BRIEF 03.21.14www.bloombergbriefs.com

Financial Regulation

Quote of the Week

“The threat of Bitcoin-related fraud is a real danger for investors looking to make a quick profit from Bitcoin.”

– The Financial Industry Regulatory Authority wrote in an investor alert. See page 6.

Regulation Watch

cftc oveRseas tRading PlatfoRm RegistRation staRts next Week. The Commodity Futures Trading Commis-sion is considering providing more time for overseas multi-lateral trading platforms to seek relief from agency registration require-ments before March 24, Acting Chair Mark Wetjen said this week. See page 7.

inside

schaeuble backs savings banks The German finance minister has been lob-bying for his country’s smaller lenders in a push for SRM waiver. See page 2.

volckeR Rule costs The rule will costs U.S. national banks as much as $4.3 billion to implement, accord-ing to the OCC. See page 4.

foR the RecoRd U.K. FCA head Wheatley said banks should have known about chat rooms. ECB’s Laut-enschlaeger said implementation of new bank regulations could be slowed to weigh their impact. See page 7.

confeRence RounduP Regulators, policy makers and business officials discussed the changing regulatory environment at the U.S. Chamber’s Capital Market Summit this week. See page 7.

Q&a: next enfoRcement fRontieR Ex-CFTC lawyer stephen obie, now a partner at Jones Day, says the next step for regulators from an enforce-ment perspective is to look to ensure that firms aren’t evading Dodd-Frank Act requirements. See page 11.

Banks’ Split With Fed on Test Risk Payout PlansBy DAKin CAMpBELL, ELizABETh DExhEiMER AnD MiChAEL J. MOORE

goldman sachs group inc. and citigroup inc. staked out sharply divergent views from the federal Reserve over how well they would perform in a market shock, as the central bank gauges the strength of U.S. lenders. Such discrepancies can lead the Fed to reject plans to pay out capital to shareholders.

Stress-test projections released by the Fed and U.S. firms yesterday showed Goldman Sachs predicted its Tier 1 common ratio would be 3.9 percentage points higher than what the Fed estimated in a worst-case scenario. Citigroup calculated a ratio 3 percentage points stronger than the central bank’s figure.

The Fed’s test measures how well banks can weather economic turmoil, before the regulator signals in a second stage whether firms can proceed with proposed dividends and stock buybacks. Fed officials have said they’ll also consider the quality of banks’ processes when approving or rejecting proposed payouts.

“if the bank really appears to be an outlier relative to the Fed test it has to speak to their own capital-planning process,” todd hagerman, an analyst at Sterne Agee & Leach inc., said in a phone interview. “if one of those companies had a fairly wide disparity between its own model and the Fed’s model, that’s going to raise red flags.”

Last year, the large banks whose figures split most from the Fed’s — Goldman Sachs and JPmorgan chase & co. — were forced to submit new capital plans to address weaknesses in their processes. The firms were allowed to continue payouts in the mean-

The Federal Reserve’s Dodd-Frank stress test found that 29 of the 30 largest U.S. banks met or topped its capital target with the exception of zions Bancorporation, which had a minimum Tier 1 common ratio of 3.5 percent in a severely adverse scenario. That is below the Fed’s 5 percent threshold. A zions spokesman didn’t reply to a phone call seeking comment. All 30 firms topped the minimum in a separate scenario of rising interest rates: http://1.usa.gov/1g6p95f.

Zions Misses Capital Minimum Part of Fed Stress Test

0

2

4

6

8

10

12

14

16

Change from Q3 2013 to severely adverse scenarioMin tier 1 ratio in severely adverse scenario

Source: Fed March 2014 Stress Test Results

%

1 2 3 4 5 6 7 8 9 10 11

time. While the regulator posted results for every bank in this year’s first round, not all of them released their own calculations yesterday for comparison.

JpMorgan, the nation’s largest bank, estimated this time that its Tier 1 common ratio would fall to a level that differed by only 0.2 percentage point from the Fed’s estimate. Bank of America Corp.’s figure was more optimistic than the Fed’s by 2.6 percentage points. morgan stanley’s gap was 2 percentage points. Wells fargo & co.’s was 1.5 percentage points. Spokesmen for all six lenders declined to comment.

Schaeuble Backs German Savings Banks in SRM WaiverGerman Finance Minister Wolfgang schaeuble has been lobbying for his country’s

smaller lenders to be exempted from paying into Europe’s 55 billion-euro ($76 billion) bank-resolution fund, government documents show.

The Finance Ministry told the European Commission that banks with liabilities of less than 500 million euros should be granted “lump-sum exemptions” from contributions to the planned Single Resolution Fund, according to the two-page ministry position paper, dated Feb. 24, that was circulated to lawmakers in Berlin.

negotiators have to hammer out rules for how much banks will have to pay to fill up the fund after European Union lawmakers agreed yesterday on legislation to create a single agency to handle failing euro-area banks. The German government is siding with savings banks, the country’s biggest source of credit, as they object to bailing out failed lenders while larger commercial banks say everyone in the industry must pay.

