US Reg Round Up: 19/09/2024
Federal Reserve
The FED issues FOMC statement - 18 September 2024
The Federal Reserve's Federal Open Market Committee (FOMC) recently announced that economic activity continues to expand at a solid pace, although job gains have slowed and the unemployment rate, while low, has increased slightly. Inflation is making progress toward the Committee's 2 percent objective but remains somewhat elevated. Considering these factors, the Committee decided to lower the target range for the federal funds rate by half a percentage point to 4.75 to 5 percent, indicating a greater confidence in the sustainability of inflation moving toward the target. The Committee will continue to assess incoming data and evolving economic conditions as it works to support maximum employment and control inflation.
Agencies extend comment period for Bank-Fintech arrangements - 13 September 2024
The federal bank regulatory agencies announced an extension of the comment period until October 30, 2024, regarding their request for information on bank-fintech arrangements related to banking products and services. The agencies aim to gather insights on the nature and implications of these arrangements, as well as effective risk management practices. This extension provides the public with additional time to reflect on the request, prepare their comments, and address the questions posed by the agencies.
The FED requests comments around operational practices of the discount window - 05 September 2024
The FED requested public input regarding the operational practices of the discount window, which provides short-term credit to banks and credit unions. The feedback collected will assist both the Board and the Reserve Banks in enhancing the efficiency and accessibility of the discount window and intraday credit. This tool is crucial for maintaining liquidity and stability within the banking system by enabling access to funding against a variety of collateral, thus facilitating the flow of credit to households and businesses. Although the discount window has been functioning effectively, the Board and Reserve Banks aim to be proactive in adapting to the evolving banking landscape. Specifically, they are seeking insights on various operational aspects, including the collection of legal documentation, the processes for pledging and withdrawing collateral, the procedures for requesting and repaying loans, the extension of intraday credit, and communication practices related to the discount window.
The FED announce final individual capital requirements for all large banks - 28 August 2024
The FED announced the final individual capital requirements for large banks, effective on October 1, 2024. These requirements are based on the results of the stress test conducted earlier in the year and include a minimum capital requirement set at 4.5% for all banks, a stress capital buffer requirement that varies by bank and is based on stress test results with a minimum of 2.5%, and a capital surcharge that applies to the largest and most complex banks, updated annually based on their systemic risk. If a bank's capital falls below its total requirement, it will face automatic restrictions on capital distributions and discretionary bonuses. The Federal Reserve Board also indicated its intention to explore improvements to the stress testing framework, including possible refinements to data reporting and model components.
Securities and Exchange Commission
SEC adopts amendments to enhance market transparency and pricing standards - 18 September 2024
The Securities and Exchange Commission (SEC) has adopted amendments to certain rules under Regulation NMS aimed at improving market quality and reducing transaction costs for investors. These amendments introduce an additional minimum pricing increment, or "tick size," for quoting certain NMS stocks, lower the access fee caps for protected quotations, and enhance transparency regarding exchange fees and rebates. Furthermore, the SEC has expedited the implementation of definitions related to round lots and odd-lot information, ensuring that the best prices for smaller-sized orders are readily available to the public. The amendments will take effect 60 days after publication in the Federal Register, with compliance deadlines set for November 2025 and May 2026 for specific provisions.
SEC launches educational resources on income statements and balance sheets for small businesses - 09 September 2024
The Securities and Exchange Commission (SEC) has unveiled new educational resources designed for small business owners to better understand income statements and balance sheets. Stacey Bowers, Director of the office, emphasized the importance of financial literacy, stating that understanding these financial statements is essential for both investors and business owners. The initiative underscores the SEC's commitment to supporting small businesses, particularly those that are women-owned, diverse, located in rural areas, or affected by natural disasters, by providing accessible resources to navigate the complexities of securing funding. Additional materials are available on the SEC's website.
SEC approves PCAOB’s new quality control standard to enhance audit practices - 09 September 2024
The Securities and Exchange Commission (SEC) has approved a new quality control (QC) standard, QC 1000, from the Public Company Accounting Oversight Board (PCAOB), aimed at significantly improving the quality control systems of registered public accounting firms. This integrated, risk-based standard mandates that firms identify specific risks to their practices and design a quality control system with appropriate responses. Under QC 1000, firms performing PCAOB engagements must implement and operate a quality control system, which will undergo an annual evaluation and reporting, certified by key personnel. Additionally, firms issuing audit reports for more than 100 issuers must establish an external quality control function to provide independent oversight of their QC system. The new standard reflects changes in the audit environment and lessons learned from two decades of PCAOB inspections and enforcement. QC 1000 and its related amendments will become effective on December 15, 2025.
SEC enhances reporting requirements for registered investment companies and addresses liquidity risk management - 28 August 2024
The Securities and Exchange Commission (SEC) has adopted amendments to the reporting requirements for registered investment companies, specifically targeting Form N-PORT to improve the timeliness and transparency of portfolio information. These changes will require funds, including registered open-end and closed-end funds as well as exchange-traded funds, to file monthly reports within 30 days after the end of each month, compared to the previous quarterly reporting requirement. This shift will triple the amount of data available to investors annually, enhancing their ability to assess fund risks and monitor investments.
Office of the Superintendent of Financial Institutions
OSFI launches standardized climate scenario exercise to assess climate risks in financial institutions - 10 September 2024
The Office of the Superintendent of Financial Institutions (OSFI) has announced the final version of the Standardized Climate Scenario Exercise (SCSE), a new tool designed to evaluate the potential exposure of financial institutions to climate risks. This initiative aims to enhance understanding of how climate-related challenges could impact financial institutions and the broader industry. The SCSE will gather data to assess climate change risks, identify vulnerabilities within the financial system, and improve institutions' capabilities for conducting climate scenario analyses. OSFI is collaborating with the Autorité des marchés financiers (AMF) in Quebec to implement the SCSE across various regulated financial entities.