Financial Industry Developments
FHFA Announces $5.5 Billion Settlement With Royal Bank of Scotland
On July 12, 2017, the Federal Housing Finance Agency ("FHFA"), as conservator of Fannie Mae and Freddie Mac, announced it had reached a settlement with Royal Bank of Scotland Group plc, related companies and specifically named individuals (collectively, "RBS") for $5.5 billion. The settlement resolves all claims in the lawsuit FHFA v. The Royal Bank of Scotland Group plc et al., Case No. 3:11-cv-1383, in the United States District Court for the District of Connecticut. FHFA alleged violations of federal and state securities laws in connection with private-label residential mortgage-backed securities (PLS) trusts purchased by Fannie Mae and Freddie Mac between 2005 and 2007. Under the terms of the agreement, Royal Bank of Scotland will pay approximately $4.525 billion to Freddie Mac and approximately $975 million to Fannie Mae and certain claims against RBS related to the securities involved will be released. Release. Settlement Agreement.
Rating Agency Developments
On July 10, 2017, DBRS issued a report entitled Rating Canadian Split Share Companies and Trusts. Report.
On July 7, 2017, DBRS issued a report entitled Derivatives Criteria for Canadian Structured Finance. Report.
On July 7, 2017, DBRS issued a report entitled Legal Criteria for Canadian Structured Finance. Report.
On July 7, 2017, DBRS issued a report entitled Legal Criteria for U.S. Structured Finance. Report.
On July 7, 2017, DBRS issued a report entitled Rating Canadian ABCP and Related Enhancement Features. Report.
On July 7, 2017, Fitch issued a report entitled CLOs and Corporate CDOs Rating Criteria. Report.
On July 7, 2017, Fitch issued a report entitled French Residential Loans EDF Engie Bespoke Rating Criteria. Report.
On July 7, 2017, Fitch issued a report entitled U.S. State Housing Finance Agencies: Mortgage Insurance or Guarantee Fund Program Rating Criteria. Report.
On July 6, 2017, Fitch issued a report entitled Third-Party Partial Credit Guarantees Rating Criteria. Report.
On July 6, 2017, Fitch issued a report entitled U.S. Public Finance Solid Waste Revenue Bond Rating Criteria. Report.
European Financial Industry Developments
European Union (Withdrawal) Bill Received First Reading in Parliament
The European Union (Withdrawal) Bill (the "Repeal Bill"), which will end the supremacy of EU law in the UK by repealing the European Communities Act 1972 and will prepare the UK's legislative framework after its withdrawal, has received its first reading in Parliament on July 13, 2017.
The Repeal Bill will have four key functions:
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The repeal of the ECA 1972 and the end of the supremacy of EU law after exit day.
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Conversion of EU law into UK law so that the UK's legislation retains a functioning statutory framework after Brexit.
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Creating powers that, where the government considers it necessary, correct existing legislative provisions and afford the devolved administrations the power to make corrective amendments.
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Maintaining the current scope of devolved decision making powers in areas currently governed by EU law.
The Bill was published with Explanatory Notes.
It is anticipated that the Repeal Bill will not receive its second reading until after September 5, 2017, after which parliamentary debate will follow. The UK is scheduled to leave the EU on March 29, 2019.
European Commission Expert Group on Sustainable Finance Issues Interim Report
On July 13, 2017, the European Commission published the interim report of its high-level expert group ("HLEG") on sustainable finance. The HLEG was established in October 2016 as one of the initiatives relating to the Commission's capital markets union (CMU). The HLEG's aim is to provide recommendations on how to entrench sustainability into the EU's regulatory and financial policy framework and to utilize more capital flows towards sustainable investment and lending. Read more here.
FIA Reports on MiFID II/MiFIR Compliance for US FCMs
On July 7, 2017, the Futures Industry Association ("FIA") published a compliance brief on the impact of the revised European Markets in Financial Instruments Directive ("MiFID II") and Markets in Financial Instruments Regulation ("MiFIR") on U.S. Futures Commission Merchants ("FCMs"). Both regulations are scheduled to take effect on January 3, 2018.
MiFID II and MiFIR form a framework of EU legislation that provides for the regulation of investment firms and the trading of financial instruments in the EU markets. MiFID II/MiFIR revise the EU's original Markets in Financial Instruments Directive (MiFID).
The FIA brief addresses the compliance obligations of U.S. FCMs and their non-EU clients (third-country firms) once MiFID II/MiFIR take effect. Read more here.
