Insight

Washington Report 360 | July 16, 2021

Third-party risk guidance; Bank merger guidelines; SEC ESG disclosures; Cryptocurrency regulatory framework

Amy S. Matsuo

Amy S. Matsuo

ESG and Regulatory Insights Lead, KPMG LLP

Key Highlights

  • The federal banking agencies proposed interagency guidance in order to provide a consistent approach to managing third party risks; the proposal is based on the OCC’s guidance with applicable changes to extend the scope to banking organizations supervised by the FRB and FDIC. (see KPMG Special Alert)
  • President Biden signed an Executive Order directing the DOJ, with the federal banking agencies, to update the bank merger guidelines to provide more robust scrutiny of mergers; CFPB is to proceed with rulemaking for consumer data portability. (see KPMG Special Alert)
  • SEC’s Asset Management Advisory Committee approved recommendations for consideration by the SEC on DE&I- and ESG-related disclosures; FSB published three reports on climate-related financial risks, addressing international cooperation, data availability, and disclosures.
  • FRB will release a report in late summer or fall to begin a consultation on a potential regulatory framework for cryptocurrencies and stablecoins.

Financial services regulatory and policy news

Banking

  • Federal banking agencies (FRB, OCC, FDIC):
  • Requested comment on proposed guidance related to third-party risk management
  • FRB:
  • Spoke about disclosures and data related to building strong foundations for addressing climate-related financial risks (FRB Governor Quarles, as Chair of the FSB)
  • Provided testimony on the SemiAnnual Monetary Report to Congress
  • OCC:
  • Announce organizational changes, including a new Senior Deputy Comptroller for Supervision Risk and Analysis position
  • CFPB:
  • Prioritized resources against racial bias in home appraisals
  • Released a report outlining trends in reported assistance on consumers’ credit records

Capital Markets

  • SEC:
  • Asset Management Advisory Committee met and approved recommendations to the SEC on disclosures related to Diversity and Inclusion and ESG; recommendations here and here
  • CFTC:
  • Market Risk Advisory Committee adopted for consideration by the CFPB the SOFR First recommendation, an initiative for switching trading conventions from LIBOR to SOFR
  • FINRA:
  • Announced clarifications of interpretations of its margin rule regarding minimum equity requirements
  • Continued to encourage firms to notify FINRA if they engage in activities related to digital assets

Other

  • White House:
  • President Biden signed an Executive Order on Promoting Competition
  • FTC:
  • Plans to launch a review of merger guidelines in response to the Executive Order on Promoting Competition
  • Will vote on whether to rescind the policy statement on ‘prior approval’ and ‘prior notice’ provisions in merger cases
  • NYFRB:
  • Announced the start of SMCCF corporate bond sales on July 12
  • BIS:
  • Launched—in conjunction with other international financial organizations—the Central Banks’ and Supervisors’ Climate Training Alliance
  • Released a report that found CBDCs have the potential to enhance cross-border payment efficiency
  • FSB:
  • Released a(n):
  • Report promoting climate-related disclosures
  • Report examining the availability of data with which to monitor and assess climate-related risks to financial stability
  • Roadmap for addressing climate-related financial risks
  • Progress report on LIBOR transition activities
  • Interim report on the lessons learned from COVID-19, noting significant increase in cyberattacks

Industry news headlines
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