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 Comptroller of the Currency (OCC):
Role of Supervisory Guidance
Publication Date: November 5th 2020

Risks Covered: Liquidity Risk
Business Processes Impacted: Funding & Liquidity Management
Multiple agencies are inviting comment on a proposed rule that would codify the Interagency Statement Clarifying the Role of Supervisory Guidance issued by the agencies on September 11, 2018 (2018 Statement).1

Federal Deposit Insurance Corporation (FDIC):
Interagency Statement LIBOR Transition for Loans
Publication Date: November 6th 2020

Risks Covered: Interest Rate Risk (non-trading book)
Business Processes Impacted: Brokerage Services
Multiple agencies have issued a joint statement reiterating that a bank may use any reference rate for its loans that the bank determines to be appropriate for its funding model and customer needs.2

Securities and Exchange Commission (SEC):
Use of Derivatives by Registered Investment Companies and Business Development Companies
Publication Date: November 2nd 2020
Risks Covered: Interest Rate Risk (non-trading book)
Business Processes Impacted: Consumer/Investor Protection
The agency has announced it is adopting a new exemptive rule under the Investment Company Act of 1940 designed to address the investor protection purposes and concerns underlying section 18 of the Act and to provide an updated and more comprehensive approach to the regulation of funds’ use of derivatives and the other transactions addressed in 17 CFR 270.3

Financial Reporting Council (UK) (FRC):
Time to Raise the Bar on Climate Change Reporting
Publication Date: November 10th 2020
Risks Covered: Climate Risk
Business Processes Impacted: Reporting
In its review, the agency notes minimal evidence that business models and company strategies have been adequately influenced by climate considerations, and that there is a significant variation in the quality of support, training and review provided to audit practices regarding climate change.4

HM Treasury (HMT):
Guidance on the taxation implications for businesses from the withdrawal of LIBOR and other benchmark rate reform [Updated November 12, 2020]
Publication Date: November 12th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The authority has announced the guidance has been updated with information about the tax implications of the withdrawal of London Inter-bank Offered Rate (LIBOR) for individuals and businesses.5

Financial Conduct Authority (FCA):
FCA announces changes to open banking identification requirements
Publication Date: November 3rd 2020
Risks Covered: Third Party Risk/Vendor Risk
Business Processes Impacted: Fraud and Financial Crime
The agency has announced that they will be introducing changes for UK-based third-party providers (TPPs) to limit the risk of disruption for open banking services after Brexit.6

Financial Stability Board (FSB):
FSB consults on regulatory and supervisory issues relating to outsourcing and third-party relationships
Publication Date: November 9th 2020
Risks Covered: Conduct Risk
Business Processes Impacted: Audit, Legal & Compliance
This discussion paper makes use of findings from a survey conducted amongst FSB members and identifies several issues and challenges with outsourcing and other third-party relationships.7

Bank for International Settlements (BIS):
Basel Committee publishes new details on global systemically important banks
Publication Date: November 11th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has issued the findings of its 2020 assessment of global systemically important banks (G-SIBs) including details to enhance the understanding of G-SIB scores.8

The Board of Governors of the Federal Reserve System (The Fed):
Privacy Act of 1974; Privacy Act Regulation
Publication Date: November 19th 2020
Risks Covered: Conduct Risk
Business Processes Impacted: Data Privacy
The Board is issuing a final rule revising its regulation implementing the Privacy Act of 1974 (Privacy Act Rule) to add BGFRS–43, “FRB-Security Sharing Platform”, to the list of systems of records identified as “exempt” systems of records. This final rule is effective from November 19, 2020.9

Securities and Exchange Commission (SEC):
Modernization of Rules and Forms for Compensatory Securities Offerings and Sales
Publication Date: November 24th 2020
Risks Covered: Climate Risk
Business Processes Impacted: Business Continuity Management
The agency is proposing for public comment amendments to Rule 701 under the Securities Act of 1933, which provides an exemption from registration for securities issued by non-reporting issuers pursuant to compensatory arrangements, and Form S-8, the Securities Act registration statement for compensatory offerings by reporting issuers.10

Office of the Comptroller of the Currency (OCC):
Fair Access to Financial Services
Publication Date: November 25th 2020
Risks Covered: Liquidity Risk
Business Processes Impacted: Funding & Liquidity Management
The agency is proposing a regulation to ensure that national banks and Federal savings associations offer and provide fair access to financial services. Comments must be received on or before January 4, 2021.11

Monetary Authority of Singapore (MAS):
MAS Launches World’s First Grant Scheme to Support Green and Sustainability-Linked Loans
Publication Date: November 24th 2020
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The agency has announced the launch of the Green and Sustainability-Linked Loan Grant Scheme (GSLS) to support corporates in obtaining green and sustainable financing by defraying the expenses of engaging independent service providers to validate the green and sustainability credentials of the loan.12

