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:

Financial Conduct Authority (FCA):
PS21/3 Building operational resilience
Publication Date: March 29th 2021

Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
The agency has published its final rules and guidance on new requirements to strengthen operational resilience in the financial services sector.1

Financial Industry Regulatory Authority (FINRA):
FINRA Adopts Rules to Address Brokers with a Significant History of Misconduct
Publication Date: March 11th 2021

Risks Covered: Conduct Risk
Business Processes Impacted: Brokerage Services
The agency has adopted new rules to address brokers with a significant history of misconduct and the broker-dealers that employ them.2

European Banking Authority (EBA):
Guidelines on stress testing (revised) : Guidelines
Publication Date: March 24th 2021
Risks Covered: Conduct Risk
Business Processes Impacted: Risk Management & Stress Testing
ECB and FCA have published Committee of European Banking Supervisors (CEBS) Guidelines on stress testing.3

European Banking Authority (EBA):
Implementing Technical Standards package for 2022 benchmarking exercise
Publication Date: March 23th 2021
Risks Covered: Credit Risk
Business Processes Impacted: Risk Management & Stress Testing
The authority has published a consultation paper proposing to amend the EU Commission’s Implementing Regulation on the benchmarking of credit risk, market risk and models so as to include some new elements for the 2022 exercise.4

European Banking Authority (EBA):
EBA GL 2019 04 – CT GLs on ICT and security risk management
Publication Date: March 22nd 2021
Risks Covered: Security Risk
Business Processes Impacted: Information Technology
The agency has published the following guidance on information and communications technology (ICT) and security risk management.5

European Union (EU):
ESMA sees high risk for investors in non-regulated crypto assets
Publication Date: March 17th 2021
Risks Covered: Credit Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The report analyses the impact of COVID-19 on financial markets during the second half of 2020 and highlights the increasing credit risks linked to significant corporate and public debt overhang, as well as the risks linked with investments in non-regulated crypto-assets.6

European Banking Authority (EBA):
The EBA would make its Basel III monitoring exercise mandatory
Publication Date: March 16th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has published a decision, which would change the Basel III monitoring exercise from its current voluntary nature to a mandatory exercise from December 2021.7

UK Parliament:
The Electricity Trading (Development of Technical Procedures) (Day-Ahead Market Timeframe) Regulations 2021
Publication Date: March 24th 2021
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
A draft of the Electricity Trading (Development of Technical Procedures) (Day-Ahead Market Timeframe) Regulations 2021 were published, together with a draft explanatory memorandum. These Regulations would implement new cross-border electricity trading arrangements at the day-ahead market timeframe, in accordance with provisions in the UK-EU Trade and Co-operation Agreement.8

Federal Energy Regulatory Commission (FERC):
Climate Change, Extreme Weather, and Electric System Reliability; Supplemental Notice of Technical Conference Inviting Comments
Publication Date: March 19th 2021
Risks Covered: Climate Risk
Business Processes Impacted: Business Continuity Management
The Commission staff would convene a technical conference to discuss issues surrounding the threat to electric system reliability posed by climate change and extreme weather events.9

Federal Communications Commission (FCC):
Emergency Alert System, Wireless Emergency Alerts; National Defense Authorization Act for Fiscal Year 2021, Delivering Alerts Via the Internet, Including Through Streaming Services
Publication Date: March 30th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Brokerage Services
The agency is exploring opportunities to improve the way the public receives emergency alerts from the Nation’s Emergency Alert System (EAS) and Wireless Emergency Alerts System (WEA) on their mobile phones, televisions, and radios.10

European Banking Authority (EBA):
Regulatory Technical Standards on the conditions for assessing the materiality of extensions and changes of internal approaches for credit, market and operational risk : 2013-06-10 BSG Opinion to EBA CP 2013 02
Publication Date: March 24th 2021
Risks Covered: Outsourcing Risk
Business Processes Impacted: Business Continuity Management
Banking Stakeholder Group comments on EBA Draft Regulatory Technical Standards on the conditions for assessing the materiality of extensions and changes of internal approaches when calculating own funds requirement for credit, market and operational risk under articles 138(5), 301(3)(a) and 352(3)(a) of CRR (EBA/CP/20132).11

European Banking Authority (EBA):
Regulatory Technical Standards on default probabilities and losses given default for default risk model under the Fundamental Review of the Trading Book : Consultation paper
Publication Date: March 24th 2021
Risks Covered: Data Security Risk
Business Processes Impacted: Data Quality Management
The agency is seeking views on draft regulatory technical standards on default probabilities and losses given default for default risk model under the FRTB.12

European Banking Authority (EBA):
Implementing Technical Standards on supervisory reporting changes related to CRR2 and Backstop Regulation : Consultation Paper on the ITS on Supervisory Reporting
Publication Date: March 24th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has published a consultation paper on supervisory reporting changes related to CRR2 and Backstop Regulation.13

