BCG discusses the “Brave New Era” of Comprehensively Regulated Banks

Global banking has entered a new era in which every region, product, and legal entity is going to be closely regulated.

To assess the current status and future effects of regulatory reform, we have classified the entire spectrum of regulatory reforms, grouping them into three clusters: financial stability, prudent operations, and resolution and separation. (See Exhibit 1.)

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Financial Stability: Expectations Exceed Regulators’ Intent

Since the crisis began, establishing and safeguarding global and local financial stability have been regulators’ highest priorities. As a result, financial stability is the most developed area of reform. Fundamental requirements have been revised or reinstated, primarily … Read more


Short Selling Reporting Rules in the EU and the US: A Greenfield Area

The following post comes from Elizabeth Howell, a doctoral student in law at the University of Oxford and a visiting scholar at Columbia Law School in the Fall Semester 2014. It is related to her paper, ‘Short Selling Reporting Rules in the EU and the US: A Greenfield Area’ that is forthcoming in the European Company Law Journal. Further details are available here

Short selling reporting obligations can be helpful to regulators, particularly in relation to deterring abusive behavior. Following the recent financial crisis, the European Short Selling Regulation (the ‘Regulation’)[1] introduced a common framework for short … Read more

PwC discusses Ten Key Points from the FDIC’s Resolution Plan Guidance

On December 17th, the FDIC issued guidance for the 2015 resolution plans of the covered insured depository institutions (CIDIs) of large bank holding companies (BHCs). The guidance (applicable to 36 CIDIs) adds welcome clarification around regulatory expectations, but also raises the bar – in some cases quite significantly – on the nature and depth of required plan content.

In addition to the BHC resolution plans required under Dodd Frank Section 165(d) [1], the FDIC requires a separate CIDI resolution plan for US insured depositories with assets of $50 billion or more. Most of the largest, most complex BHCs are subject … Read more

Commissioner Mark Wetjen

Ensuring the Promise of a Centrally Cleared, Global Swaps Market: Next Steps

These remarks were made by Commissioner Mark P. Wetjen before the Futures Industry Association Asia Derivatives Conference

Thank you for that kind introduction, and my thanks as well to the Futures Industry Association for having me here to speak at this year’s Asia Derivatives Conference. I am honored to be with you in Singapore. I want to give a special thanks to my good friend, Walt Lukken, who has shown tremendous leadership in his role at the FIA.

While traveling in Asia this week and meeting with members of the derivatives community, I’ve been struck by both the vastness and … Read more

Sullivan & Cromwell discusses FDIC Final Rule Issued to Align the Deposit Insurance Assessment System with Basel III Capital Rules

On November 18, 2014, the Federal Deposit Insurance Corporation (the “FDIC”) published a final rule (the “Final Rule”) modifying certain elements of its deposit insurance assessment system for insured depository institutions (“IDIs”).[1] The Final Rule amends the FDIC’s 2011 revised methodology for determining insurance assessment rates both for large institutions and for highly complex institutions (the “2011 Assessments Rule”)[2]—the so-called “scorecard” method that is currently used to calculate assessment rates for these institutions. The Final Rule indicates that it is intended to align the deposit insurance assessment system for all IDIs—including advanced approaches banking organizations—with the standardized approach (the “Standardized … Read more

Morrison & Foerster discusses 2015 ISS and Glass Lewis Proxy Voting Guidance Updates

Proxy research and advice entities Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co., LLC (“Glass Lewis”) recently updated the guidelines each service will use to inform their voting recommendations for the 2015 proxy season. The updates address topics such as amendments to governing documents, director and executive compensation, board leadership structures, and certain shareholder proposals included in proxy materials. We summarize the most notable updates to these guidelines, below.