Office of the Superintendent of Financial Institutions (OSFI):
Bank of Canada and OSFI launch pilot project on climate risk scenarios
Publication Date: November 16th 2020
Risks Covered: Conduct Risk
Business Processes Impacted: Fraud and Financial Crime
The agency has announced plans for a pilot project to use climate-change scenarios to better understand the risks to the financial system related to a transition to a low-carbon economy. A small group of institutions from the banking and insurance sectors will participate voluntarily in the project.13

European Securities and Markets Authority (ESMA):
Brexit: Impact of the end of the transition period on 31 December 2020 on the trading obligation for derivatives (Article 28 of MiFIR)
Publication Date: November 25th 2020
Risks Covered: Conduct Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has issued a statement concerning the application of the trading obligation for derivatives (DTO) under Article 28 of Regulation (EU) No 600/20141 (MiFIR) after the end of the transition period provided for in the withdrawal agreement between the European Union (EU) and the United Kingdom (UK) on 31 December 2020.14

European Commission (EC):
Management plan 2020 – DG Climate Action
Publication Date: November 25th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Consumer/Investor Protection
The plan outlines the actions and main outputs to be achieved in 2020 which are in line with the general and specific objectives of DG CLIMA, as detailed in the 2020-2024 Strategic Plan, and reflects the priority actions identified in the Commission Work Programme for 2020.15

Australian Prudential Regulation Authority (APRA):
Integrating AASB 17 into the capital and reporting frameworks for insurers and updates to the LAGIC framework
Publication Date: November 25th 2020
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The authority is seeking comments from the public on proposals to align its capital and reporting frameworks for life, general and private health insurance with the Australian Accounting Standards Board 17 Insurance Contracts (AASB 17), where appropriate. APRA is also updating the Life and General Insurance Capital (LAGIC) framework as the framework was not revised since it was implemented in 2013. The final APRA capital and reporting standards will become effective from 1 July 2023.16

International Swaps and Derivatives Association (ISDA); Futures Industry Association (FIA):
FIA and ISDA respond to ESMA’s ‘Draft Guidelines on common procedures and methodologies on supervisory review and evaluation process of CCPs under Article 21 of EMIR’
Publication Date: November 18th 2020
Risks Covered: Systemic Risk
Business Processes Impacted: Audit, Legal & Compliance
Both regulators support standardisation of scope and depth of these reviews, and recommend that the reviews are not restricted to the elements outlined in the consultation, but should holistically review whether the risk management framework is fit for purpose.17

Agency for the Cooperation of Energy Regulators (ACER):
Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency
Publication Date: November 20th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published updated guidance on the application of Regulation (EU) 1227/2011 on wholesale energy market integrity and transparency (REMIT).18

UK Medicines and Healthcare Products Regulatory Agency (MHRA):
Regulating medical devices from 1 January 2021

Publication Date: November 4th 2020
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
From 1 January 2021, the agency has taken on the responsibilities for the UK medical devices market that are currently undertaken through the EU system.19

Federal Energy Regulatory Commission (FERC):
FERC Affirms, Clarifies PURPA Final Rule

Publication Date: November 19th 2020
Risks Covered: Business Cycle Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has affirmed Order No. 872, the final rule that revised its regulations implementing the Public Utility Regulatory Policies Act (PURPA) to address significant changes that have taken place in the nation’s energy markets.20

FORTHCOMING REGULATIONS:

Swiss Financial Market Supervisory Authority (FINMA)
Transparency obligations for climate risks – FINMA opens consultation

The agency has issued a consultation proposing amendments to its Circulars 2016/1 “Disclosure – banks” and 2016/2 “Disclosure – insurers”. The aim is to increase transparency with regard to the financial risks posed by the impact of climate change on financial institutions in the longer term. Comments were to be submitted by 19 January 2021.21

International Association of Insurance Supervisors (IAIS)
Public Consultation on the draft definition and high-level principles to inform the criteria that will be used to assess whether the Aggregation Method provides comparable outcomes to the Insurance Capital Standard

The agency has published a public consultation for feedback on the draft definition of comparable outcomes and an overarching approach which has been designed to guide the development of high-level principles and criteria by suggesting areas of focus.22

Financial Conduct Authority (FCA)             
Reporting of securities financing transactions under UK SFTR after the transition period

The agency has published information explaining what Trade Repositories and UK counterparties need to do to ensure compliance with the UK SFTR reporting obligations at the end of the transition period, 31 December 2020.23

Insurance Europe (IE)
Comments on EC roadmap on the review of VAT rules for financial and insurance services
The agency welcomes the EC plans to tackle the lack of VAT neutrality, legal uncertainty and regulatory complexity, however it highlights the need to go further and ensure that VAT rules are adapted to reflect the realities of the modern business environment.24