The Finance Ministry paper seeks to contrast the risks associated with large banks with those related to Germany’s savings and cooperative banks, saying that a bank’s size “should be the main risk indicator” for financial stability.

Germany’s position is that small, low-risk banks must be burdened less than large banks, a Finance Ministry spokeswoman said.

While Schaeuble welcomed the agreement reached yesterday, German savings banks said that the system will place unfair burdens on them. Germany’s national wind-down fund doesn’t count the first 300 million euros of a bank’s liabilities in assessing dues.

“A bank regulation that weakens the substance of regionally active financial institutions in order to hedge the risks of major international banks is neither appropriate nor fair,” georg fahrenschon, president of the DSGV savings banks’ association, said yesterday.

—Birgit Jennen and Rainer Buergin

SEC Said to Examine Hidden Prices in Bond TradingThe practice of dealers showing clients different prices for the same securities on

electronic bond-trading platforms is drawing the scrutiny of the U.S. securities and ex-change commission, which is concerned that smaller investors are being penalized.

SEC regulators want to understand why brokers sometimes block their rivals and clients from seeing some of their prices for municipal, corporate and other bonds, according to a

■ The U.S. securities and exchange commission sued simpson thacher & bartlett clerk steven metro and broker vladimir eydelman, who was then at Op-penheimer and is now at Morgan Stanley, over claims they made illegal trades on inside informa-tion that netted more than $5.6 million over four years. Metro was accused of stealing confidential data on 13 corporate transactions and tipping a friend who passed it to Eydelman, an arrest complaint said. Eydelman’s attorney William Silverman declined to comment. Metro’s attorney Michael Rosen said the charges are only allegations and his client is presumed innocent. Simpson Thacher fired Metro after learning of the charges, Brooke Gordon, a spokeswoman for the law firm with Sard Verbinnen & Co., said in an e-mail. The firm will review its systems and procedures, she said.

■ The FCA fined insurance broker besso ltd. 315,000 pounds ($524,000) for failing to have proper controls in place to prevent bribery, an FCA statement said. The FCA said Besso’s weak controls on com-missions sharing led to the risk they could be used for corrupt purposes. Besso spokeswoman Sophie Roe said in a statement that the FCA recognized Besso doesn’t “pose a high bribery and corruption risk”

EnFoRCEMEnT

Banks’ split with fed...

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person with direct knowledge of the examination. They’re examining whether being able to turn quotes on and off allows market manipulation, and whether smaller buyers are given worse prices, the person said.

The probe underscores the growing concern that the infrastructure of the U.S. bond market hasn’t kept pace with a 23 percent expansion in the past six years, with much of the trading still conducted through telephone conversations and e-mails. The inquiry into alternative trading systems has focused on those that cater to individual investors as well as dealers trading among themselves, said the person. The probe is an attempt to get more information and is being conducted by the Office of Compliance inspections and Examinations wing of the SEC, said the person familiar with the matter.

Even if alternative trading systems “don’t account for a majority of the trading, they can be a source of information, and there’s the potential for filters to be used in a manner that would distort the market,” kevin goodman, national associate director of the broker-dealer examination at the SEC, said in an interview. “We want to understand how we can promote more transparency” and how electronic trading is “either contributing or not contributing to transparency.” he declined to confirm the existence of any examinations.

The SEC has contacted providers including tradeweb markets llc and tmc bonds llc, seeking information about the systems they manage that allow dealers to buy and sell debt to one another and to investors, said two people with knowledge of the matter.

There are reasons some electronic systems enable bond dealers to block rivals from seeing their price quotes, said TMC CEO thomas vales, who confirmed he’d discussed the issue with the SEC. Tradeweb spokesman Clayton McGratty declined to comment.

— Lisa Abramowicz

and has made “significant efforts to improve systems and controls.”

■ citigroup inc.’s brokerage unit was fined $1.1 million for ille-gally betting against stocks before participating in public offerings of the same shares, the financial industry Regulatory authority and bats global markets inc. said. Citigroup sold shares short within five days of the pricing of five public offerings in 2009 and 2010, and then bought shares as part of the offerings, Finra said. “We are pleased to resolve this matter,” Citi spokesman Scott helfman said. Citi-group neither admitted nor denied the charges, Finra said.

— Alan Katz, David Voreacos, Lindsay Fortado, Kit Chellel

enforcement...

sec said examining...

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03.21.14 www.bloombergbriefs.com bloomberg brief | financial Regulation 3

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Official media partnersMain sponsors of ICMA’s AGM 2014

Registrations now openThe ICMA Annual General Meeting (AGM) and Conference is a long established and internationally respected event for the international capital markets, bringing together the global financial community to discuss market and regulatory developments.

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2556 IPE 113x214mm_Reg.indd 1 06/03/2014 14:35

$402M $365M $365M $365M

$176M $167M $161M

$0

$100

$200

$300

$400

$500

$600

2014 2015 2016 2017

Estim

ated

ann

ual c

ompl

ianc

e co

sts (

in

mln

s)

7 large market-making banks 39 other banks

Source: OCC

seven banks account for most of volcker compliance spendingThe Volcker Rule will cost U.S. national banks as much as $4.3 billion to imple-ment as it forces them to sell restricted investments at a loss, according to the of-fice of the comptroller of the currency.

