Washington Report 360 | September 14, 2018

Key highlights

• Five federal financial regulatory agencies clarified that supervisory guidance is not law and does not guide enforcement actions but rather outlines supervisory expectations, priorities, and general views. The joint statement does not define “enforcement actions” specifically as they relate to supervisory actions.
• The SEC similarly stated that staff statements are nonbinding and create no enforceable legal rights or obligations.
• The Federal Reserve published a paper that proposes a new method for estimating bank asset holdings for systemic risk monitoring using interbank lending and stock market returns.
• The NY Department of Financial Services approved two new virtual currency products.

Financial services legislative and regulatory news

The NY Department of Financial Services approved two new virtual currency products that will be tied to the U.S. dollar and referred to as “stablecoin.” The issuing companies have limited purpose trust charters from NYDFS and will be subject to supervision and examination.

The Federal Reserve approved final amendments to the liability provisions of Regulation CC addressing substitute, or electronic, checks.

Pursuant to EGRRCPA:

• The OCC proposed a rule to allow federal savings associations with total consolidated assets of $20 billion or less to operate with national bank powers.
• The CFPB issued an interim final rule updating model disclosures to reflect changes made to the Fair Credit Reporting Act.
• The FDIC released the first of two proposed rules addressing brokered deposits.

The House of Representatives passed:

• H.R. 5059, the State Insurance Regulation Preservation Act, which would define Insurance Savings and Loan Holding Companies and create a regulatory framework.
• H.R. 6411, the FinCEN Improvement Act of 2018, which would require FinCEN to work with foreign financial intelligence units to thwart the use of virtual currencies by terrorist groups for illicit activity and money laundering.

Financial services policy news

The Federal Reserve, CFPB, FDIC, NCUA, and OCC clarified that supervisory guidance is not law and does not guide enforcement actions but can outline supervisory expectations, priorities, and general views.

The SEC reiterated its “longstanding position” that all staff statements and documents are nonbinding and create no enforceable legal rights or obligations of the Commission or other parties.

The CFTC Chair discussed the agency's updated approach to cross-border swaps and the objectives of increasing cooperation with global regulators; rationalizing regulations; reducing market fragmentation; and fostering liquidity pools.

FINRA issued a report on regulatory technology (RegTech) in the securities industry, identifying five areas where industry participants have most prominently leveraged RegTech innovations.

FINRA proposed to expand the summary firm data related to over-the-counter equity trading volume data published on its website.

The SEC announced that it will end the quoting and trading requirements of the two-year Tick Size Pilot on September 28, 2018; the pilot program expires October 2, 2018.

The Federal Reserve published a paper proposing a new method for using interbank lending and stock market returns to measure bank asset holdings for systemic risk monitoring.