UK FCA to get enhanced powers on Libor

EU to study UK's post-Brexit financial rules | UK FCA to get enhanced powers on Libor | US banks see increased capital under advanced approaches

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June 24, 2020

Daily coverage for the global derivatives industry

The British Treasury has released the government's post-Brexit financial regulation update plans for banks, asset managers and derivatives traders, saying they reflect international Basel standards. The EU now has to determine if the UK rules will meet its equivalence criteria.

Full Story: Reuters (6/23), Financial Times (subscription required) (6/23), S&P Global Platts (free registration) (6/23)

UK FCA to get enhanced powers on Libor

UK Chancellor of the Exchequer Rishi Sunak told Parliament that new legislation will be introduced to give the UK Financial Conduct Authority enhanced powers relating to Libor. Sunak said it is in the interests of financial markets "that the pool of contracts referencing LIBOR is shrunk to an irreducible core ahead of LIBOR's expected cessation, leaving behind only those contracts that genuinely have no or inappropriate alternatives and no realistic ability to be renegotiated or amended."

Full Story: BNN Bloomberg (Canada) (6/23), Regulation Asia (subscription required) (6/23)

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Industry News and Trends

US banks see increased capital under advanced approaches

Some US banks have seen their risk-weighted assets under the advanced approaches increase more than under the standardized approaches set by regulators, which could have implications for capital allocation.

Full Story: Risk (subscription required) (6/24)

Singapore calls for green finance ties with China

Monetary Authority of Singapore managing director Ravi Menon is seeking to promote green finance initiatives between China and Singapore by establishing guidelines for green and sustainability-linked loans. "China and Singapore can help to blaze a new trail in financial cooperation and innovation in Asia," Menon told a forum.

Full Story: Regulation Asia (subscription required) (6/24)

Banks release details of plans for office returns

Investment banks are implementing a range of measures to ease the return of their staff to office working, from phased returns to free antibody testing.

Full Story: Financial Times (subscription required) (6/23)

Regulatory Roundup

ESMA eyes possible position limit reforms

European Securities and Markets Authority executive director Verena Ross told a conference that ESMA is looking to review its commodity derivatives position limits regime under the revised Markets in Financial Instruments Directive "to make that framework more efficient and effective." Ross said one move would be to "narrow down" which contracts would be subject to the position limits and "focus on those where we believe it is essential to have that type of framework and regime in place."

Full Story: Futures & Options World (subscription required) (6/23)

Analysis: Next FCA head Rathi faces challenges

London Stock Exchange CEO Nikhil Rathi's new job as the next head of the UK's Financial Conduct Authority comes at a time when the FCA is dealing with coronavirus disruptions, domestic post-Brexit financial regulations and EU equivalence discussions. Rathi's prior government and political experience gives a good indication that he will be able to handle the pressure.

Full Story: Politico Pro (subscription required) (6/23), Financial Times (subscription required) (6/22)

ECB's Enria deems bank consolidation likely

Falling profitability as a result of the coronavirus pandemic has increased the likelihood of consolidation in the eurozone banking sector, European Central Bank supervisor Andrea Enria says. A clearer view of the pandemic's impact will appear next month when the ECB releases results of a vulnerability analysis, he says.

Full Story: Reuters (6/23)

BoE falling short on diversity, Bailey says

The Bank of England faces challenges to reach its gender and race diversity goals, says governor Andrew Bailey. Some 32% of senior management roles are currently filled by women against a target of 35% by the end of this year, while ethnic minorities remain underrepresented among its senior ranks.

Full Story: Bloomberg (tiered subscription model) (6/23)

ISDA News and Events

ISDA Virtual Conferences Now Available! Upcoming topics include SIMM, Interest Rates and FpML

New Benchmarks Hub

ISDA has published a new hub on its website that pulls together useful information on the transition from LIBOR and the adoption of alternative risk-free rates. Featuring updates on ISDA's work on fallbacks and other benchmark initiatives, as well as research and analysis, the new benchmarks hub serves as a one-stop shop for information from ISDA on benchmark reform. Click here to visit ISDA's Benchmark Reform and Transition from LIBOR webpage!