Capital adequacy

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…

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…

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…

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…

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…

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…

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…

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…

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…

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 …