Washington Report 360 | August 10, 2018

Key highlights

• National regulators, including the CFPB, have joined an initiative to create a Global Financial Innovation Network and promote a “global sandbox” for financial technologies.
• Focus on clearing companies:
  • Proposal to exempt non-U.S. clearing organization from CFTC registration
  • International standards setters i) seek input on post-crisis reforms, and ii) study interdependencies between CCPs and clearing members.

Financial services legislative and regulatory news

The CFTC approved a proposed rule to establish a regulatory framework allowing clearing organizations located outside of the U.S. to be exempt from registering as derivatives clearing organizations.

FDIC Chairman Jelena McWilliams identified as top priorities: examining regulatory burden on small banks, speeding up bank charter applications, and helping to introduce new financial products to underserved communities. (WSJ 08/06)

The New York Department of Financial Services reminded its regulated institutions of new compliance requirements under the NYDFS cybersecurity regulation beginning September 4, 2018; the requirements include annual reporting by the Chief Information Security Officer, encryption of nonpublic information, policies and procedures for secure disposal of information, and risk-based monitoring of persons with access to information systems.

The Conference of State Bank Supervisors is considering a case to challenge the OCC’s new FinTech charter (WSJ 08/08)

Financial services policy news

The FRB released its July 2018 Senior Loan Officer Opinion Survey on Bank Lending Practices indicating that, during the second quarter of 2018, banks eased their standards on C&I loans though their standards on residential real estate and auto loans remained little changed and tightened for some credit card loans.

The CFPB announced that it has joined eleven financial regulators and related organizations in an initiative to form the Global Financial Innovation Network (GFIN), which would facilitate collaboration and information sharing, joint policy work, and cross-border trials. CFPB and other GFIN members are seeking comment on a related consultative document.

The Administration has moved to reduce the staff size of the Office of Financial Research, an independent bureau within the Treasury Department that was formed by the Dodd-Frank Act to support the FSOC. (Reuters 08/08)

The FSB, BCBS, IOSCO and CPMI published a consultative document seeking input on how post-crisis reforms have affected incentives to centrally clear over-the-counter derivatives.

The FSB, BIS, BCBS, and IOSCO jointly released a second report mapping interdependencies between central counterparties (CCPs) and their clearing members and other financial services providers; the report is generally consistent with the first report, finding that exposures to CCPs are concentrated in a small number of entities and that there is a core group of highly connected CCPs.