRR) as applied to derivatives transactions with a new Standardized Approach (SA-CCR).10

Office of the Superintendent of Financial Institutions (OSFI):
Developing financial sector resilience in a digital world
Publication Date: November 15th 2020
Risks Covered: Liquidity Risk
Business Processes Impacted: Funding & Liquidity Management
The paper focuses on risks arising from rapid technological advancement and digitalization, as these trends impact the stability of the Canadian financial sector. The agency welcomes comments and submissions on the discussion paper by December 15, 2020.11

European Commission (EC):
The EU prepares for the end of LIBOR: the Commission welcomes the agreement reached between the European Parliament and the Council on financial benchmarks
Publication Date: November 30th 2020
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The agency states that the agreement is timely, given that the UK FCA, the supervisor of LIBOR, /would stop supporting that benchmark at the end of 2021, and that the agreement /would allow for continuity in the financial system.12

International Swaps and Derivatives Association (ISDA):
ISDA Statement on IBA, UK FCA and Federal Reserve Board Announcements on US Dollar LIBOR Consultation
Publication Date: November 30th 2020
Risks Covered: Conduct Risk
Business Processes Impacted: Fraud and Financial Crime
The agency has published a response statement to announcements from ICE Benchmark Administration (IBA), the administrator of LIBOR, the UK FCA and the FRB regarding the intention to cease publishing the one-week and two-month US Dollar LIBOR settings from December 31, 2020 and the remaining US dollar LIBRO settings from June 30, 2023.13

Bank for International Settlements (BIS):
Governors and Heads of Supervision commit to ongoing coordinated approach to mitigate Covid-19 risks to the global banking system and endorse future direction of Basel Committee work
Publication Date: November 30th 2020
Risks Covered: Conduct Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has announced that the Group of Central Bank Governors and Heads of Supervision (GHOS) under the BCBS have approved a coordinated approach to addressing COVID-related risks to the global banking system.14

European Insurance and Occupational Pensions Authority (EIOPA):
Discussion Paper on Non-Life Underwriting And Pricing in Light of Climate Change
Publication Date: December 10th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The paper discusses the challenges associated with existing non-life underwriting practices and options for ensuring the availability and affordability of insurance products in the context of climate change.15

Insurance Europe (IE):
Response to EIOPA consultation on supervisory statement on use of risk mitigation techniques by insurance and reinsurance undertakings
Publication Date: December 1st 2020
Risks Covered: Reinsurance Risk
Business Processes Impacted: Reporting
The agency has published its response to the EIOPA consultation on its draft supervisory statement on the use of reinsurance risk mitigation techniques (RMT).16

Federal Deposit Insurance Corporation (FDIC):
Agencies Announced Several Resolution Plan Actions
Publication Date: December 10th 2020
Risks Covered: Systemic Risk
Business Processes Impacted: Audit, Legal & Compliance
Both regulators have announced several resolution plan actions. Resolution plans, commonly known as living wills, should describe the company’s strategy for rapid and orderly resolution in bankruptcy in the event of material financial distress or failure of the company.17

Federal Deposit Insurance Corporation (FDIC):
Assessments, Amendments To Address the Temporary Deposit Insurance Assessment Effects of the Optional Regulatory Capital Transitions for Implementing the Current Expected Credit Losses Methodology
Publication Date: December 7th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency is seeking comment on a proposed rule that would amend the risk-based deposit insurance assessment system applicable to all large insured depository institutions (IDIs), including highly complex IDIs, to address the temporary deposit insurance assessment effects resulting from certain optional regulatory capital transition provisions relating to the implementation of the current expected credit losses (CECL) methodology.18

Environmental Protection Agency (EPA):
Financial Responsibility Requirements Under CERCLA Section 108(b) for Facilities in the Electric Power Generation, Transmission, and Distribution Industry; the Petroleum and Coal Products Manufacturing Industry; and the Chemical Manufacturing Industry
Publication Date: December 2th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
The agency is finalizing its proposed decisions to not impose financial responsibility requirements under section 108(b) of the CERCLA for facilities in three industry sectors: The electric power generation, transmission, and distribution industry.19

Environmental Protection Agency (EPA):
Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process
Publication Date: December 23rd 2020
Risks Covered: Climate Risk
Business Processes Impacted: Consumer/Investor Protection
This rule establishes processes that the agency /would be required to undertake in promulgating regulations under the Clean Air Act (CAA) to verify that information regarding the benefits and costs of regulatory decisions is provided and considered in a consistent and transparent manner.20

FORTHCOMING REGULATIONS:

European Banking Authority (EBA); European Securities and Markets Authority (ESMA); European Insurance and Occupational Pensions Authority (EIOPA)
ESAs Letter to IFRS Foundation consultation sustainability reporting
The multiple regulators have issued a joint letter to the Chair of the Trustees at the IFRS Foundation relating to the importance of the European financial and non-financial sectors transitioning towards climate neutrality and delivering on the European Commission’s Green Deal.21

European Commission (EC)
Financial transparency – single EU access point for company information (Inception impact assessment)
The agency is requesting feedback on its inception impact assessment with regard to building on the ‘European financial transparency gateway’ project, which /would mean a single EU access point to company information that is financial and non-financial.22

European Insurance and Occupational Pensions Authority (EIOPA) 
Discussion Paper on Methodology on potential inclusion of climate change in the Nat Cat standard formula
The agency is soliciting comments in response to its discussion paper on a methodology for the potential inclusion of climate change in the Solvency II standard formula when calculating natural catastrophe underwriting risk.23

