Insight

Washington Report 360 | June 11, 2021

SEC changes to capital markets structure; HUD reinstating AFFH requirement; Focus on crpyt/digital assets; FSB TCFD consultation paper

Amy S. Matsuo

Amy S. Matsuo

ESG and Regulatory Insights Lead, KPMG LLP

Key Highlights

  • SEC will be reviewing and considering changes to the capital markets structure, including topics related to insider trading, payment for order flow, best execution, and national best bid and offer.
  • FRB says it is aiming to adopt the last parts of Basel III by January 2023, indicating the changes are expected to impact firms based on their risk profile; FRB says, in general, US capital requirements would be reduced for credit risk and increased for operational and market risk.
  • HUD is reinstating the Affirmatively Furthering Fair Housing (AFFH) requirement, which was rescinded and replaced by the previous administration; HUD’s interim final rule, which becomes effective July 31, 2021, also rescinds the previous administration’s rule (the 2020 Preserving Communities and Neighborhood Choice Rule”).
  • Ongoing focus to crypto and digital assets seen in Senate Committee hearing, BCBS paper on prudential treatment of bank cryptoasset exposures, and IRS request for authorization to collect information on cryptoasset transfers.
  • Regulatory attention to climate-related risk includes an FSB TCFD consultation paper addressing climate-related metrics, targets, and transition plans, and a NY DFS paper on insurers’ exposures to climate-related financial risk.

Financial services regulatory and policy news

Capital Markets

  • SEC:
  • Spoke about achieving core public policy goals as new technology changes the financial industry, key topics include payment for order flow, best execution, national best bid and offer, and gamification.
  • Spoke about potential changes to the insider trading regime at the WSJ CFO Network Summit.
  • CFTC:
  • Interest Rate Benchmark Subcommittee (of the Market Risk Advisory Committee) recommended transitioning interdealer swap market trading conventions from LIBOR to SOFR on July 26.
  • FINRA:
  • Sought comment on short interest position reporting enhancements and other changes related to short sale reporting.

Other

  • Senate Banking Committee:
  • Held a hearing on the opportunities of a central bank digital currency (CBDC).
  • BIS:
  • Published a BCBS preliminary proposal on the prudential treatment of bank cryptoasset exposures.
  • Announced collaboration on a cross-border CBDC experiment.
  • Issued an FSI Brief on the “accountability regime of banking supervisors”.
  • FSB:
  • Published two consultative documents by the Task Force on Climate-Related Financial Disclosures (TCFD).
  • HUD:
  • Published an interim final rule to reinstate the Affirmatively Furthering Fair Housing requirement beginning July 31, 2021.

Insurance

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