The regulator estimates implementation costs between $413 million and $4.3 bil-lion for banks it supervises, the OCC said in a report yesterday. Most of the potential costs could come from the rule’s curbs on certain investments, such as in some col-lateralized loan obligations. The OCC also said affected banks will mostly be those with more than $10 billion in assets and could include seven community banks.

“The range of our cost estimate primarily reflects the uncertainty of the final rule’s impact on the market value of banks’ investments,” according to the OCC’s re-port. After Volcker, the market value “could drop by up to 5.5 percent.”

Selling the restricted assets after such a decline could cost the banks as much as $3.6 billion, the report said. The remain-der of the costs would largely come from as much as $541 million in compliance and reporting burdens, the agency said.

Volcker Rule to Cost Banks as Much as $4.3 Billion in Implementation Costs, oCC Says

SPoTlIGHT: VolCkER RulE By JESSE hAMiLTOn, BLOOMBERG nEWS

yesterday’s analysis focuses just on OCC-supervised firms — mostly on 46

larger banks — and not on costs from implementation by other agencies.

The above chart shows the estimated compliance-related costs associated with the rule, which range from $402 million in 2014 and a high of $541 million in 2015, the OCC said. They are based on 1,100 trading desks at the seven largest banks and 491 trading desks at the other 39 banks.

03.21.14 www.bloombergbriefs.com bloomberg brief | financial Regulation 4

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shadow banking

■ u.s. regulators concerned that banks and brokerage firms remain too dependent on risky types of short-term funding are weighing new rules designed to reduce reliance on parts of the shadow banking system. The Securities and Exchange Commission is weighing new funding rules for brokers as well as a limit on leverage similar to those used by the Fed, according to a regulatory document and SEC officials familiar with the matter.

– Dave Michaels

bonus curbs

■ michel barnier, the eu’s financial-services chief, warned lawmakers not to hand bankers a “gift” by risking a delay in the start of bonus curbs scheduled to take effect next year. he wants to win over leg-islators in the European parliament who haven’t decided whether to block rules that determine which bank staff would be affected by a ban on bonuses greater than twice fixed pay. Unless measures are swiftly approved, “banks will have an

excuse to do nothing — don’t give them this present,” Barnier said at a hearing.

– Jim Brunsden

■ societe generale sa became the first among Europe’s leading invest-ment banks to formally seek shareholder permission to pay bonuses amounting to twice bankers’ salaries. The bank will seek a two-thirds majority at its May 20 share-holder meeting, a motion published on its website said. Under EU rules, banks won’t be able to pay executives who meet certain criteria bonuses that exceed their annual fixed pay, unless shareholders ap-prove a doubling of the cap.

– Fabio Benedetti-Velntini and Elisa Martinuzzi

bank-failure bill

■ eu lawmakers struck a deal on legislation to create a single agency to handle failing euro-area banks after an all-night negotiating marathon ahead of a summit of EU leaders March 20. The deal will now need formal approval by Europe-an parliament and national governments.– Jim Brunsden, Rebecca Christie and Ian Wishart

fx Rigging

■ chancellor of the exchequer george osborne said U.K. regulators are expand-ing a probe into the rigging of foreign-exchange rates. Osborne said he plans to keep U.K. lawmakers informed as “regula-tors are broadening their investigation to the foreign exchange markets.”

– Emma Charlton

■ the australian securities and invest-ments commission said it will conduct inquiries into Australia’s foreign exchange market. ASiC said in an e-mailed state-ment that it’s aware of international regu-latory inquiries into potential misconduct in Fx markets in other jurisdictions. The Financial Times, citing ASiC Chair Greg Medcraft, reported earlier that the inquiry will take at least a year to complete.

– Edward Johnson

liquidity coverage Ratio

■ banks will be allowed to count their holdings of debt issued by the euro area’s bailout funds toward meeting their liquidity coverage ratio. The Basel Committee said that bonds issued by the European Financial Stability Facility and the European Stability Mechanism could be used in buffers of easy-to-sell assets that banks have to hold starting next year.

– Jim Brunsden

high-frequency trading

■ new York attorney general eric schneiderman opened an investigation into whether U.S. stock exchanges and alternative venues provide high-frequency traders with improper advantages, a person with knowledge of the matter said. Schneiderman is examining the sale of products and services that offer faster access to data and richer information on trades than is typically available to the public, the person said.