Footnotes:

  1. “Seeking comments on clarifying role of supervisory guidance,” Office of the Comptroller of the Currency (OCC), November 5, 2020. Access at: Role of Supervisory Guidance.
  2. “Statement on reference rate,” Federal Deposit Insurance Corporation (FDIC), November 6, 2020. Access at: Interagency Statement LIBOR Transition for Loans.
  3. “New rule on investor protection,” Federal Reserve (The Fed), October 9, 2020. Access at: Use of Derivatives by Registered Investment Companies and Business Development Companies.
  4. “Audit practices regarding climate change,” Financial Reporting Council (UK) (FRC), November 10, 2020. Access at: Time to Raise the Bar on Climate Change Reporting.
  5. “Guidance on tax implications of withdrawal of LIBOR,” HM Treasury (HMT), November 12, 2020. Access at: Guidance on the taxation implications for businesses from the withdrawal of LIBOR and other benchmark rate reform [Updated November 12, 2020].
  6. “Introduction of UK based TPPs,” Financial Conduct Authority (FCA), November 3, 2020. Access at: FCA announces changes to open banking identification requirements.
  7. “Findings from a survey,” Financial Stability Board, November 9, 2020. Access at: FSB consults on regulatory and supervisory issues relating to outsourcing and third-party relationships.
  8. “Findings on 2020 assessment of G-SIB scores,” Bank for International Settlements, November 11, 2020. Access at: Basel Committee publishes new details on global systemically important banks.
  9. “Final rule on Privacy Act,” The Board of Governors of the Federal Reserve System (The Fed), November 19, 2020. Access at: Privacy Act of 1974; Privacy Act Regulation.
  10. “Seeking comments on amendments to Rule 701,” Securities and Exchange Commission (SEC), November 24, 2020. Access at: Modernization of Rules and Forms for Compensatory Securities Offerings and Sales.
  11. “Regulation on national banks and federal savings associations offer and fair access,” Office of the Comptroller of the Currency (OCC), November 25, 2020. Access at: Fair Access to Financial Services.
  12. “Launch of GSLS,” Monetary Authority of Singapore (MAS), November 24, 2020. Access at: MAS Launches World’s First Grant Scheme to Support Green and Sustainability-Linked Loans.
  13. “Pilot project to use climate change scenarios,” Office of the Superintendent of Financial Institutions (OSFI), November 16, 2020. Access at: Bank of Canada and OSFI launch pilot project on climate risk scenarios.
  14. “Statement on trading obligation for DTO,” European Securities and Markets Authority (ESMA), November 25, 2020. Access at: Brexit: Impact of the end of the transition period on 31 December 2020 on the trading obligation for derivatives (Article 28 of MiFIR).
  15. “Climate action plans,” European Commission, November 25, 2020. Access at: Management plan 2020 – DG Climate Action.
  16. “Updates on LAGIC framework,” Australian Prudential Regulation Authority (APRA), November 25, 2020. Access at: Integrating AASB 17 into the capital and reporting frameworks for insurers and updates to the LAGIC framework.
  17. “Review of risk management framework,” International Swaps and Derivatives Association (ISDA); Futures Industry Association (FIA), November 18, 2020. Access at: FIA and ISDA respond to ESMA’s ‘Draft Guidelines on common procedures and methodologies on supervisory review and evaluation process of CCPs under Article 21 of EMIR’.
  18. “Guidance on REMIT,” Agency for the Cooperation of Energy Regulators (ACER), November 20, 2020. Access at: Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency.
  19. “UK medical devices’ market responsibilities,” UK Medicines and Healthcare Products Regulatory Agency (MHRA), November 4, 2020. Access at: Regulating medical devices from 1 January 2021.
  20. “Final rule on PURPA,” Federal Energy Regulatory Commission (FERC), November 19, 2020. Access at: FERC Affirms, Clarifies PURPA Final Rule.
  21. “Amendments with regards to climate change on financial institutions,” Swiss Financial Market Supervisory Authority (FINMA), November 10, 2020. Access at: Transparency obligations for climate risks – FINMA opens consultation.
  22. “Feedback on development of high level principles area of focus,” International Association of Insurance Supervisors (IAIS), November 9, 2020. Access at: Public Consultation on the draft definition and high-level principles to inform the criteria that will be used to assess whether the Aggregation Method provides comparable outcomes to the Insurance Capital Standard.
  23. “Information on UK SFTR,” Financial Conduct Authority (FCA), November 25, 2020. Access at: Reporting of securities financing transactions under UK SFTR after the transition period.
  24. “VAT rules on neutrality, legal uncertainty and regulatory complexity,” Insurance Europe (IE), November 24, 2020. Access at: Financial services – improving resilience against cyberattacks (new rules).

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This document is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this document and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional.

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