Regulation
The regulatory environment continues to be a contexture of legislative acts and evolving action related to market practices.
What are the regulatory issues that are keeping you up at night? Whatever they might be, there's a good chance that we have the insights to help you understand them and the people to help you adjust and even thrive. Let us know what's on your mind. We'll let you know how we can help.
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| Regulators | Taxation | Fund Operations | |
| Equity Markets | Retirement Plans | ||
| Money Market Reform | Insurance | Global Investing | |
| Investor Protection | Derivatives | ||
| Wall Street Reform | Banking Operations | ||
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Derivatives
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Regulatory Reform: The Shape of Things To Come
Transparency, reporting and ongoing regulatory reform are key issues in the derivatives marketplace. While many are aware of the Dodd-Frank Act, the full impact of the law remains unclear. Patrick Tadie, Global Business Head of Derivatives360, discusses the major challenges facing financial institutions in this new regulatory environment and outlines ways to prepare for these challenges.
Who's Helping You?
For more information on our derivatives offerings or any of our industry-leading products and services, contact:
Patrick Tadie, Global Business Head
BNY Mellon Derivatives360 »
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European Trialogue Agrees on Final Text for EMIR
On 9 February 2012, following several months of discussions, the final text for the European Market Infrastructure Regulation (EMIR) was agreed by the European Commission (EC), the European Parliament (EP) and the Council of Ministers (the Council). The legislative text forms the framework for clearing over-the-counter (OTC) contracts and reporting on OTC derivatives transactions, which is a radical reform that mirrors elements of the U.S. Dodd-Frank Act.
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CFTC Issues Final Order Amending the Effective Date for Swap Regulation
On December 19, 2011, the Commodity Futures Trading Commission (CFTC) issued a Final Order regarding the effective date for swap regulation, which extends the potential latest expiration date of the recent exemptive relief to July 16, 2012.
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European Union Agrees EMIR Approach
On 4 October 2011, the Economic and Financial Affairs Council ("the Council") agreed on a general approach to the European Market Infrastructure Regulation ("EMIR") legislation. The compromise proposal sets out the Council's position on increasing transparency and reducing risk in the over-the-counter ("OTC") derivatives market. EMIR requires that derivatives contracts should be reported to trade repositories and cleared through a central counterparty clearing ("CCP").
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CPSS-IOSCO Closes Consultation on Data Reporting and OTC Aggregation
On 23 September 2011, the Committee on Payment and Settlement Systems ("CPSS") of the Bank for International Settlements ("BIS") and the International Organization of Securities Commissions ("IOSCO") closed their period of consultation on data reporting and aggregation of over-the-counter ("OTC") derivatives.
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European Market Infrastructure Regulation (EMIR)
On 24 May 2011, the European Parliament's Economic & Monetary Affairs Committee (ECON) voted in favour of the revised draft of the European Market Infrastructure Regulation (EMIR) The new regulation proposes a framework for central clearing and risk mitigation of over-the-counter (OTC) derivatives, rules for central counterparties (CCPs), post-trade interoperability, reporting obligations and requirements for trade repositories.
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SEC Orders "Temporary Relief" for Certain Swaps Regulations
The Securities and Exchange Commission recently granted "temporary relief" to companies and other investors who engage in swap transactions, delaying implementation of certain regulations set forth in Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
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The financial crisis re-emphasized the importance of counterparty credit risk, and the subsequent industry-led program of reform has addressed many of the shortcomings of the OTC market. BNY Mellon and independent consulting firm InteDelta investigated current counterparty credit risk management policies and processes across a representative sample of asset management, insurance and pension fund institutions. Findings from this research reveal an evolving OTC derivatives market that is wary of risk, open to change, and surprisingly robust.
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Equity Markets
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Enhancing Australia's Equity Market
The Australian Securities and Investment Commission has released a consultation paper on enhancing regulation of Australia's equity markets. The specific proposals in the Consultation Paper are designed to support the Commission's objectives related to market quality, market integrity, investor protection, fairness and efficient implementation of changes to the regulatory regime.
Who's Helping You?