The ISS voting policy updates are relevant to shareholder meetings taking place on or after February 1, 2015. The two principal updates highlighted by ISS relate to ISS’s … Read more

Ballard Spahr discusses Risk Retention Rules

A final credit risk retention rule was recently issued with respect to asset-backed securities (ABS) by the prudential bank regulators (the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency) and the Securities Exchange Commission, and, with respect to residential mortgage assets only, the Federal Housing Finance Agency and the Department of Housing and Urban Development. The final rule bears little resemblance to the approach originally proposed in April 2011 but is essentially (i.e., with the exception of a few details) identical to the rule as re-proposed in … Read more

Eric Talley

Tax Inversions and Regulatory Competition

The following post comes to us from Eric L. Talley, The Rosalinde and Arthur Gilbert Foundation Professor of Law at the University of California, Berkeley, School of Law. It is based on a recent working paper, “Corporate Inversions and the Unbundling of Regulatory Competition,” which is available here.

Several prominent public corporations have recently embraced a noteworthy (and newsworthy) type of transaction known as a “tax inversion.”  In a typical inversion, a US multinational corporation (MNC) merges with an operating foreign company. The entity that ultimately emerges from this transactional cocoon is invariably incorporated abroad, yet typically remains listed … Read more

Jonathan D. Glater

Hurdles of Different Heights for Securities Fraud Litigants of Different Types

The following post comes to us from Jonathan D. Glater, Assistant Professor of Law at the University of California Irvine School of Law. It is based on his recent paper, “Hurdles of Different Heights for Securities Fraud Litigants of Different Types,” which is available here.

When investors buy securities in a private offering, it is presumed that they have the sophistication and expertise to invest in the absence of the formal disclosure requirements that apply to public offerings. When investors claim to have been victims of fraud, they assert that they have fallen victim to deceit. When investors who purchased … Read more

Debevoise & Plimpton discusses SEC’s Proposed Rule on Security-Based Swap Quotes

On September 8, 2014, the Securities and Exchange Commission (the “SEC”) published a proposed rule (the “Proposed Rule”) providing that certain communications involving quotes of security-based swaps will not be deemed to constitute offers of such security-based swaps or of any guarantees of such security-based swaps that are securities for purposes of the registration requirements applicable to offers or sales of securities under section 5 of the Securities Act of 1933 (the “Securities Act”), if the security-based swaps may be purchased only by eligible contract participants (“ECPs”)[1] and are traded on or processed through a trading system or platform that … Read more

Sullivan & Cromwell discusses Extraterritorial Application of CFTC’s Swap Rules


On September 16, 2014, the United States District Court for the District of Columbia dismissed a broad-based challenge to the interpretive guidance and policy statement issued by the Commodity Futures Trading Commission (“CFTC”) in July 2013 relating to the extraterritorial application of the CFTC’s swaps rules adopted pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or “Dodd-Frank Act”). The guidance specifically addressed the circumstances under which certain Dodd-Frank requirements, such as the CFTC’s swap reporting rules, mandatory clearing requirement, trade execution requirement, and swap dealer registration and business conduct requirements, would apply … Read more

Cadwalader discusses Third-Party Due Diligence Reports for Asset-Backed Securities

On August 27, 2014, the Securities and Exchange Commission (the “SEC”) adopted final rules[1] (the “Final Rules”) implementing, among other things, provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) relating to third-party due diligence reports for asset-backed securities[2] (“ABS”).  As adopted, the Final Rules will require:

       (i)            issuers and underwriters of rated ABS, whether or not registered with the SEC, to file with the SEC, at least five business days before the first sale in the ABS offering, a Form ABS-15G containing the findings and conclusions of reports of third-parties who have … Read more

Sullivan & Cromwell discusses Proposed SEC Rule Regarding Security-Based Swaps


On September 8, 2014, the Securities and Exchange Commission proposed a rule under the Securities Act of 1933 to provide that the publication or distribution of price quotes relating to security-based swaps that may be purchased only by eligible contract participants and are traded or processed through a national securities exchange or a security-based swap execution facility will not be deemed to constitute offers of such security-based swaps (or any guarantees of such security-based swaps), for the purposes of the registration requirements of the Securities Act. Comments on the proposed rule are due on or before 60 days from … Read more

Reed Smith discusses the Liquidity Coverage Ratio

We all know that liquids are both good and bad. We are supposed to drink on average eight glasses of water a day for good health. However, too much alcoholic intake will get us into trouble with the law. Now, the larger banking organizations are required to have a minimum amount of liquidity on their balance sheets fully in place by January 1, 2017.