Financial Conduct Authority (UK):
Disclosure Guidance and Transparency Rules Chapter 5 (DTR 5) User Guide
Publication Date: March 22nd 2021
Risks Covered: Climate Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency’s sourcebook containing the Disclosure Guidance and Transparency Rules. When considering this term in the context of financial services, reference should be made to the FCA Handbook glossary definition of DTR.14

Office of the Superintendent of Financial Institutions (CA):
OSFI unwinds regulatory adjustments for banks subject to market risk capital adequacy rules
Publication Date: March 16th 2021
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency announced the unwinding of regulatory adjustments to the market risk capital requirements for banks, effective May 1, 2021. One year ago, the regulator introduced extraordinary regulatory adjustments to support the financial and operational resilience of federally regulated financial institutions (FRFIs) in response to the initial wave of the COVID-19 pandemic.15

Financial Industry Regulatory Authority (FINRA):
Regulatory Notice 21-11
Publication Date: March 16th 2021
Risks Covered: Climate Risk
Business Processes Impacted: Finance & Performance Management
The agency is seeking comment on proposed amendments to Rule 4210 (Margin Requirements) that would clarify and incorporate into the rule current interpretations regarding when issued and other extended settlement transactions, and provide relief to facilitate the application of the rule interpretations to these transactions.16

Financial Conduct Authority (FCA):
FCA announcement on future cessation and loss of representativeness of the LIBOR benchmarks
Publication Date: March 5th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has announced the future cessation or loss of representativeness of the LIBOR benchmark.17

European Banking Authority (EBA):
Consultation paper on draft ITS on Pillar 3 disclosures on ESG risks
Publication Date: March 1st 2021
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
The authority invites comments on draft ITS on Pillar 3 disclosures on environmental, social and governance (ESG) risks.18

European Banking Authority (EBA):
FinTech: Regulatory sandboxes and innovation hubs
Publication Date: March 15th 2021
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
In this report the European Supervisory Authorities (the ESAs) set out a comparative analysis of the innovation facilitators established to date in the EU, further to the mandate specified in the European Commission’s March 2018 FinTech Action Plan.19

Office of the Superintendent of Financial Institutions (OSFI):
Advancing a more resilient and proportional banking regulatory framework in Canada
Publication Date: March 11th 2021
Risks Covered: Credit Risk
Business Processes Impacted: Reporting
The agency launches consultations on Basel III implementation and a new tailored approach to capital and liquidity requirements for smaller, less complex banks.20

FORTHCOMING REGULATIONS:

Consumer Financial Protection Bureau (CFPB):
Equal Credit Opportunity (Regulation B); Discrimination on the Bases of Sexual Orientation and Gender Identity
The agency is issuing this interpretive rule to clarify that, with respect to any aspect of a credit transaction, the prohibition against sex discrimination in the ECOA and Regulation B, which implements ECOA, encompasses sexual orientation discrimination and gender identity discrimination, including discrimination based on actual or perceived nonconformity with sex-based or gender-based stereotypes and discrimination based on an applicant’s associations.21

Department of the Treasury, Office of the Comptroller of the Currency (OCC):
Regulatory Capital Rule: Emergency Capital Investment Program
The multiple agencies are issuing an interim final rule that provides that preferred stock issued under ECIP qualifies as additional tier 1 capital and that subordinated debt issued under ECIP qualifies as tier 2 capital under the agencies’ capital rule.22

Federal Deposit Insurance Corporation, Department of the Treasury, Federal Reserve System, National Credit Union Administration, Farm Credit Administration, Office of the Comptroller of the Currency:     
Loans in Areas Having Special Flood Hazards; Interagency Questions and Answers Regarding Private Flood Insurance
Multiple agencies proposes to supplement the Interagency Questions and Answers Regarding Flood Insurance with new questions and answers regarding the acceptance of flood insurance policies issued by private insurers pursuant to the Agencies’ private flood insurance final rule issued in February 2019.23

European Banking Authority (EBA):
CP on the revised Guidelines on Risk-Based Supervision
Draft guidelines on the characteristics of a risk‐based approach to anti‐money laundering and terrorist financing supervision, and the steps to be taken when conducting supervision on a risk‐sensitive basis under Article 48(10) of Directive (EU) 2015/849 (amending the Joint Guidelines ESAs 2016 72).24

European Securities and Markets Authority (ESMA):
Consultation Paper on draft technical standards under the ECSP Regulation
The agency is seeking views on draft technical standards under the European Commission’s interest crowdfunding service (ECSP) Regulation.25

European Securities and Markets Authority (ESMA):
Compliance table Guidelines Conflict of interest
The agency has published guidance on conflict of interest management in the capital markets.26

Footnotes:

  1. “Final rule on operational resilience,” Financial Conduct Authority (FCA), March 29, 2021. Access at: PS21/3 Building operational resilience.
  2. “New rules on misconduct of broker-dealers,” Financial Industry Regulatory Authority (FINRA), March 11, 2021. Access at: FINRA Adopts Rules to Address Brokers With a Significant History of Misconduct.
  3. “Guidelines on stress testing,” European Banking Authority (EBA), March 24, 2021. Access at: Guidelines on stress testing (revised) : Guidelines.
  4. “Consultation paper on benchmarking of credit risk,” European Banking Authority (EBA), March 23, 2021. Access at: Implementing Technical Standards package for 2022 benchmarking exercise.
  5. “Guidance on ICT and security risk management,” European Banking Authority (EBA), March 22, 2021. Access at: EBA GL 2019 04 – CT GLs on ICT and security risk management.
  6. “Report on impact of Covid-19 on financial markets,” European Union (EU), March 17, 2021. Access at: ESMA sees high risk for investors in non-regulated crypto assets.
  7. “Basel III monitoring exercise,” European Banking Authority (EBA), March 16, 2021. Access at: The EBA will make its Basel III monitoring exercise mandatory.
  8. “Draft of the electricity trading regulations 2021,” UK Parliament, March 24, 2021. Access at: The Electricity Trading (Development of Technical Procedures) (Day-Ahead Market Timeframe) Regulations 2021.
  9. “Technical conference on electric system and extreme weather events,” Federal Energy Regulatory Commission (FERC), March 19, 2021. Access at: Climate Change, Extreme Weather, and Electric System Reliability; Supplemental Notice of Technical Conference Inviting Comments.
  10. “Improve public emergency alerts system,” Federal Communications Commission (FCC), March 30, 2021. Access at: Emergency Alert System, Wireless Emergency Alerts; National Defense Authorization Act for Fiscal Year 2021, Delivering Alerts Via the Internet, Including Through Streaming Services.
  11. “Comments on assessing credit, market, operational risk calculation,” European Banking Authority (EBA), March 24, 2021. Access at: Regulatory Technical Standards on the conditions for assessing the materiality of extensions and changes of internal approaches for credit, market and operational risk : 2013-06-10 BSG Opinion to EBA CP 2013 02.
  12. “RTS on default risk model under FRTB,” European Banking Authority (EBA), March 24, 2021. Access at: Regulatory Technical Standards on default probabilities and losses given default for default risk model under the Fundamental Review of the Trading Book : Consultation paper.
  13. “Paper on supervisory reporting changes to CRR2,” European Banking Authority (EBA), March 24, 2021. Access at: Implementing Technical Standards on supervisory reporting changes related to CRR2 and Backstop Regulation : Consultation Paper on the ITS on Supervisory Reporting.
  14. “Sourcebook: Disclosure guidance and transparency rules,” Financial Conduct Authority (FCA), March 22, 2021. Access at: Disclosure Guidance and Transparency Rules Chapter 5 (DTR 5) User Guide.
  15. “Regulatory adjustment to market risk capital requirements,” Office of the Superintendent of Financial Institutions (OSFI), March 16, 2021. Access at: OSFI unwinds regulatory adjustments for banks subject to market risk capital adequacy rules.
  16. “Seeking comments on proposed amendment to rule 4210,” Financial Industry Regulatory Authority (FINRA), March 16, 2021. Access at: Regulatory Notice 21-11.
  17. “Future cessation of libor benchmark,” Financial Conduct Authority (FCA), March 5, 2021. Access at: FCA announcement on future cessation and loss of representativeness of the LIBOR benchmarks.
  18. “Seeking comments on ITS on Pillar 3 disclosures on ESG risks,” European Banking Authority (EBA), March 1, 2021. Access at: Consultation paper on draft ITS on Pillar 3 disclosures on ESG risks.
  19. “Report on FinTech action plan,” European Banking Authority (EBA), March 15, 2021. Access at: FinTech: Regulatory sandboxes and innovation hubs.
  20. “Consultations on Basel III,” Office of the Superintendent of Financial Institutions (OSFI), March 11, 2021. Access at: Advancing a more resilient and proportional banking regulatory framework in Canada.
  21. “Rule against sex discrimination in the ECOA and Reg B,” Consumer Financial Protection Bureau (CFPB), March 16, 2021. Access at: Equal Credit Opportunity (Regulation B); Discrimination on the Bases of Sexual Orientation and Gender Identity.
  22. “Interim final rule under ECIP qualifies,” Department of the Treasury, Office of the Comptroller of the Currency (OCC), March 22, 2021. Access at: Regulatory Capital Rule: Emergency Capital Investment Program.
  23. “Propose to supplement the interagency Q&As regarding flood insurance,” Federal Deposit Insurance Corporation, Department of the Treasury, Federal Reserve System, National Credit Union Administration, Farm Credit Administration, Office of the Comptroller of the Currency, March 18, 2021. Access at: Loans in Areas Having Special Flood Hazards; Interagency Questions and Answers Regarding Private Flood Insurance.
  24. “Draft guidelines on AML,” European Banking Authority (EBA), March 17, 2021. Access at: CP on the revised Guidelines on Risk-Based Supervision.
  25. “Draft technical standards on ECSP regulation,” European Securities and Markets Authority (ESMA), March 26, 2021. Access at: Consultation Paper on draft technical standards under the ECSP Regulation.
  26. “Guidance on conflict of interest management in capital markets,” European Securities and Markets Authority (ESMA), March 8, 2021. Access at: Compliance table Guidelines Conflict of interest.

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