For more information on equity markets, or to learn about our industry-leading products and services, contact:
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Proposals for additional liquidity facilities as part of money market regulatory reforms
The Investment Company Institute (ICI) submitted a comment letter to the Securities and Exchange Commission (SEC) on January 10, 2011, proposing an industry-supported liquidity facility for money market funds.
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Global Investing
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Summary: SEC Exemptive Relief and Expansion of Actively Managed ETFs
Several large asset management firms have publicly filed to launch actively managed exchange-traded funds (ETFs). Before the launch of a new actively managed ETF, investment companies must file for and be granted exemptive relief from the SEC. Following the financial crisis of 2008, many regulatory bodies worldwide began to review their guidelines for the use of derivatives in investment vehicles. The SEC announced in March 2010 that it would defer its approval of requests for exemptive relief for actively managed ETFs using derivatives (such as swaps) until its investigation on the use of derivatives was complete.
Who's Helping You?
For more information on global investing, or to learn about our industry-leading products and services, contact:
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ECB Postpones the Launch of TARGET2-Securities
At its meeting on 20 October 2011, the Governing Council of the European Central Bank (ECB) decided to postpone the launch date of the TARGET2-Securities (T2S) securities settlement platform from September 2014 to June 2015.
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IOSCO Outlines its Principles on Collective Investment Schemes
On 19 January 2012, the International Organization of Securities Commissions ("IOSCO") Technical Committee published its final report "Principles on Suspensions of Redemptions in Collective Investment Schemes". The report sets out IOSCO's guiding principles regarding the suspension of redemptions for open-ended collective investment schemes ("CIS"). The report covers management of liquidity risk, ex-ante disclosure to investors, criteria or reasons for the suspension, the decision to suspend and conduct during the suspension.
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The European Commission advanced a Proposal for a new Regulation which will enable social investment fund managers to market their funds across the whole of Europe. It introduces a 'European Social Entrepreneurship Funds' label so that investors can identify funds that focus on investing in European social businesses.
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ESMA Launches Central Credit Rating Repository to Improve Transparency
On 2 February 2012, the European Securities Market Authority ("ESMA") launched a Central Rating Repository ("CEREP") providing information on ratings issued by 15 Credit Rating Agencies (CRAs) registered or certified in the European Union. The CEREP repository will allow investors to assess for the first time, on a single platform, the performance and reliability of credit ratings on different types of ratings, asset classes and geographical regions over a defined period.
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ESMA Outlines Future Framework for ETFs and Other UCITS Issues
On 30 January 2012, the European Securities and Market Authority (ESMA) published a consultation setting out its guidelines on Undertaking for Collective Investments in Transferable Securities (UCITS) Exchange Traded Funds (ETFs) and other UCITS-related issues. The proposals cover both synthetic and physical UCITS ETFs, Total Return Swap by any UCITS and the additional obligations to come.
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ESMA Issues Guidelines on Short Selling and Certain Aspects of CDS
In November 2011, the Council and the Parliament voted on a Regulation on short selling and certain aspects of Credit Default Swaps (CDS). The regulation once published, will be applicable from 1 November 2012. The consultation period is expected to close on 31 March 2012 after which time; ESMA will publish its final report and submit its draft technical standards.
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ESMA Publishes its Rules for Alternative Investment Fund Managers
On 16 November 2011, the European Securities and Markets Authority ("ESMA") published their final report on its detailed rules on implementing measures of the Alternative Investment Fund Manager's Directive (AIFMD). In its report, ESMA establishes a comprehensive framework for alternative investment funds, their managers and depositories. The report covers four broad areas: i) General provisions for managers, authorization and operating conditions, ii) Governance of Depositories, iii) Transparency and Leverage and iv) Third Countries Arrangements.
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On 31 October 2011, the European Securities Market Authority announced the registration of four credit rating agencies; DBRS, Fitch Rating, Moody's Investor Services and Standard and Poors. The European Union (EU) requires rating agencies to be registered in compliance with the EU Credit Rating Agencies (CRA) regulation.