Financial Stability Board (FSB)
FSB encourages the IFRS Foundation and authorities to use TCFD’s recommendations as the basis for climate-related financial risk disclosures
The agency has issued a press release encouraging the IFRS Foundation and authorities to use TCFD’s recommendations as the basis for climate-related financial risk disclosures.24

Footnotes:

  1. “Final rules to disclose final payments of oil, natural gas,” Securities and Exchange Commission (SEC), December 16, 2020. Access at: SEC Adopts Final Rules for the Disclosure of Payments by Resource Extraction Issuers.
  2. “Final guidance on resolution plan,” Federal Reserve (The Fed); Federal Deposit Insurance Corporation (FDIC), December 22, 2020. Access at: Guidance for Resolution Plan Submissions of Certain Foreign-Based Covered Companies.
  3. “Guidance for Brexit transition period,” Financial Conduct Authority (FCA), December 22, 2020. Access at: FCA publishes final Brexit instruments and Temporary Transitional Power (TTP) directions.
  4. “Revised code to use spcial resolution regime in Brexit Transition Period,” HM Treasury (HMT), December 17, 2020. Access at: Banking Act 2009: Special resolution regime code of practice (revised December 2020).
  5. “Amendments update on accounting standards,” Financial Reporting Council (FRC), December 21, 2020. Access at: Amendments to accounting standards – UK exit from the EU and IBOR Phase 2.
  6. “Notice 133 regarding valuation,” Monetary Authority of Singapore (MAS), December 23, 2020. Access at: Notice 133 Valuation and Capital Framework for Insurers.
  7. “Guidelines on environmental risk management for insurers,” Monetary Authority of Singapore (MAS), December 9, 2020. Access at: Guidelines on Environmental Risk Management for Insurers.
  8. “Launch of enhanced competency framework on operational risk management,” Hong Kong Monetary Authority (HKMA), December 8, 2020. Access at: Enhanced Competency Framework on Operational Risk Management.
  9. “Reporting updates on institutions’ Pillar 3 public disclosures,” European Banking Authority (EBA), December 22, 2020. Access at: EBA updates reporting framework 3.0 and technical standards on Pillar 3 disclosure.
  10. “Replacement of the current exposure method and standardized method for CRR calculation,” International Swaps and Derivatives Association (ISDA); Association for Financial Markets in Europe (AFME), December 24, 2020. Access at: Recalibration SA-CCR to mitigate increased hedging costs for end-users.
  11. “Focus on risks coming from rapid technological advancement and digitalization,” Office of the Comptroller of the Currency (OCC), November 15, 2020. Access at: Developing financial sector resilience in a digital world.
  12. “Regulators agreement on stopping benchmark at the end of 2021,” European Commission (EC), November 30, 2020. Access at: The EU prepares for the end of LIBOR: the Commission welcomes the agreement reached between the European Parliament and the Council on financial benchmarks.
  13. “Response to cease publishing weekly data,” International Swaps and Derivatives Association (ISDA), November 30, 2020. Access at: ISDA Statement on IBA, UK FCA and Federal Reserve Board Announcements on US Dollar LIBOR Consultation.
  14. “Coordinated approach to address COVID-related risks,” Bank for International Settlements (BIS), November 30, 2020. Access at: Governors and Heads of Supervision commit to ongoing coordinated approach to mitigate Covid-19 risks to the global banking system and endorse future direction of Basel Committee work.
  15. “Challenges associated in context of climate change,” European Insurance and Occupational Pensions Authority (EIOPA), December 10, 2020. Access at: Discussion Paper on Non-Life Underwriting And Pricing in Light of Climate Change.
  16. “Response on reinsuance risk mitigation techniques,” Insurance Europe (IE), December 1, 2020. Access at: Response to EIOPA consultation on supervisory statement on use of risk mitigation techniques by insurance and reinsurance undertakings.
  17. “Announcement of living wills,” Federal Deposit Insurance Corporation (FDIC), December 10, 2020. Access at: Agencies Announced Several Resolution Plan Actions.
  18. “Seeking comments on risk based deposit insurance assessment system,” Federal Deposit Insurance Corporation (FDIC), December 7, 2020. Access at: Assessments, Amendments To Address the Temporary Deposit Insurance Assessment Effects of the Optional Regulatory Capital Transitions for Implementing the Current Expected Credit Losses Methodology.
  19. “Proposed rule for not imposing financial responsibility requirements,” Environmental Protection Agency (EPA), December 2, 2020. Access at: Financial Responsibility Requirements Under CERCLA Section 108(b) for Facilities in the Electric Power Generation, Transmission, and Distribution Industry; the Petroleum and Coal Products Manufacturing Industry; and the Chemical Manufacturing Industry.
  20. “Promulgating regulations under the clean air act,” Environmental Protection Agency (EPA), December 23, 2020. Access at: Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process.
  21. “Joint letter towards climate neutrality,” European Banking Authority (EBA); European Securities and Markets Authority (ESMA); European Insurance and Occupational Pensions Authority (EIOPA), December 16, 2020. Access at: Transparency obligations for climate risks – FINMA opens consultation.
  22. “Feedback on building the European financial transparency gateway’s project,” European Commission (EC), December 18, 2020. Access at: Financial transparency – single EU access point for company information (Inception impact assessment).
  23. “Discussion paper on climate change in the solvency II standard formula,” European Insurance and Occupational Pensions Authority (EIOPA), November 2, 2020. Access at: Discussion Paper on Methodology on potential inclusion of climate change in the Nat Cat standard formula.
  24. “To use TCFD’s recommendations as the basis for climate-related financial risk disclosures,” Financial Stability Board (FSB), December 21, 2020. Access at: FSB encourages the IFRS Foundation and authorities to use TCFD’s recommendations as the basis for climate-related financial risk disclosures.

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