Financial Regulatory Developments Focus - 11 Mar 2014

In this newsletter, we provide a snapshot of the principal European, US and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

DERIVATIVES

CFTC Provides Time-Limited No-Action Relief to Certain Affiliated Counterparties

On 6 March 2014, the Commodity Futures Trading Commission ("CFTC") Divisions of Clearing and Risk ("DCR") and Market Oversight ("DMO") provided time-limited no-action relief to certain affiliated counterparties. The DCR issued a no-action letter extending the time-limitation contained in the alternative compliance frameworks available to certain affiliated counterparties pursuant to CFTC regulation 50.52(b)(4)(ii)-(iii). The DMO issued a no-action letter providing time-limited no-action relief from the requirements of the trade execution requirement in Commodity Exchange Act ("CEA") section 2(h)(8) to "Eligible Affiliate Counterparties," as defined in CFTC regulation 50.52(a), that engage in swap transactions with one another that involve a swap subject to the trade execution requirement.

The full text of the DCR no-action letter is available at: http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/14-25.pdf.

The full text of the DMO no-action letter is available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/letter/14-26.pdf.

CFTC, FERC Implement Information Sharing MOU

On 5 March 2014, the CFTC Acting Chairman Mark Wetjen and Federal Energy Regulatory Commission ("FERC") Acting Chairman Cheryl LaFleur announced the initial transmission of market data under the recently adopted CFTC-FERC Memorandum of Understanding ("MOU") for use in analyzing market activities and protecting market integrity.

Wetjen and LaFleur also announced the creation of a staff-level Interagency Surveillance and Data Analytics Working Group to coordinate information sharing between the agencies and focus on data security, data sharing infrastructure, and the use of analytical tools for regulatory purposes. As directed by Congress under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), the CFTC and FERC entered into an MOU on 2 January 2014 to share information for use in analyzing market activities and protecting market integrity. The MOU ensures that information requests related to markets within the respective jurisdiction of each agency are properly coordinated to minimize duplicative information requests and to address the treatment of confidential information.

COMPENSATION

European Commission Adopts RTS on Bonus Caps

The European Commission has adopted Regulatory Technical Standards ("RTS") on criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile. In broad terms, staff will be identified as having a material impact on an institution's risk profile if certain qualitative and quantitative criteria are met. The qualitative criteria are designed to identify members of senior management and risk-takers that are in control functions. The quantitative criteria and thresholds relate to total gross remuneration awarded to staff members and specify criteria for identifying staff members whose total remuneration takes them into the same remuneration bracket as members of senior management and risk-takers. The Regulation will come into force on the twentieth day following publication in the Official Journal of the European Union (i.e. once translated into all official languages of the European Union and then published in the Official Journal of the European Union).

The text of the regulation is available at: http://ec.europa.eu/internal_market/company/docs/modern/140304-regulatory-technical-standards_en.pdf.

Letter from BoE to Treasury Committee Published Providing Information on the PRA's Remuneration Code and UK Banks' Exposures to China

The Treasury Committee published, on 4 March 2014, a letter from Mark Carney, Governor of the Bank of England ("BoE") to Andrew Tyrie, Treasury Committee Chairman setting out a timetable for the PRA's response to the Parliamentary Commission on Banking Standards' ("PCBS") recommendations on claw back and other aspects of the Remuneration Code. The letter states that the PRA plans to consult in August 2014 on the implementation of a revised Remuneration Code in light of the PCBS recommendations on remuneration, to coincide with the PRA's consultation on the implementation of new legislation with regards to accountability and standards for bank employees.

The letter is available at...