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ESMA Opinion on Practical Arrangements for Late Transposition to UCITS IV
On 13 October 2011, the European Securities and Market Authority (ESMA) published its opinion on the practical arrangements for the late transposition and implementation of measures of Undertaking of Collective Investments in Transferable Securities Directive (UCITS IV). The deadline for Member State transposition into national law was 1 July 2011.
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ESMA Consults on Credit Rating Agencies Technical Standards
On 19 September 2011, the European Securities and Market Authority issued a consultation paper on the Regulatory Technical Standards on credit rating agencies in their application for registration and certification as well as for the assessment of their systemic importance to the financial stability or integrity of financial markets.
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ESMA Seeks Feedback on ETFs and Structured UCITS
On 22 July 2011, the European Securities and Markets Authority (ESMA) published a discussion paper, Policy Orientations on Guidelines for UCITS Exchange-Traded Funds (ETF) and Structured UCITS, on aspects of the regulatory regime governing Undertakings for Collective Investments in Transferable Securities (UCITS). ESMA seeks feedback in order to "improve the transparency and quality of information provided to the investors who are buying UCITS ETFs and Structured UCITS". ESMA will consider all responses received on or before 22 September 2011.
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European Commission Delays Feedback on Market Abuse Directive
The European Commission (the Commission) proposed a Market Abuse Directive (Directive) to address insider dealing and market manipulation as well as to harmonise the treatment of market abuse across member states. The Commission was expected to provide feedback on the consultation paper discussing the revised legislation by the first half of 2011; however, publication has been delayed and a new date has yet to be announced.
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European Securities Settlement: Steps Toward Harmonization
The evolution of the European Union (EU) has meant rapid integration across its member nations to form a more cohesive governance model. Much of this transformation has occurred in the financial markets, from the creation of the European Central Bank to the adoption of a common currency. As a way to bring about further harmonization among its various financial markets, European leaders have agreed that a uniform schedule must be implemented for trade settlement across the different EU nations.
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Fund Operations
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Regulatory Reform: The Shape of Things To Come
Transparency, reporting and ongoing regulatory reform are key issues in the derivatives marketplace. While many are aware of the Dodd-Frank Act, the full impact of the law remains unclear. Patrick Tadie, Global Business Head of Derivatives360, discusses the major challenges facing financial institutions in this new regulatory environment and outlines ways to prepare for these challenges.
Who's Helping You?
For more information on fund operations, or to learn about our industry-leading products and services, contact:
Patrick Tadie, Global Business Head
BNY Mellon Derivatives360 »
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In December 2011, the European Securities and Markets Authority (ESMA) issued two consultation papers on certain aspects of the Markets in Financial Instruments Directive (MiFID) requirements for suitability and compliance. ESMA will accept all responses received by 24 February 2012.
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European Union Markets in Financial Instruments Directive II MiFID II / MiFIR
On 20 October 2011, the European Commission ("the Commission") issued its proposal to revise the Markets in Financial Instruments Directive ("MiFID"). The proposal consists of a draft Directive, MiFID II which requires transposition into national law, and a draft Regulation, MiFIR, which is directly applicable without transposition. The new structure is set to increase the powers of regulators as well as provide clearer operating rules for all trading activities.
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ESMA Opinion on Practical Arrangements for Late Transposition to UCITS IV
On 13 October 2011, the European Securities and Market Authority (ESMA) published its opinion on the practical arrangements for the late transposition and implementation of measures of Undertaking of Collective Investments in Transferable Securities Directive (UCITS IV). The deadline for Member State transposition into national law was 1 July 2011.
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European Commission Plans for Legislation on CSDs
The European Commission is planning to introduce legislation on Central Securities Depositories (CSDs) in the European Union (EU). The principal purpose of this legislation is to create an appropriate regulatory framework for CSDs in the EU and to harmonise certain aspects of securities settlement. The Commission held a public consultation on its planned CSD legislation from January to March 2011. The Commission's legislative proposal is expected to be issued in November 2011.