– Keri Geiger and Sam Mamudi

bitcoin

■ the u.s. securities and exchange commission is conducting a formal

THE WEEk In REVIEW

SEC Plans to Cap Broker leverage; Japan undecided on Bitcoin; Fund Firms Push Back

0

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10

Dec. 2009 Jun. 2011 Dec. 2011 Jun. 2012 Dec. 2012 Jun. 2013 Com

mon

equ

ity ri

sk-w

eigh

ted

capi

tal r

atio

s

Large, internationally active banks Other banks %

Sources: Basel Committee, Banks and capital requirements BIS working paper: http://bit.ly/1kMtRpu

Basel III min (including capital conservation buffer)

Weighted average capital ratios for large international banks rose to 9.5 percent at the end of June from 5.7 percent at the end of 2009, according to Basel Committee data and a BiS working paper analysis. Ratios for a sample of smaller banks also rose, reaching 9.1 percent in June, up from 2009’s 7.8 percent, the data show.

banks’ basel iii capital Ratios Rise in aggregate from ’09 to ’13

03.21.14 www.bloombergbriefs.com bloomberg brief | financial Regulation 5

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inquiry into an online gambling website’s Bitcoin-denominated stock sale after it sig-naled that such dealings may break U.S. laws. The SEC sent a letter asking MpEx to provide contracts and other documents relating to SatoshiDice.com, a copy of the request said.

– Carter Dougherty

■ Japan’s government said it has yet to decide whether to regulate bitcoin, while highlighting that banks must report any suspicions of money laundering stem-ming from trades of the digital currency. The government is still collecting informa-tion on Bitcoin, it said March 18 in a writ-ten response to lawmaker questions.

– Takahiko Hyuga

fannie, freddie bill

■ fannie mae and freddie mac would continue paying all of their profits to the Treasury for the next five years under bipartisan Senate legislation designed to wind down the U.S.-owned mortgage financiers and overhaul the government’s role in the housing market. A draft of the measure, released March 17, would en-sure the U.S. maximizes its return on the 2008 taxpayer bailout of the two compa-nies before junior preferred and common shareholders receive any proceeds.

— Cheyenne Hopkins and Clea Benson

derivatives Policy

■ the commodity futures trading commission, citing an inability to fully understand swaps-market data, has be-gun an overhaul of information collected by the Depository Trust & Clearing Corp., CME Group inc. and others. The CFTC released a request for comment on about 70 questions on ways to change how and which information must be reported to swap-data repositories.

— Silla Brush

■ germany and france are moving toward a joint proposal on a European financial-transaction levy and are con-sidering taxing derivatives from the start, German lawmakers said. While France has indicated it wants to limit fees to stocks at the start of the levy’s gradual in-troduction, German Finance Minister Wolf-

gang Schaeuble said taxing derivatives transactions immediately “makes sense.”

– Birgit Jennen

fund oversight

■ hedge-fund and mutual-fund firms faced scrutiny of their risk-management practices at a March 17 meeting of the U.S. Commodity Futures Trading Commis-sion. The CFTC staff met to discuss funds’ controls for risks tied to the firms’ invest-ments and operations, as well as regula-tions. This is the latest step by regulators to increase oversight of asset managers.

– Silla Brush

■ u.s. mutual fund companies are pushing back against claims that some firms may be too big to fail, saying that singling out a few large money managers and subjecting them to more regulation would hurt competition and ultimately investors. “new costs and new regulations applied selectively will distort the com-petitive landscape of our industry,” paul Schott Stevens, president of the invest-ment Company institute, said in a speech.

– Christopher Condon and Dave Michaels

commodities Pressure

■ JPmorgan chase & co. will sell its physical commodities unit to Mercuria Energy Group Ltd. for $3.5 billion, ending a five-year foray into owning and storing raw materials amid pressure from regula-tors to leave the business. JpMorgan is selling amid concern among regulators that banks could control prices if they own commodities as well as trade them, or suffer catastrophic losses that would endanger the financial system.

– Andy Hoffman and Hugh Son

courts

■ Javier martin-artajo, the former JPmorgan chase & co. banker fighting U.S. extradition from Spain over trading losses that surpassed $6.23 billion, is challenging the U.K. Financial Conduct Authority. Martin-Artajo filed the case last week, the court’s website said. no other details about the claim were available.

– Lindsay Fortado

week in review...

■ policy makers intervene “intermit-tently” and in an “ad hoc fashion” when bailing out too-big-to-fail firms in times of stress, said satya thallam, of the american action forum. Thallam re-examined the notion that a financial firm is too-big-to-fail in a paper, finding that there isn’t a clear mechanism or procedure for policy makers to use, though Dodd-Frank does contain elements that reduce the likelihood of failure and contain those costs. http://bit.ly/1gxXsxt

■ The next reporting challenge is already on the horizon in the form of the Markets in Financial instru-ments Directive and Regulation, or Mifid/Mifir, said christian voigt, a product manager at fidessa. Voigt said in a blog post that the scope of the transaction reporting in Mifid is wider than that of Emir’s trade reporting and it affects all financial instruments, not just derivatives. http://bit.ly/1g7HYoK

■ The financial industry Regula-tory authority in a new investor alert said buying and using digital currency such as Bitcoin is “more than a bit risky.” “The threat of Bit-coin-related fraud is a real danger for investors looking to make a quick profit from Bitcoin,” Finra said. http://bit.ly/1gF6dpz

■ Gulf Cooperation Council coun-tries were ahead of many countries in implementing macroprudential measures, though there is still scope for refinement, imf staff said in a paper. The effectiveness of these policies would be enhanced by modernizing insolvency regimes and strengthening crisis manage-ment and resolution systems, said Zsofia arvai, ananthakrishnan Prasad and kentaro katayama.http://bit.ly/ODVRR5

