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:

Office of the Superintendent of Financial Institutions (OSFI):
OSFI launches consultation on climate-related risks in the financial sector
Publication Date: January 11th 2021

Risks Covered: Climate Risk
Business Processes Impacted: Business Continuity Management

The paper focuses on risks arising from climate change that can affect the safety and soundness of federally regulated financial institutions (FRFIs) and federally regulated pension plans (FRPPs). Comments should be submitted on or before April 12, 2021.1

Insurance Europe (IE):
Insurers warn EIOPA against prescriptiveness in ORSA climate risk requirements
Publication Date: January 6th 2021

Risks Covered: Solvency Risk
Business Processes Impacted: Reporting

The agency has published comments on a consultation paper from the EIOPA regarding a draft supervisory opinion on the use of climate change risk scenarios in the Own Risk & Solvency Assessment (ORSA).2

Federal Reserve (The Fed):
Automated Clearing House Items
Publication Date: January 15th 2021
Risks Covered: Sovereign Risk
Business Processes Impacted: Payments
The agency has issued an updated version of Operating Circular No. 4, the Automated Clearing House Items, which is effective from March 19, 2021.3

Monetary Authority of Singapore (MAS):
Response to Public Feedback for Consultation Paper – TRM Guidelines
Publication Date: January 18th 2021
Risks Covered: Technology Risk
Business Processes Impacted: Data Privacy
The agency has published the responses to feedback received pursuant to a consultation paper issued on 7 March 2019 regarding proposed revisions to the MAS Technology Risk Management Guidelines (TRMG).4

International Association of Insurance Supervisors (IAIS):
Public Consultation on draft Application on Supervision of Control Functions
Publication Date: January 25th 2021
Risks Covered: Liquidity Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published Consultation Paper on draft Application Paper on Supervision of Control Functions.5

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC):
Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations; Total Loss-Absorbing Capacity Requirements (Federal Register)
Publication Date: January 6th 2021
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
Multiple regulators are adopting a final rule that applies to advanced approaches banking organizations with the aim of reducing both interconnectedness within the financial system and systemic risks.6

Securities and Exchange Commission (SEC):
Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information
Publication Date: January 11th 2021
Risks Covered: Systemic Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency is adopting amendments to modernize, simplify, and enhance certain financial disclosure requirements in Regulation S-K.7

Financial Reporting Council (UK) (FRC):
UK-adoption of Amendments for IBOR Phase 2 and Amendments to IFRS 4
Publication Date: January 6th 2021
Risks Covered: Interest Conduct Risk
Business Processes Impacted: Risk Management & Stress Testing
The amendments concern phase 2 of the interest rate benchmark reform as well as the extension of the temporary exemption from applying IFRS 9 financial instruments from 1 January 2021 to 1 January 2023.8

Financial Conduct Authority (FCA):
The final countdown: Completing sterling LIBOR transition by end-2021
Publication Date: January 11th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
The agency has announced that the LIBOR administrator, ICE Benchmark Administration, is consulting on ceasing publication of all sterling LIBOR settings at the end of 2021.9

British Insurance Brokers’ Association (BIBA):
Selling Telematics Motor Insurance Policies – A Good Practice Guide
Publication Date: January 13th 2021
Risks Covered: Counterparty Credit Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has issued an update to its guide for insurers who sell Retail telematics-based motor insurance products.10

European Securities and Markets Authority (ESMA):
ESMA promotes transparency for TLTRO III transactions
Publication Date: January 6th 2021
Risks Covered: Liquidity Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has issued a public statement promoting transparency in the IFRS financial statements of banks regarding accounting for the third series of the bank’s Targeted Longer-Term Refinancing Operations (TLTRO III), and giving recommendations for affected banks.11

European Securities and Markets Authority (ESMA):
CFTC ESMA Enhanced MoU
Publication Date: January 7th 2021
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The agency has signed with the CFTC a new MoU regarding co-operation and the exchange of information with respect to certain registered derivatives clearing organizations established in the USA that are central counterparties (CCPs) recognized by ESMA under the EMIR.12

Financial Crimes Enforcement Network (FinCEN):
Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets
Publication Date: January 15th 2021
Risks Covered: Conduct Risk
Business Processes Impacted: Fraud and Financial Crime
A notice of proposed rulemaking proposing requirements for banks and money services businesses (MSBs) related to certain transactions involving convertible virtual currency (CVC) or digital assets with legal tender status (legal tender digital assets or LTDA).13

Office of the Comptroller of the Currency (OCC):
Bank Secrecy Act/Anti-Money Laundering : Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other AML Considerations
Publication Date: January 21st 2021
Risks Covered: Conduct Risk
Business Processes Impacted: Consumer/Investor Protection
Multiple regulators have issued responses to frequently asked questions regarding suspicious activity reporting and other AML considerations for financial institutions covered by suspicious activity reporting rules.14

Prudential Regulation Authority (PRA):
Strengthening Accountability: SM&CR: Forms update
Publication Date: January 22nd 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has published a policy statement that gives feedback to the responses received in relation to its Consultation Paper on Strengthening Accountability: SM&CR.15