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European Commission Delays UCITS Depositary Function Publication
The European Commission (the "Commission") has postponed the publication of the Undertaking for Collective Investments in Transferable Securities ("UCITS") V legislative proposal on the UCITS depositary function and managers' remuneration, moving the release date to the early part of 2012. The purpose of this legislation is to further harmonise protection for UCITS investors with a particular focus on the duties of depositaries, including eligibility, liability and how they are supervised. It may also include new rules on competition between fund providers and policies remuneration policies for UCITS managers. The Commission intends to introduce a new section on sanctioning regimes into the directive, stating its objective of greater convergence and reinforcement of the national sanctioning regimes in the financial sector. The publication for UCITS V was originally scheduled for July 2011.
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SEC Approves FINRA's Operations Professional Registration Proposal
In July, the Securities and Exchange Commission (SEC) approved a proposal by the Financial Industry Regulatory Authority (FINRA) to create a registration category and qualification exam requirements for certain operations personnel ("Operations Professionals") within the financial services industry. This proposal also establishes continuing education requirements for Operations Professionals, which must be initially completed two years after passing the qualification exam, with subsequent continuing education requirements occurring every three years thereafter.
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ESMA Consults on AIFMD Technical Advice and Third Countries
On 23 August 2011, the European Securities Market Authority (ESMA) issued its second consultation, setting out its proposals for detailed rules on supervision and third country entities under the Alternative Investment Fund Manager Directive ("AIFMD") Level 2 measures. The technical draft, titled ESMA's draft technical advice to the European Commission on possible implementing measures of the Alternative Investment Fund Managers Directive in relation to supervision and third countries, dated 23 August 2011 can be found here.
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UCITS IV Directive transposition in EU Member States Law
The European Union (EU) Undertakings for Collective Investments in Transferable Securities (UCITS) IV Directive is a significant piece of new regulation that has the potential to improve the way fund managers do business across Europe and beyond, and its execution is critical for the EU funds market.
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The Alternative Investment Fund Managers Directive
The Alternative Investment Fund Managers Directive (the "Directive") came into force on 21 July 2011, just 20 days following its publication in the Official Journal of the European Union (EU). EU Member States will have until 22 July 2013 to transpose the provisions set out in the Directive into their local law.
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Insurance
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Treasury Collections in the Insurance Industry: Current Practices and Priorities for the Future
Find out what some of the largest and most highly respected insurance companies in the United States are saying about cash collections and payments processing today. Also learn what these companies identify as key challenges that need to be overcome to increase visibility and improve control.
Who's Helping You?
For more information on insurance, or to learn about our industry-leading products and services, contact:
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Insurance IT Roundtable: Regulation Overload Sparks IT Re-think
The regulatory changes that have occurred or are being anticipated in the future are forcing insurance companies to review and rethink how they do things internally. The demands that are being forced on the back and middle office operations of insurance companies are increasing. Learn how the various regulatory initiatives globally are affecting insurance firms' technology demands.
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Solvency II Directive: Implication for Asset Servicing
In April 2003, representatives of the European Union (EU) Member States endorsed the European Commission proposal regarding the fundamental principles for the design of a future prudential system for the supervision of insurance undertakings in the EU. After much deliberation and following completion of the consultation process, the Commission adopted the Solvency II Proposal in July 2007.
Solvency II introduces a fundamental review of the solvency and risk management standards for the European insurance industry, with the objective of providing greater protection for policyholders. Solvency II aims to implement solvency requirements that reflect the risks companies face and deliver a supervisory system that is consistent across all member states. The directive stipulates that solvency calculations should align more closely with the specific risk profile of the undertaking or the company to avoid the possibility of consumer loss or market disruption in the insurance sector. It seeks to instill risk awareness into operations, the governance process and decision making of the business. It is envisaged the harmonization of the above will bring benefits, making it easier for firms to do business across the EU.
30 countries in Europe will adopt Solvency II (27 EU Member States plus 3 in the European Economic Area). The target implementation date for Europe is set for January 1, 2013. Other country regulators including Japan, Bermuda and Cayman Island are watching Solvency II with the view of introducing similar risk based capital regulation locally.