ARound THE WEB

03.21.14 www.bloombergbriefs.com bloomberg brief | financial Regulation 6

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FoR THE RECoRd

■ investment banks should have known about foreign-exchange traders using chat rooms that had the potential to rig currency prices, said martin Wheatley, the CEO of the U.K. financial conduct authority. “it’s incredible that a bank should not know that traders have unmonitored access to private chat rooms to talk to a bunch of mates that they’ve had relationships with or worked with over the years,” Wheatley said in an interview with Bloomberg TV’s Angie Lau. There should have been controls over bank employees that conduct trades and are allowed to submit rates, Wheatley said. “The surprise for me is that the banks did not check, did not do their homework, and look at how chat rooms were being used,” he said. “The standards of ethics, of conduct, the culture of banks actually got too lax and i think we’re still dealing with that.” Wheatley said the FCA is sending a “strong message” to banks that this sort and behavior and attitude has to change and that fines make a difference on this front. “They hurt. They hurt the egos of senior management, they hurt the boards who say to their staff ‘what on earth is going on, how can it be possible that the regulator is coming after us,’” he said. “They don’t quite hurt as much as they should if they were personal fines.” he said that’s one of the challenges the regulator now faces — moving from big ticket fines that get passed onto shareholders to getting

them taken out of people’s bonuses.

– Adam Haigh and Melissa Karsh

■ The U.S. gov-ernment sees no evidence of “wide-spread” use of virtual currencies such as Bitcoin to evade sanctions or finance terrorism, according to david s. cohen, the treasury depart-

ment’s undersecretary for terrorism and finance intelligence. “Terrorists generally need ‘real’ currency, not virtual currency, to pay their expenses — such as salaries, bribes, weapons, travel and safe houses,” Cohen said in a speech at Bloomberg’s new york headquarters. “The same is true for those seeking to avoid sanctions.” Cohen rejected arguments that regulation would drive virtual currency innovation out of the U.S., saying “the opposite is true.” “Financial transparency can help bring stability to the virtual currency market and security to its users and investors,” Cohen said. “And that is what we are trying to do through sensible, flexible and — to use a word from the tech world — scalable regulation.” Cohen also said that the government would err on the side of squeezing innovation if necessary for law enforcement purposes.

– Carter Dougherty and Greg Farrell

■ european central bank Supervisory Board Vice Chair sabine lautenschlae-

ger said new bank regulation could be paused to weigh the effect that it’s had on the industry. “i think regulation should be for a period brought to a halt, with the excep-tion of three, four ele-ments, and see, if the steering effects that were promised, if they fit together with other elements, if they are calibrated the way we wanted,” Lautenschlaeger said at an event in Dusseldorf, Germany. “We really went through a phase of deregulation, until 2007. now we’re having ‘re-regulation,’ we have a whole package.”

– Jeff Black

Regulators, policy makers and company officials spoke March 19 about the changing regula-tory environment at the U.S. Chamber of Commerce’s Eighth Annual Capital Markets Summit in Washington, D.C. The comments below have been condensed and edited.

■ The financial industry needs “clarity” on regulations so it can increase funding to businesses across all sectors and in turn accelerate U.S. economic recovery, morgan stanley COO Jim Rosenthal said in a speech. “The time has come now for the new rule drafting to end,” said Rosenthal, who is also chairman of the securities industry and financial markets association. Regulations, which now amount to at least 14,000 pages of Dodd-Frank rules, need to be finished “so we can adapt and move on,” he said.

■ securities and exchange commission Chairman mary Jo White said she aims to have more to say on disclosure regulations soon. White said she looks at the disclosure issue more in terms of making company disclosures more effective and meaningful, not just as a means of reducing overload. White spoke about the SEC’s “comprehensive” review of market structure, aimed at determining whether new measures need to be taken. “All assumptions are on the table,” she said.

■ commodity futures trading commission Acting Chairman mark Wetjen told reporters after the event that the CFTC is considering providing more time for overseas multi-lateral trading platforms to seek relief from agency registration requirements before March 24. he said the CFTC is “still getting a sense” of issues involving getting clients on trading facilities. The request to delay the requirement to July 1 “seems pretty far out there,” Wetjen said, noting that an extension to a date before July 1 is under consideration.

– Kim Chipman and Silla Brush

ConFEREnCE RounduP

Martin Wheatley

David S. Cohenphotographer: Scott Eells/Bloomberg

Sabine Lautenschlaeger photographer: hannelore Foerster/Bloomberg

03.21.14 www.bloombergbriefs.com bloomberg brief | financial Regulation 7

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REGulATIon TRACkER

european tracker dATE REGulAToR ACTIon dESCRIPTIon lInkS

March 21, 2014

Basel Committee on Banking Supervision

Consultation Ends

Consultation on proposals for a comprehensive revision of the treatment of securitization within the risk-based capital framework. http://bit.ly/JpSFWz

March 21, 2014

U.K. Prudential Regulation Authority

Consultation Ends

Consultation paper on proposed changes to rules and policy material in the PRA's handbook. http://bit.ly/1f0VANB