Background The Federal Reserve Board (“Board”) at its September 3 open meeting finalized a minimum Liquidity Coverage Ratio rule (“LCR”) for covered bank holding companies (“BHCs”), savings and loan holding companies, and depositories. The action was … Read more

Conley and Williams

The Social Reform of Banking: Innovating for Sustainable Financial Services

The following post comes to us from John M. Conley, William Rand Kenan Jr. Professor of Law at the University of North Carolina School of Law, and Cynthia A. Williams, Osler Chair in Business Law at Osgoode Hall Law School, York University. It is based on their recent paper, “The Social Reform of Banking,” which was published in the Journal of Corporation Law and is available here.

The financial crisis of 2008 led to global demands for reforms that would put the financial services industry on a more sustainable ethical, economic, and legal footing. Thus far, the response to … Read more

Cleary Gottlieb discusses Shortcomings in Financial Company Resolution Plans

On August 5, 2014, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (the “Agencies”) released a Joint Statement identifying common shortcomings and action steps for the 11 largest financial companies that initially filed resolution plans in 2012 (the “First Wave Filers”).[1] Contemporaneously with the Joint Statement, the Agencies sent letters to each of the First Wave Filers in which they identified more detailed and specific shortcomings in individual First Wave Filers’ 2013 resolution plans and additional information required for the 2015 plans (the “Joint Letters”).

In effect, the Joint Statement and the Joint … Read more


The Crisis: The More We Know, The Less We Understand

With the stock market regularly surpassing record highs, housing prices surging 13.6 percent in 2013 alone, and unemployment down to 6.7 percent, it is easy to forget just how dire the economic outlook appeared just five years ago. It is also tempting to assume that we have figured out what went wrong and have made the changes necessary to address the fragilities the crisis revealed. After all, academics, policymakers, and other commentators have produced seemingly endless articles and books about the crisis. Congress also passed the Dodd-Frank Act, the most sweeping financial reform bill since the 1930s. A closer look … Read more

Sullivan & Cromwell discusses CFTC Reauthorization Bill


On June 24, 2014, the House of Representatives voted 265 to 144 to pass H.R. 4413, entitled the “Customer Protection and End-User Relief Act” (the “Reauthorization Act”). The Reauthorization Act reauthorizes the operations of the Commodity Futures Trading Commission (the “CFTC”) through the 2018 fiscal year. In addition to reauthorizing the CFTC, the Reauthorization Act would, if enacted, amend the Commodity Exchange Act (the “CEA”), among other things, to:

  • require statutorily the CFTC and Securities and Exchange Commission (“SEC”) to issue joint rules regarding the application of U.S. swaps rules to transactions made between U.S. and foreign entities;
  • modify

Read more

Morrison & Foerster discusses SEC’s Final Rules on Security-Based Swap Definitions

Nearly four years after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), on June 25, 2014, the Securities and Exchange Commission (“SEC”) adopted its first in a series of final rules aimed at cross-border security-based swap activities. The final rules stem from an SEC proposal issued May 23, 2013, but do not address all of the issues raised in that proposal. Instead, the final rules address certain aspects of the 2013 proposal, principally the applicability of the security-based swap dealer (“SBSD”) and major security-based swap participant (“MSBSP”) definitions to cross-border security-based swap activities. Final … Read more


High Frequency Trading Reform: The Short Term and the Longer Term

High frequency trading has more enemies than friends, but the key question is what are the costs of reform.  Attorney General Schneiderman’s pending suit against Barclays PLC for allegedly misrepresenting that its dark pool (known as “LX”) was “safe” from high frequency traders, when in fact it appears to have been a hotbed of “predatory” trading, shows two things:  First, it underlines that the market, itself, does not really understand the microstructure of equity trading, because trading at LX fell by 37% the week after the suit revealed unsuspected practices.[1]  But LX may not stand alone, and other dark pools … Read more