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Investor Protection
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European Commission Investor Compensation Schemes Directive
The European Commission published a review of the Investor Compensation Scheme Directive (ISCD), which aims to extend the scope of compensation under the ICSD, reduce the gaps in the regulatory system, reduce the disparities between the protection of clients of investment firms and of bank depositors and create common rules to harmonise the funding of the schemes and their day-to-day operations.
Who's Helping You?
For more information on investor protection, or to learn about our industry-leading products and services, contact:
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GASB's Proposal to Require Governments Disclose Cash Flow and Financial Obligations
The Governmental Accounting Standards Board (GASB) approved their Preliminary Views, Economic Condition Reporting: Financial Projections, to provide more information to assist users in assessing a government or governmental entity's economic condition.
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SEC Publishes Risk Alert on Investment Advisor Use of Social Media
The Securities and Exchange Commission's (SEC) Office of Compliance Inspections and Examinations released a National Examination Risk Alert concerning the use of social media by registered investment advisors on January 4, 2012.
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FSA Receives Feedback on the Delivery of RDR Platforms Consultation Paper
The FSA received feedback on its consultation paper entitled Platforms: Delivering the RDR and other issues for platforms and nominee-related services (CP10/29), which closed on 17 February 2011. The paper proposes to regulate platforms in a way that would achieve the objectives of the Retail Distribution Review and achieve good outcomes for consumers, whilst recognising the industry's concerns wherever possible. The new rules will change the way firms carry out their business. The target date for implementation is 31 December 2012.
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Update on the FSA Retail Distribution Review
The Retail Distribution Review launched in 2006 by the Financial Services Authority seeks to address previous 'mis-selling' scandals and specifically sets out to improve the clarity with which firms describe their services to customers; address the potential for adviser remuneration to distort consumer outcomes; and increase the professional standards of advisers.
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DOL Proposes Expansion of the Definition of Fiduciary
The Employment Benefits Security Administration within the Department of Labor (DOL) has proposed a broader definition of the term "fiduciary" to apply to those who provide investment advice to retirement plan officials or plan participants. This proposal is under consideration because the evolving financial marketplace and its expanded suite of products have resulted in more complex advisory relationships, some of which the DOL believes should be categorized as fiduciary in nature but currently are not. The new proposal would expand the original guidelines that were put in place 35 years ago and, if adopted, would affect plan sponsors, fiduciaries, participants and beneficiaries of retirement plans (which includes individual retirement accounts and pension plans), as well as the providers of investment advice and other services for these accounts and plans.
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Money Market Reform
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Financial Regulation Altering the Cash Management Landscape
BNY Mellon Cash Investment Strategies looks at the potential supply and demand mismatch of shorter-maturity securities as new regulations require money market mutual funds to hold more highly liquid, short-term securities, while Basel III regulations encourage banks to focus on longer-term debt.
Who's Helping You?
For more information on money market reform, or to learn about our industry-leading products and services, contact:
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Money Fund Intelligence: Money Market Funds Ready to Transact Non-$1
On October 31, the last directive in the SEC's Money Market Fund Reform amendments to the Investment Company Act will come into effect. Funds must be in compliance with a transactions processing mandate requiring the fund to have the capacity to redeem and sell its securities at a price based on the fund's current net asset value per share, including the capacity to sell and redeem shares at prices that do not correspond to the stable net asset value or price per share. Jim Cecere, managing director of global product management for U.S. financial institutions, discusses the issues and challenges of the new regulation.
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Evaluating the Post-Crisis Tri-Party Repo Market
The financial crisis of 2008 - 2009 prompted regulatory agencies worldwide to re-examine systemic risks in various markets and re-evaluate the way that many transactions are conducted. The Task Force on Tri-Party Repo Infrastructure was created to identify risks that could be mitigated in tri-party repurchase transactions and to recommend actions to help avoid these risks in the future. While such steps are necessary to bolster confidence in our financial markets, institutions must look at the costs involved and decide how best to adhere to new initiatives while still maximizing the potential for yield.