March 28, 2014 Central Bank of Ireland Consultation

Ends Consultation on the publication of the UCITS Rulebook. http://bit.ly/1bvRWdT

March 28, 2014

International Organization of Securities Commissions

Consultation Ends

Consultation proposing significant revisions and updates to Iosco's current code of conduct for credit rating agencies. http://bit.ly/1gn65hS

March 28, 2014

Swiss Financial Market Supervisory Authority (Finma)

Consultation Ends

Consultation on revisions to the Liquidity Ordinance based on the Basel III minimum standard. http://bit.ly/MLLnxI

March 31, 2014 Central Bank of Ireland Consultation

EndsConsultation on the introduction of a tiered regulatory approach for credit unions. http://bit.ly/1fCSi4S

April 1, 2014 European Banking Authority Effective

DateRegulatory technical standards on multiple distribution for own funds as per the CRD IV/CRR directive. http://bit.ly/15S4XB2

April 4, 2014

U.K. Financial Conduct Authority

Comments Due

Consultation on reforms to the U.K. mortgage market that includes strengthen-ing affordability assessments. http://bit.ly/1em9Ggf

u.s. tracker dATE REGulAToR ACTIon dESCRIPTIon lInkS

March 21, 2014

Financial Industry Regulatory Authority

Comments Due Concept proposal to develop a comprehensive automated risk data system. http://bit.ly/1dISKvX

March 24, 2014

Securities and Exchange Commission

Comments Due

Proposed issuer eligibility rule amendments to Regulation A on content and fil-ing requirements for offering statements and reporting requirements for issuers. http://1.usa.gov/1m98673

March 24, 2014

Commodity Futures Trading Commission

Deadline Extension Relief for European swap-trading platforms from having to register in the U.S. http://1.usa.gov/1bNyyt7

March 28, 2014

Securities and Exchange Commission

Comments Due

Reopening of the comment period on new disclosure requirements for asset-backed securities offerings. http://1.usa.gov/NvlkLA

March 28, 2014

Office of the Comptroller of the Currency

Comments Due

Notice of proposed rulemaking to establish minimum standards for the imple-mentation of a risk governance framework for large insured national banks. http://1.usa.gov/1eQLzrD

March 31, 2014 Federal Reserve Comments

DueProposed revisions to Regulation HH risk-management standards for certain financial market utilities that have been designated as systemically important. http://1.usa.gov/1bYpFQr

March 31, 2014

Federal Housing Finance Agency

Comments Due

Notice of proposed rulemaking relating to matters of board responsibilities, corporate practices and corporate governance. http://1.usa.gov/1eQNbBF

March 31, 2014

Federal Deposit Insurance Corp., OCC

Effective Date

Final supervisory guidance on Dodd-Frank company-run stress tests for banks with total consolidated assets of more than $10 billion and less than $50 billion. http://1.usa.gov/PPzuc8

asia Pacific tracker dATE REGulAToR ACTIon dESCRIPTIon lInkS

March 21, 2014

Australian Prudential Regulatory Authority

Submissions Due

Consultation on enhanced reinsurance counterparty reporting requirements for life insurers. http://bit.ly/18UlaHf

March 25, 2014

Securities and Exchange Board of India

Submissions Due Discussion paper on monitoring agency report and related disclosures. http://bit.ly/1q7RYSF

March 28, 2014

Australian Prudential Regulatory Authority

Submissions Due

Proposal to harmonize and enhance the current risk management prudential requirements. http://bit.ly/1dSp4MG

April 10, 2014 Australian Treasury Submissions

DueConsultation on the implementation of Australia's G-20 OTC derivatives commitments. http://bit.ly/1orLmee

April 14, 2014

Monetary Authority of Singapore

Submissions Due

Consultation on draft regulations to enhance the regulatory framework for unlisted amrgined derivatives offered to retail investors. http://bit.ly/1pbZNDy

April 20, 2014 Reserve Bank of India Submissions

DueConcept paper on trade receivables and credit exchange for financing micro, small and medium enterprises. http://bit.ly/1ddC4TY

April 25, 2014

Hong Kong Securities and Futures Commission

Submissions Due

Consultation to enhance and standardize the regulation of alternative liquidity pools, also known as dark pools. http://bit.ly/1ne6YMp

May 2, 2014

Monetary Authority of Singapore

Submissions Due

Consultation paper on improvements to various market functions and trading practices in the securities market in Singapore. http://bit.ly/1ompJ1P

03.21.14 www.bloombergbriefs.com bloomberg brief | financial Regulation 8

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CAlEndAR TO SUBMiT An EVEnT pLEASE E-MAiL MKARSh@BLOOMBERG.nET

dATE EVEnT FEATuRES loCATIon ConTACT / REGISTRATIon

March 21, 2014

CRA for Community Based Organizations

Co-sponsored by the Office of the Comptroller of the Currency, Federal Reserve, FDIC and Federal Home Loan Bank of Boston.

