Non-financial commercial companies often secure their derivatives transactions with financial institutions in a manner other than posting cash margin, such as by granting liens on a commercial end-user’s assets. A proposed regulation from the US federal banking regulators to revise risk-based capital rules regarding derivatives in order to implement an international standard may have the … Continue Reading
On November 21, 2018, the Office of the Comptroller of the Currency (the “OCC”), the Board of Governors of the Federal Reserve System (the “Board”), and the Federal Deposit Insurance Corporation (the “FDIC”) (collectively, the “Federal Banking Agencies” or the “Agencies”) jointly issued a notice of proposed rulemaking (the “NPR” or the “Proposal”) that would … Continue Reading
Late last month, the US federal banking agencies (the Federal Reserve Board (FRB), Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC), collectively, the “banking agencies”) issued an interim final rule that implements section 403 of the recently enacted “Economic Growth, Regulatory Relief, and Consumer Protection Act” (the “Act”), to … Continue Reading
The Commodity Futures Trading Commission (CFTC) recently approved two applications from LedgerX – a platform for trading and clearing Bitcoin options – to become registered as a swap execution facility (SEF) and derivatives clearing organization (DCO). These approvals make LedgerX the first DCO and the second SEF approved to facilitate digital currency-related derivatives activity (another … Continue Reading
On December 19, 2016, the Federal Reserve Board announced that it had finalized a regulation requiring large banking organizations (covered companies) to publicly disclose on a quarterly basis certain information about their liquidity coverage ratios (LCRs). The final regulation is substantially similar to the proposed regulation issued in December 2015, but there have been minor … Continue Reading
The Federal Reserve Board (FRB) recently proposed new restrictions on the ability of a financial holding company (FHC) to engage in physical commodity activities. The complex proposal includes (i) heightened capital requirements for certain physical commodity activities, (ii) changes to the maximum amount of specified physical commodities FHCs can hold, (iii) clarification of restrictions on … Continue Reading
On June 14, 2016, the Federal Reserve Board (“FRB”) published an Advance Notice of Proposed Rulemaking (“ANPRM”) requesting comments on how it should formulate capital standards for insurance companies that own banks that carry federal deposit insurance (“insured banks”). Comments are due on or before August 17, 2016. Section 171 of the Dodd-Frank Wall Street … Continue Reading
The US federal banking regulators (the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of Comptroller of the Currency) recently issued a Notice of Proposed Rulemaking (NPRM) proposing a new regulation that would impose another liquidity requirement on large financial institutions. The net stable funding ratio, or NSFR, would require that covered … Continue Reading
On April 11, 2016, the Federal Reserve Board published a final rule that allows banking organizations under its jurisdiction the flexibility to include some state and municipal securities in meeting certain of its liquidity requirements. It is effective July 1, 2015. In September 2014, the US federal banking regulators (the Federal Reserve Board, the Office … Continue Reading
Market participants must be mindful of the robust enforcement environment at the CFTC and U.S. futures exchanges. In 2015, the CFTC brought numerous enforcement actions and continued to impose aggressive civil monetary penalties on market participants, including energy and agricultural companies. Significantly, the CFTC also started to pivot from implementing to enforcing its regulations promulgated … Continue Reading
Under current international capital standards issued by the Basel Committee of the Bank for International Settlements, certain large banking organizations, with regulatory approval, can use their sophisticated internal risk-based models to determine the risk weight of their assets, called the Internal Ratings-Based Approach. The remaining banking organizations use the Standardized Approach. The standardized risk-based capital … Continue Reading
On December 1, 2015, the Federal Reserve Board published in the Federal Register a proposed rule to require all depository institution holding companies to publicly disclose on a quarterly basis certain information about their liquidity coverage ratios. In September 2014, the US banking regulators had finalized the liquidity coverage ratio rule, which requires that certain … Continue Reading
Recently, the Federal Reserve Board proposed new regulations, based on recommendations from international regulators, to require global systemically important US banks, and such non-US banks with US operations, to maintain a “total loss-absorbing capacity” ratio that would be satisfied by maintaining additional capital and issuing certain types of unsecured long term debt. Kathleen A. Scott … Continue Reading
On November 6, 2015, US banking regulators (the Office of Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve Board) issued instructions (“Instructions”) for banking entities on making regulatory capital adjustments for their investments in covered funds subject to the Volcker Rule. Both the Volcker Rule and the agencies’ risk-based regulatory … Continue Reading
The Financial Industry Regulatory Authority (“FINRA”) has issued Regulatory Notice 15-33, which provides guidance on prudent practices that broker-dealers should consider and implement in order to effectively manage liquidity. In its notice, FINRA stressed that failure to manage liquidity has contributed to firm failures as well as wide spread systemic crises. The notice described a review … Continue Reading
On July 20, 2015, the Federal Reserve Board issued a final rule imposing an additional capital surcharge on the largest US bank holding companies. This additional capital surcharge would be in addition to the capital conservation buffer already required under existing bank holding company capital requirements, and would be applicable to those bank holding companies … Continue Reading
In September 2014, the US federal banking regulators finalized the Liquidity Coverage Ratio (LCR) rules. On May 28, 2015, the Federal Reserve Board published proposed rules to allow additional liquid assets to be used to meet the ratio. Comments will be accepted on the proposed rule through July 24, 2015. The LCR requires that certain … Continue Reading
On April 9, 2015, the Federal Reserve Board announced that it was broadening the applicability of its policy on the formation and expansion of small bank holding companies from $500 million in total consolidated assets to $1 billion, and extending the policy to savings and loan holding companies. The amendments to the policy are … Continue Reading
Banking organizations are subject to complex risk-based regulatory capital rules. Some banking organizations may use internal risk management models approved by the relevant regulator; other must use standardized rules set out in the regulations. On April 6, 2015, Frequently Asked Questions were released by the federal banking regulators to assist banking organizations in calculating their … Continue Reading
The Basel Committee of the Bank for International Settlements, a group of the world’s banking regulators, develops international banking standards. The Basel Committee again is considering revising the current international risk-based capital requirements. Kathleen A. Scott wrote a recent column in the New York Law Journal that discusses the Basel Committee review process and the … Continue Reading
Just before the end of 2014, the President signed legislation amending the Dodd-Frank Wall Street Reform and Consumer Protection Act to clarify capital requirements for insurance companies that own banks. On December 18, 2014, the President signed S. 2270, the Insurance Capital Standards Clarification Act of 2014 (Pub. Law No. 113-279). S. 2270 amended section … Continue Reading
On December 30, 2014, the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) published in the Federal Register interim final rules amending their capital, lending limit and liquidity regulations to ensure that they are not affected by the implementation of special resolution regulations in jurisdictions outside the United States and … Continue Reading
On December 18, 2014, the Federal Reserve Board published in the Federal Register a Notice of Proposed Rulemaking that would impose additional capital requirements for the largest and most interconnected US bank holding companies. This surcharge would be in addition to the capital conservation buffer already required under existing bank holding company capital requirements. If … Continue Reading
On September 3, 2014, the US federal banking regulators (the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of Comptroller of the Currency) announced the final adoption of the liquidity coverage ratio for large financial institutions under their supervision. The liquidity coverage ratio, or LCR, requires that covered banking organizations maintain sufficient … Continue Reading