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Regulators
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SEC and CFTC Approve Final Joint Rules for
Private Fund Risk ReportingThe U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have approved final rules Requiring Registered Investment Advisers to Private Funds and Certain Commodity Pool Operators (CPOs) and Commodity Trading Advisors (CTAs) and have jointly established the form and content to be included in Form PF filings.
Who's Helping You?
For more information on regulators, or to learn about our industry-leading products and services, contact:
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Summary: Financial Stability Oversight Council Created Under the Dodd-Frank Act
The Financial Stability Oversight Council (FSOC) was created under legislation included in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), and it has been tasked by lawmakers with the identification and mitigation of threats to the stability of the U.S. financial markets. To help the FSOC gather the necessary data to help determine existing systemic risks, research and analysis may be requested from the Office of Financial Research, which was also created through the Dodd-Frank Act. The FSOC must report to Congress on an annual basis about emerging risks to the financial system.
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European Commission Plans for Legislation on CSDs
The European Commission ("the Commission") is planning to introduce legislation on Central Securities Depositories (CSDs) in the European Union (EU). The principal purpose of this legislation is to create an appropriate regulatory framework for CSDs in the EU and to harmonise certain aspects of securities settlement. The Commission held a public consultation on its planned CSD legislation from January to March 2011.
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SEC Removes Credit Ratings as Criteria for Short-Form Registration
On July 26, the Securities and Exchange Commission voted unanimously to remove credit ratings as one of the eligibility criteria for companies planning to use "short form" registration when registering their securities for public sale. Forms S-3 and F-3 are the "short forms" used by eligible issuers to register securities under the Securities Act of 1933.
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International Financial Reporting Standards - Are You Getting Ready for IFRS 9?
The changes to accounting standards for financial instruments in IFRS 9 will have significant system and operations implications for organizations. The objective of this paper is to provide an overview of recent changes so that companies can gain a better understanding of the new and potential requirements and how their operations may be impacted.
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Retirement Plans
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Sponsors of defined benefit and defined contribution plans are working to solve a most pressing question: how to provide employees with retirement benefits that offer sufficient funding without causing further strain to employer balance sheets or government budgets. This report identifies how managers of retirement plans view this challenge and how their service providers, including their custodians and asset managers, can help confront it.
Who's Helping You?
For more information on benefit disbursements or any of our industry-leading products and services, contact:
Laurin Moore, Head of the U.S. Corporate, Government & Not-for-Profit Group »
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Department of Labor Announces Rules on 408(b)(2) Fee Disclosures
On 2 February 2012, the long awaited U.S. Department of Labor (DoL) rules on 408(b)(2) fee disclosure, was finally released. The final ruling extends the effective deadline by three months to allow service providers to become compliant before 1 July 2012. For further information, please read the fact sheet and 408(b)(2) rules.
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Current pension legislative outlook – reviewing 2011 – looking forward to 2012
A review of 2011 retirement policy activity and discussion of the 2012 policy agenda
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Department of Labor Revises Interim Participant Fee e-disclosure Policy
The Department of Labor's Employee Benefit Security Administration (EBSA) issued Technical Release 2011-03 which sets forth an interim enforcement policy regarding the use of electronic media to satisfy the disclosure requirements under Regulation 29 CFR 2550.404a-5. On December 8, 2011 EBSA issued a further update, Technical Release 2011-03R, which revises the department's interim policy.
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U.S. Department of Labor & Securities Exchange Commission Coordinate on 401(k) Plan Fee Disclosure Rules
On October 27, 2011, the U.S. Department of Labor (DOL) released a Securities and Exchange Commission (SEC) staff no-action letter relating to both the Employee Benefits Security Administration's participant-level fee disclosure regulation (ERISA Rule 404a-5) and Rule 482 under the Securities Act of 1933.
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Department of Labor Finalizes Investment Advice Regulation
On October 24, 2011, the Department of Labor released final regulations on investment advice. The regulation implements the statutory exemption, added by the 2006 Pension Protection Act (PPA), for flat-fee and model-driven investment advice provided to by a person affiliated with funds offered under a 401(k) plan.