Braintree, Massachusetts http://bit.ly/1lDp0ah

March 21, 2014

NYC Bar: Hot Topics in SEC Enforcement program

Andrew M. Calamari, New York regional office director at the U.S. Securities and Exchange Commission. New York http://bit.ly/1ekOF6a

March 24 - 25, 2014 ASIC Annual Forum Two-day forum on regulating for real people. Registration closes

March 14. Sydney http://bit.ly/Uv83yE

March 24, 2014

Crowdfunding for Community Development Finance

Topics include regulatory issues for regulated institutions and credit rating agency implications for banks. N/A http://1.usa.gov/1nDShWH

March 24, 2014

FDIC Kansas City Region Telecon-ference Call

Topic includes the Community Reinvestment Act for intermediate and small banks. Teleconference http://1.usa.gov/1d039JU

March 24 - 26, 2014

American Bankers Association Government Relations Summit

Includes a meet the regulators session. Open to bankers, bank directors and trustee and state association executives.

Washington, D.C. http://bit.ly/HVv9Qj

March 25, 2014 CFPB Hearing on Payday Loans Consumer Financial Protection Bureau Director Richard Cordray will

speak at the event.Nashville, Tennessee http://1.usa.gov/PPCxBf

March 26, 2014 Fed CCAR results release date The Federal Reserve will release the results from the

Comprehensive Capital Analysis and Review, or CCAR. N/A http://1.usa.gov/1drhxZD

March 26, 2014 SEC Cybersecurity Roundtable Topics include cybersecurity and the challenges it raises for market

participants and public companies, and how to address concerns.Washington, D.C. http://1.usa.gov/1kTrALh

March 27, 2014 EBA public hearing European Banking Authority hearing on margin periods for risk

used for treatment of exposure to clients consultation. London http://bit.ly/Oxkr5S

C&L ANNUALSEMINAR

2014

GRANDE LAKES ORLANDO

WWW.SIFMA.ORG/CL2014

March 30–April 2

The premier event for financial services compliance and legal professionals to engage with leading industry experts and regulators.

ADVERTISE WITH BLOOMBERG BRIEFSUNIQUE AUDIENCESMARKET LEADING EDITORIALUNIQUE SPONSORSHIP OPPORTUNITIES

Call Adrienne Bills at +1-212-769-0480

www.bloombergbriefs.com

03.21.14 www.bloombergbriefs.com bloomberg brief | financial Regulation 9

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dATE EVEnT FEATuRES loCATIon ConTACT / REGISTRATIon

March 27, 2014 FSOC meeting The Financial Stability Oversight Council is scheduled to meet in a

closed session.Washington, D.C. http://1.usa.gov/StUscN

March 29 - April 1, 2014 NAIC Spring National Meeting Topics include emerging actuarial issues, financial examiner

coordination and principle-based reserving. Orlando, Florida http://bit.ly/15rBfQq

March 30 - April 1, 2014

National Automated Clearing House Association meeting

NACHA hosts a two-day government relations advocacy group meeting.

Washington, D.C. http://bit.ly/1kT3HDD

March 30 - April 2, 2014

Sifma Compliance & Legal Society Seminar 2014

Topics include retail compliance and advisory issues, ethical con-siderations and current issues in bank regulation.

Orlando, Florida http://bit.ly/1bViAOf

March 30 - April 2, 2014

National Interagency Community Reinvestment Conference

Co-sponsored by the Office of the Comptroller of the Currency, Fed, FDIC, and the Treasury Department's CDFI Fund. Chicago http://bit.ly/1cZZlrT

March 31 - April 2, 2014

City Week 2014: International Financial Services in the Post-Reform World

Speakers include IOSCO former Chairman Masamichi Kono, and Martin Wheatley, chief executive of the Financial Conduct Authority. London http://bit.ly/1hSAE2p

April 2 - 3, 2014

National Bankers Association Legislative and Regulatory Conference

TBD Washington, D.C. http://bit.ly/1olnJ9X

April 3, 2014 CFTC Roundtable The Commodity Futures Trading Commission will host the round-table to discuss end-user issues and Dodd-Frank.

Washington, D.C. http://1.usa.gov/1hKXCWV

April 4, 2014 EBA public hearingHearing on the European Banking Authority's consultation paper on draft technical standards on the mapping of ECAIs credit assess-ments.

London http://bit.ly/1jjX24Q

April 7 - 10, 2014 Iosco AMCC mid-year meeting

Training event covering Iosco principles relating to regulator, self-regulation, enforcement, market intermediaries and the secondary market.

Tokyo http://bit.ly/1bptCA5

April 10, 2014

SEC Investory Advisory Commit-tee meeting Contact DonleyO@SEC.GOV for more information. Washington,

D.C. http://1.usa.gov/PPwFry

April 24, 2014

FDIC Chicago Regional Regulatory Conference Call

Topic includes investment securities and new rules for assessing credit risk. Conference Call http://1.usa.gov/1gAj78e

April 25, 2014 PLI's Enforcement 2014

Program includes perspectives from government agencies, includ-ing the Commodity Futures Trading Commission, Finra and NY Department of Financial Services.

New York and via webcast http://bit.ly/1hSHdlE

April 27 - 30, 2014

NAIC and National Insurance Pro-ducer Registry E-Reg Conference

Topics include federal insurance legislation and systemic risk in insurance.

