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Americas: goodbye,
Dodd-Frank
This week saw the biggest piece of banking reform since
Dodd-Frank pass its way through the House, with bipartisan
support. President Trump signed Senate Bill 2155 or the
Economic Growth, Regulatory Relief and Consumer Protection Act,
late on Thursday. It contains provisions that will make changes
including reducing the number of banks subject to the
Volcker Rule and introducing a simpler capital regime for
community banks.
The bill gives more flexibility for federal savings and to
banks that are not systemically important financial
institutions by raising the threshold for heightened prudential
standards and right-sizing stress-testing requirements.
Continuing the saga, the US Court of Appeals for the 5th
Circuit voted by 2-1 to reject a request by three states,
California, Oregon and New York, that had asked it to
reconsider a decision denying them intervention in the
Department of Labor Department's
fiduciary standard rule.
This week the Commodity Futures Trading Commission released
new guidance about how to launch cryptocurrency derivatives.
The guidance provides exchanges with best practice rules as the
trend of futures based on bitcoin and other alternative
currencies gains in popularity.
Asia Pacific: opening up
Hong Kong’s Securities and Futures Commission
(SFC) has become one of the first signatories to
Iosco’s Enhanced Multilateral Memorandum of
Understanding Concerning Consultation and Cooperation and the
Exchange of Information for cross-border enforcement
cooperation. Securities regulators that are signatories aim to
cooperate by sharing information such as phone and internet
records and compelling attendance at interviews.
The Thai government has issued new royal decrees to regulate
cryptocurrency and digital tokens. The decree treats digital
tokens as securities and indicates that digital tokens must be
offered for sale only according to conditions prescribed by the
Securities and Exchange Act. They can only be offered through a
service provider approved by the Securities and Exchange
Commission. Business operators already engaging in digital
assets business must apply for a licence by August 11 2018. The
decree also imposes a requirement to withhold 15% on payment of
income derived from the transfer of cryptocurrency or digital
tokens.
EMEA: how to solve European NPL
problem?
This week, the Association for Financial Markets in Europe
(Afme) hosted a non-performing loan (NPL) conference in
Brussels discussing the NPL action plan, the servicing industry
and future regulatory plans.
A key takeaway was that the EU NPL problem still persists.
While the US has managed to address and reduce NPLs
significantly, Europe is making very slow progress.
Inconsistent insolvency rules and the lack of region-wide bad
bank are being blamed for the slow progress. In particular, a
US-style Chapter 11 would be effective in providing directors
with more time to assess their options and could reduce the
chances of involuntary collapses. The chances of a European bad
bank are bleak, with Germany in particular reluctant to adopt
it and share bank risks throughout Europe.
Italian NPLs are a huge concern and in light of the new
coalition government, these fears have intensified. Italian
NPLs make up 11.1% of all national loans and with big spending
rises and tax cuts planned, there are fears this number could
increase significantly in the future. Italy is second only to
Greece in the infamous NPL table and its public debt is 131.8%
of its GDP as of the end of 2017. In a leaked draft of their
contract for government, it said the coalition of Five-Star
Movement and League would audaciously ask the European Central
Bank to forgive €250 billion of debt. The ECB is not going
to agree to such demands, so a more viable solution needs to be
found.
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