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An Examination of the Latin American Pension Systems - The Challenges Ahead
Latin America's economic ascendancy exemplifies the success in debt and inflation management and the solidification of democratic rule. While not facing the imminent demographic challenges of the developing world, the long-term macroeconomic viability of the region is predicated upon building upon prior structural reforms, namely pension reform to ensure popular expectations are met within the realm of fiscal responsibility. To achieve this objective, public-private partnerships will need to consider certain recommendations.
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Taxation
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Tax-Transparent Investing Via Common Contractual Funds
Asset pooling allows investors to pool their assets in order to co-invest. It is used by investment companies to offer investors of varying scale access to specialised investment products. This article outlines the benefits available to institutional investors who choose to invest their assets via a tax-transparent pooling structure such as the Irish Common Contractual Fund (CCF). Properly establishing the infrastructure to support a CCF requires a degree of effort, but the benefits make it worthwhile.
Who's Helping You?
For more information on taxation, or to learn about our industry-leading products and services, contact:
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IRS Delays FATCA Guidance Rules
Despite a recent publication by a Treasury Official, the Inland Revenue Services (IRS) did not issue its proposed rules on Foreign Account Tax Compliance (FATCA) at the end of January as originally planned. According to sources at the Treasury Department, the government is drafting proposals for a regulation. FATCA guidance is intended to implement a statue that requires foreign banks to report their U.S.-owned accounts to the IRS or face, in some cases a 30 percent withholding tax.
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European Commission Proposes Financial Transaction Tax Reform
On 28 September 2011, the European Commission ("the Commission") announced its proposals for a Financial Transaction Tax ("FTT") at European level. The proposed reform would introduce a minimum tax on financial transactions where at least one party is a financial institution established in a Member State and acts as either an agent or principal. Financial institutions will be charged an amount equal to 0.1% of the market price for transactions in shares and bonds, and will be charged an amount equal to 0.01% of the notional amount for derivative transactions. Although the Commission proposes to implement the tax in 2014, work is still in progress to reach a consensus.
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U.S. Treasury and IRS Extend FATCA Compliance Deadline
The U.S. Treasury and the Internal Revenue Service have extended compliance deadlines for the Foreign Account Tax Compliance Act (FATCA).
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Foreign Account Tax Compliance Act
Guidance regarding payments to Foreign Financial Institutions and Non-Financial Foreign Entities
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FBAR: Amendment to the Bank Secrecy Act Regulations
On February 24, 2011, the Financial Crimes Enforcement Network (FinCEN) and the U.S. Department of the Treasury issued the final rule to amend the Bank Secrecy Act regulations regarding the reporting of foreign financial accounts. The amendments relate primarily to the clarification of certain definitions, including foreign financial account and signature or other authority over foreign financial accounts. Additionally, on May 31, 2011, FinCEN issued Notice 2011-1 which extended the filing deadline for certain individuals with signature or other authority and no financial interest in certain foreign financial accounts. All other U.S. persons required to file the Report of Foreign Bank and Financial Accounts (FBAR) this year are required to meet the June 30, 2011 filing deadline.
The U.S. Department of the Treasury is recommending that questions be directed to: FinCEN, Regulatory Policy & Programs Division (800) 949-2732, select Option 1 All individuals and entities are encouraged to contact their legal or tax consultants to determine applicability of FBAR requirements. Criminal and/or civil penalties could apply to those who do not file or maintain filings for FBAR.
For further information, including access to Form TD-F 90-22.1, please visit www.irs.gov and www.fincen.gov.
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Wall Street Reform
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Helping Mutual Fund Clients Do More With Less
The past several years have marked a new era for the way in which mutual fund companies do business. Changes in the regulatory landscape have played a large part in this evolution, as proposed legislation has called for enhanced risk management and increased oversight of mutual funds, as well as for an increase in transparency through the use of additional disclosures and reporting. In order to be ready for the new requirements, fund companies may need to implement additional systems, which may lead to greater expenses.
Who's Helping You?