Kansas City, Missouri http://bit.ly/1kCEqNM

April 29, 2014

FDIC New York Region Regulatory Teleconference

Topic includes processing payments through third parties and managing risks. Teleconference http://1.usa.gov/1gb0aik

April 30, 2014

SEC/Finra Regional Compliance Outreach Program for Broker-Dealers

Program will address current issues in compliance and regulation. Denver http://1.usa.gov/1eS23uY

April 30, 2014

SEC/Finra Regional Compliance Outreach Program for Broker-Dealers

Program will address current issues in compliance and regulation. Los Angeles http://1.usa.gov/1eS23uY

BLOOMBERG COMPLIANCE CENTERCOMMUNICATIONS COMPLIANCE SOLUTIONS CMPC <G

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Q & A

stephen obie, a new york-based partner at Jones Day and a former enforcement lawyer at the U.S. Commodity Futures Trading Com-mission, told Bloomberg’s Melissa Karsh that regulators in the near future will start to inves-tigate those who evade Dodd-Frank Act rules, such as trade reporting requirements. Obie, who joined the law firm at the beginning of the month after 15 years at the CFTC, warned that compliance officers should be “mindful of anti-avoidance provisions before the next investigation.”

Q: You’ve helped oversee the cftc’s investigation into the manipulation of libor. What do you think should be done for manipulation cases more broadly from a regulation perspective? a: particularly for manipulation cases the central issue has been around the intent of the trades. So consequently, compliance programs really have to think about what the regulators are going to look at and if there is ever going to be an investigation. The heart of a really good compliance program is trying to anticipate what regulators are going to look at next. Compliance officers are thinking about the next benchmark that traders have been using and about other sorts of trading activity that is occurring. By definition, an investigation is reactive, compliance folks are proactive.

Q: do you expect benchmark regula-tion and enforcement to be an area of focus for regulators moving forward?a: For the CFTC it’s been a focus for sev-eral years now, beginning with the natural gas industry in 2002. These investiga-tions are not novel to the CFTC. Even the newspaper industry had its own bench-mark issue with false circulation figures, which are used to set advertising rates.

Q: What’s the next step for the cftc from an enforcement perspective?a: At some point in the near future regula-tors will start to look to see if anyone is evading Dodd-Frank Act requirements, if they are structuring trades to evade reporting and whether they are not trading products properly. The industry should

Ex-CFTC lawyer obie Sees dodd-Frank Evasion Cases as next Frontier for Enforcement

Age: 47

Residence: Salisbury Mills, N.Y.

Education: BA, Drew University; JD, SUNY Buffalo

Family: Wife (Robin) and three kids (Jessica, Jason and Christopher)

Favorite Vacation Spot: On board any cruise ship

Reading list: Currently reading “Duty” by Robert Gates

Favorite Cocktail: Rum and Coke

Golf Handicap: Just started learning

be mindful of anti-avoidance provisions before the next investigation. This means that compliance folks really have to be on their toes. it’s a difficult task to know what the new rules are and to make sure that those clearing and reporting require-ments are being followed, as well as to take particular notice of deals outside of the regular platforms. There are various exemptions that enable deals to be traded in different manners and compliance folks need to be familiar with those require-ments.

Q: the cftc has enacted more than 60 rules as a result of dodd-frank. What has that meant for the derivatives industry from a regulatory and compli-ance perspective?a: There’s been a significant paradigm shift that’s occurred with the new rules. products that were previously unregulated and traded over-the-counter are now having to be traded on regulated entities, with trades being reported, new regis-trants created and new markets created. So as these new products migrate to swap-execution facilities (SEFs), this is a challenging time both from the business perspective as well as from the compli-ance perspective. Each SEF has its own rulebook and traders and their firms have to become familiar with the rules of the regulated marketplace, which hadn’t happened previously because it was an unregulated area.

Q: You mentioned previously that as a result of dodd-frank and the rise of chief compliance officers, there’s an

interesting dichotomy between ccos and general counsels at financial firms. What does this mean in terms of com-plying with financial regulations?a: CCOs and general counsels some-times have different decisions that have to get made. For instance, there may be an event at a firm and then a general counsel decides it doesn’t need to be reported to regulators. But nevertheless the CCO may decide that they need to, so this is a novel issue that general counsel and CCOs have to work out early on. For example, one of the issues is when is the best time to tell a regulator something — is it going to be in the annual report, or is it going to be before the annual report is issued? i think people have to use their best judg-ment and decide with their counsel what’s the best time to inform regulators. For many firms, Dodd-Frank required having CCOs for the first time and required re-ports for many registrants, so this may be a new area that folks are experiencing.

Q: What role do derivatives rules play for the industry globally? in europe, there’s the european market infrastruc-ture Regulation and to a lesser extent the markets in financial instruments directive, for example.a: This is a challenging time for the indus-try to keep up with the various changes that are occurring worldwide. Enormous amounts of time and energy are being used to track everything that’s occurring. industry groups have really stepped to the forefront to help folks navigate all of the new rules.

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