Federal Deposit Insurance Corporation (FDIC):
Unsafe and Unsound Banking Practices: Brokered Deposits and Interest Rate Restrictions
Publication Date: January 22nd 2021
Risks Covered: Reinsurance Risk
Business Processes Impacted: Reporting
The agency is finalizing revisions to its regulations relating to the brokered deposits and interest rate restrictions that apply to less than well capitalized insured depository institutions.16

International Swaps and Derivatives Association (ISDA):
New IBOR Fallbacks Take Effect for Derivatives
Publication Date: January 25th 2021
Risks Covered: Systemic Risk
Business Processes Impacted: Audit, Legal & Compliance
The association have announced the introduction of new fallbacks for derivatives which are linked to key interbank offered rates (IBORs) as of January 25, 2021.17

European Central Bank (ECB):
ECB sets up climate change centre
Publication Date: January 25th 2021
Risks Covered: Climate Risk
Business Processes Impacted: Audit, Legal & Compliance
The bank has set up a climate change centre in order to bring together the work on climate issues in different parts of the bank. The goal of the climate change centre is to shape and steer the ECB’s climate agenda both internally and externally, building on the knowledge of all teams that are already working on climate-related topics.18

Bank of England (BoE):
Response to the Environmental Audit Committee letter to the Governor
Publication Date: January 25th 2021
Risks Covered: Climate Risk
Business Processes Impacted: Business Continuity Management
The Bank highlights that it has developed a work programme on climate change which comprises stress testing of the largest UK banks and insurers against climate-related financial risks as well as international cooperation with the central bank network for greening the financial system.19

Environmental Protection Agency (EPA):
Strengthening Transparency in Pivotal Science Underlying Significant Regulatory Actions and Influential Scientific Information
Publication Date: January 6th 2021
Risks Covered: Compliance Risk
Business Processes Impacted: Consumer/Investor Protection
This action establishes how the agency will consider the availability of dose-response data underlying pivotal science used in its significant regulatory actions and influential scientific information.20

FORTHCOMING REGULATIONS:

Financial Reporting Council (UK) (FRC)
Actuarial Scheme: Guidance on the commencement of investigation of cases by the Financial Reporting Council
The document contains the criteria under which the agency will carry out all disciplinary hearings in relation to allegations of misconduct by actuaries in the course of their professional, business or financial activities, among other things.  The revised Accountancy Scheme entered into force on 1 January 2021.21

Bank for International Settlements (BIS)
BIS Innovation Hub sets out annual work programme and launches Innovation Network
The agency has set out its work programme, demonstrating its focus on six key areas as it fosters international collaboration among central banks on innovative financial technology. The thematic priorities are: suptech and regtech; next-generation financial market infrastructures (FMIs); central bank digital currencies (CBDCs); open finance; cyber security; and green finance.22

European Securities and Markets Authority (ESMA)  
Final draft report on draft ITS on IGT and RC reporting templates for conglomerates
The ITS on reporting of intra-group transactions and risk concentrations under paragraphs 2b and 2c of Article 21a FICOD will form part of this single set of harmonised prudential rules along with the Commission Delegated Regulation 2015/23035 of 28th July 2015 and will become directly applicable in all Member States once adopted by the European Commission and published in the Official Journal of the EU.23

Environmental Protection Agency (EPA)
Extension of 2019 and 2020 Renewable Fuel Standard Compliance and Attest Engagement Reporting Deadlines
The agency is proposing to modify certain compliance dates under the Renewable Fuel Standard (RFS). First, agency proposes to extend the RFS compliance deadline for the 2019 compliance year and the associated deadline for submission of attest engagement reports for the 2019 compliance year for small refineries. The new deadlines would be November 30, 2021, and June 1, 2022, respectively.24

Food and Drug Administration (FDA)
Uniform Compliance Date for Food Labeling Regulations
The agency is establishing January 1, 2024, as the uniform compliance date for food labeling regulations that are published on or after January 1, 2021, and on or before December 31, 2022.25

Pipeline and Hazardous Materials Safety Administration (PHMSA)
Pipeline Safety: Gas Pipeline Regulatory Reform

The agency is amending the Federal Pipeline Safety Regulations to ease regulatory burdens on the construction, maintenance, and operation of gas transmission, distribution, and gathering pipeline systems without adversely affecting safety.26

Insurance Europe (IE)
Joint response to EFRAG consultation on its draft endorsement advice on IFRS 17
Regulator have published a joint response to a consultation issued by the EFRAG on its draft endorsement advice on IFRS 17 insurance contracts.27

Environmental Protection Agency (EPA)
National Emission Standards for Hazardous Air Pollutants: Carbon Black Production Residual Risk and Technology Review and Carbon Black Production Area Sources Technology Review
The agency is proposing amendments to the National Emission Standards for Hazardous Air Pollutants (NESHAP) for the Carbon Black Production major source category.28

Footnotes:

  1. “Climate changes due to federally regulated financial institutions,” Office of the Superintendent of Financial Institutions (OSFI), January 11, 2021. Access at: OSFI launches consultation on climate-related risks in the financial sector.
  2. “Regarding draft supervisory opinion on ORSA,” Insurance Europe (IE), January 6, 2021. Access at: Insurers warn EIOPA against prescriptiveness in ORSA climate risk requirements.
  3. “Updated version of ACH,” Federal Reserve (The Fed), January 15, 2021. Access at: Automated Clearing House Items.
  4. “Revisions on TRMG,” Monetary Authority of Singapore (MAS), January 18, 2021. Access at: Response to Public Feedback for Consultation Paper – TRM Guidelines.
  5. “Draft application paper on supervision of control functions,” International Association of Insurance Supervisors (IAIS), January 25, 2021. Access at: Public Consultation on draft Application on Supervision of Control Functions.
  6. “Final rule on reducing interconnectedness within the financial system,” Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC), January 6, 2021. Access at: Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations; Total Loss-Absorbing Capacity Requirements (Federal Register).
  7. “Amendments in Regulation S-K,” Securities and Exchange Commission (SEC), January 11, 2021. Access at: Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information.
  8. “Amendment of interest rate benchmark reform phase 2,” Financial Reporting Council (UK) (FRC), January 6, 2021. Access at: UK-adoption of Amendments for IBOR Phase 2 and Amendments to IFRS 4.
  9. “Ceasing publication of all sterling LIBOR settings,” Financial Conduct Authority (FCA), January 11, 2021. Access at: The final countdown: Completing sterling LIBOR transition by end-2021.
  10. “Updated guide on retail telematics-based motor insurance products,” British Insurance Broker’s Association (BIBA), January 13, 2021. Access at: Selling Telematics Motor Insurance Policies – A Good Practice Guide.
  11. “Statement to promote transparency on TLTRO III,” European Securities and Markets Authority (ESMA), January 6, 2021. Access at: ESMA promotes transparency for TLTRO III transactions.
  12. “MoU signed on clearing org established,” European Securities and Markets Authority (ESMA), January 7, 2021. Access at: CFTC ESMA Enhanced MoU.
  13. “Proposed rulemaking on CVC,” Financial Crimes Enforcement Network (FinCEN), January 15, 2021. Access at: Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.
  14. “FAQs for suspicious activity reporting rules,” Office of the Comptroller of the Currency (OCC), January 21, 2021. Access at: Bank Secrecy Act/Anti-Money Laundering : Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other AML Considerations.
  15. “Feedback on strengthening accountability SM&CR,” Prudential Regulation Authority (PRA), January 22, 2021. Access at: Strengthening Accountability: SM&CR: Forms update.
  16. “Best practices towards brokered deposits and interest rate restrictions,” Federal Deposit Insurance Corporation (FDIC), January 22, 2021. Access at: Unsafe and Unsound Banking Practices: Brokered Deposits and Interest Rate Restrictions.
  17. “Introduction of new fallbacks for derivatives,” International Swaps and Derivatives Association (ISDA), January 25, 2021. Access at: New IBOR Fallbacks Take Effect for Derivatives.
  18. “Set up of climate change centre,” European Central Bank (ECB), January 25, 2021. Access at: ECB sets up climate change centre.
  19. “Work programme on climate change,” Bank of England (BoE), January 25, 2021. Access at: Response to the Environmental Audit Committee letter to the Governor.
  20. “Establishing mechanism for transparency in regulatory actions,” Environmental Protection Agency (EPA), January 6, 2021. Access at: Strengthening Transparency in Pivotal Science Underlying Significant Regulatory Actions and Influential Scientific Information.
  21. “Disciplinary hearing in relations to misconduct,” Financial Reporting Council (UK) (FRC), January 18, 2021. Access at: Actuarial Scheme: Guidance on the commencement of investigation of cases by the Financial Reporting Council.
  22. “Work programme on innovative finance technology,” Bank for International Settlements (BIS), January 22, 2021. Access at: BIS Innovation Hub sets out annual work programme and launches Innovation Network.
  23. “ITS reporting of intra-group transactions and risk,” European Securities and Markets Authority (ESMA), January 18, 2021. Access at: Final draft report on draft ITS on IGT and RC reporting templates for conglomerates.
  24. “Modify of certain compliance dates,” Environmental Protection Agency (EPA), January 15, 2021. Access at: Extension of 2019 and 2020 Renewable Fuel Standard Compliance and Attest Engagement Reporting Deadlines.
  25. “Uniform compliance dates for food labelling regulations,” Food and Drug Administration (FDSA), January 6, 2021. Access at: Uniform Compliance Date for Food Labeling Regulations.
  26. “Amendment of federal pipeline safety regulations,” Pipeline and Hazardous Materials Safety Administration (PHMSA), January 9, 2021. Access at: Pipeline Safety: Gas Pipeline Regulatory Reform.
  27. “Joint response on IFRS 17 insurance contracts,” Insurance Europe (IE), January 25, 2021. Access at: Joint response to EFRAG consultation on its draft endorsement advice on IFRS 17.
  28. “Amendmets on NESHAP,” Environmental Protection Agency (EPA), January 14, 2021. Access at: National Emission Standards for Hazardous Air Pollutants: Carbon Black Production Residual Risk and Technology Review and Carbon Black Production Area Sources Technology Review.

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