For more information on Wall Street reform, or to learn about our industry-leading products and services, contact:
Jay Nusblatt, Head of U.S. Fund Accounting and Administration »
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SEC Publishes Final Rule Amending the Definition of "Accredited Investor"
On December 29, 2011, the U.S. Securities and Exchange Commission (SEC) published its final rule which amends the accredited investor standards in its existing rules.
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CFTC Proposes Limits on Banks' Proprietary Trading and Hedge Funds Investments
On January 11, 2012, the U.S. Commodity Futures Trading Commission ("CFTC") proposed limits on banks' proprietary trading and hedge fund investments under the Dodd-Frank Act's Volcker Rule.
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SEC and CFTC Approve Final Joint Rules for Private Fund Risk Reporting
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have approved final rules Requiring Registered Investment Advisers to Private Funds and Certain Commodity Pool Operators (CPOs) and Commodity Trading Advisors (CTAs) and have jointly established the form and content to be included in Form PF filings.
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FSOC Proposal on the Authority to Supervise and Regulate Certain Nonbank Financial Companies
The Financial Stability Oversight Council ("FSOC") recently proposed its framework and considerations for evaluating whether a nonbank financial company would need to be under the supervision of the Board of Governors of the Federal Reserve System ("FRB"). The proposed rules would help implement Section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act").
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Banking Operations
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Basel Committee Releases Answers to Basel III Implementation Monitoring
On 5 October 2011, the Basel Committee on Banking Supervision published a "Frequently Asked Questions" report that provides answers to technical and interpretive questions on leverage ratio and liquidity raised by supervisors and banks during the Committee's Basel III implementation monitoring.
Who's Helping You?
For more information on banking operations, or to learn about our industry-leading products and services, contact:
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Basel Committee Consults on Capitalisation of Bank Exposures to Central Counterparties
The Basel Committee ("the Committee") published its second consultative paper on the proposal of Capitalisation of Bank Exposures to Central Counterparties ("CCPs"). The proposal which takes account of the responses received during the earlier consultation in December 2010, as well as the impact assessments, covers the capital requirements for default fund exposures and trade-related exposures to CCPs. The Committee intends to finalise the rules around the end of 2011 and expects to implement in its member jurisdictions by January 2013. The Committee welcomes all feedback on the proposed text by Friday 25 November 2011.
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Financial Stability Board Discusses its Packaged Reform
On 3 October 2011, the Financial Stability Board (FSB) met to agree on the policy reforms it hopes to present at the G-20 Summit in November.
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Get Smarter
Regulatory Change in Securities Lending
An array of proposed legislation and recommendations including Basel III, Dodd-Frank and European Commission rules on short selling will ultimately provide new mandates for securities lending market participants at all stages of the transaction. In the meantime, beneficial asset holders and securities lending agents are working to assess the new environment as regulatory concepts are formalized and specific rules are adopted.
Survival Tactics
Helping Mutual Fund Clients Do More With Less
The past several years have marked a new era for the way in which mutual fund companies do business. Changes in the regulatory landscape have played a large part in this evolution, as proposed legislation has called for enhanced risk management and increased oversight. In order to be ready for the new requirements, fund companies may need to implement additional systems, which may lead to greater expenses.
Workbench Mobile
With our newly launched Workbench Mobile application, BNY Mellon Asset Servicing clients are able to easily view and monitor a wide range of account investment and performance data, industry news updates, and more.
OmniAccess
OmniAccess provides a platform to better access omnibus data and tools to help manage shareholder servicing obligations while servicing and coordinating with funds and distributors.
Market Leadership
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Our thought leadership materials are not intended as investment, tax or legal advice, but to the extent they may be deemed to be a financial promotion under non-US jurisdictions, they are provided for use by professional investors only and not for onward distribution to, or to be relied upon by, retail investors. Products and services may be provided in various countries by the subsidiaries and joint ventures of BNY Mellon. Each is authorized and regulated as required within each jurisdiction. This should not be construed as an offer or solicitation of securities or services or an endorsement thereof in any jurisdiction or in any circumstance that is otherwise unlawful or not authorized.
