Top New Rules Expected in December
December 4, 2013 9:01 PM
Regulators are furiously working to release a slew of rules due by yearend, including the controversial Volcker Rule, a ban on proprietary trading that has taken more than three years to finalize. Following are the top regulations likely to be released in the next few weeks.(Image: Bloomberg News)
The Volcker Rule
More than two years after the initial proposal was released in October 2011, five regulatory agencies are set on Dec. 10 to review and vote on a final Volcker Rule. The five agencies have had trouble agreeing how to define proprietary trading as well as crafting an exemption for market making activities.(Image: Bloomberg News)
'Single Point of Entry'
The Federal Deposit Insurance Corp. is expected to release more details about how it plans to seize and unwind a failing megabank. It unveiled its broad "single point of entry" plan nearly two years ago, in which it seizes a bank holding company and runs the subsidiary companies, but analysts have said the agency needs to say more to ensure the plan is credible with the market.
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Long-term Debt Requirement
The Federal Reserve Board and Federal Deposit Insurance Corp. plan to unveil a proposal soon to require the biggest banks to carry minimum amounts of long-term unsecured debt that could be converted to equity in the event of a resolution.
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Short-term Wholesale Funding
Top Federal Reserve officials like Gov. Jeremy Stein have said a top priority is making reforms to reduce the risk of fire sales and liquidity runs as seen during the 2008 financial crisis. Regulators have said they hope to release a concept proposal shortly aimed at addressing potential reforms to short-term wholesale funding.
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Capital Surcharge on the Biggest Banks
U.S. regulators have signaled plans to adopt extra capital buffers between 1% and 2.5% for eight of the largest U.S. institutions, which will take effect starting in 2016. The Financial Stability Board in November updated its list of global systemically-important banks lowering both Citibank's and Bank of New York Mellon's capital surcharges. Only one U.S. bank, Jamie Dimon's JPMorgan Chase, is expected to face the highest 2.5% surcharge.
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Section 165, 166
Regulators could move to finalize a massive proposal unveiled in December 2011 that would implement Sections 165 and 166 of the Dodd-Frank Act. The package of rules is considered by many as the core of the financial reform law. The plan touched on several critical areas governing bank regulation, including risk-based capital and leverage requirements, resolution planning and concentration limits.
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Foreign Bank Supervision
For the last year, Fed officials have left outstanding a December 2012 proposal that would overhaul the way U.S. regulators supervise foreign banks that operate in the U.S., effectively subjecting those firms to the same regulations as domestic ones. The plan has been met by objections from both foreign banks and overseas regulators, who argued it would hurt international cooperation and undermine global financial reform.
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