The CFTC Announces Final Rule for Alternative to Fingerprinting for Foreign Natural Persons

On March 28, 2016, the U.S. Commodity Futures Trading Commission (CFTC) approved a final rule that will add an alternative method of CFTC registration for foreign natural persons. The CFTC will now accept a registered firm's criminal history background check on such foreign natural persons in place of fingerprints. The final rule is set to take effect 30 days after its publication in the Federal Register. Press Release.

Joint interim Final Rule Published Relating to Expanded Examination Cycle Eligibility

On March 24, 2016, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC) issued and are requesting public comment on an interim final rule that will allow more community banks to be eligible for the 18-month on-site examination cycle. The rule expands eligibility to qualifying insured depository institutions with less than $1 billion in total assets. Press Release. Interim Final Bill. 

On March 30, 2016, Moody's published its rating methodology for assessing green bonds. Report.

On March 30, 2016, DBRS published its methodology for rating Canadian structured finance instruments. Report.

On March 30, 2016, DBRS updated and is requesting comment on its methodology for analyzing the credit risk of European RMBS. Report.

On March 30, 2016, DBRS published and is requesting comment on its methodology for analyzing Spanish mortgages. Report.

On March 29, 2016, DBRS published and is requesting comment on its methodology for conducting surveillance on U.S. ABS. Report.

On March 29, 2016, DBRS published and is requesting comment on its operational risk assessment methodology for U.S. ABS servicers. Report. 

On March 29, 2016, DBRS published and is requesting comment on its operational risk assessment methodology for U.S. ABS originators. Report.

On March 29, 2016, DBRS published and is requesting comment on its methodology for rating pooled aircraft lease securitizations. Report.

On March 24, 2016, DBRS published its rating methodology for supranational institutions, or multilateral financial institutions (MFIs). Report.

On March 24, 2016, Fitch updated its rating criteria for U.S. auto lease ABS. Press Release.

On March 24, 2016, S&P published its methodology and assumptions for U.S. tobacco settlement securitizations. Report. 

Federal District Court Rules against Designation of MetLife as a "SIFI" under Dodd-Frank Act

On March 30, the D.C. federal District Court ruled against the designation by the Financial Stability Oversight Counsel ("FSOC") of MetLife as a "systemically important financial institution" under the Dodd-Frank Act.  The FSOC has designated just four non-banks as SIFIs, but MetLife was the only one to file a lawsuit protesting it.

The overall impact of the ruling remains unclear, however, because it is under based on longstanding concerns about the protection of the firm's proprietary business information and it widely anticipated that the FSOC will appeal the ruling.

Barclays and MassMutual Settle RMBS Litigation

On March 29, Barclays Capital Inc. and Massachusetts Mutual Life Insurance Co. jointly moved pursuant to a confidential settlement agreement for dismissal of an action brought by MassMutual.  MassMutual brought claims under the Massachusetts Uniform Securities Act concerning $175 million in RMBS.  MassMutual alleged that Barclays had made false representations about the quality and risk of default of the underlying loans. Motion for Dismissal.  Complaint.

Federal Court Permits BlackRock's Breach of Contract Claims to Proceed against BNY Mellon

On March 28, Judge George Daniels of the U.S. District Court for the Southern District of New York granted in part and denied in part Bank of New York Mellon's motion to dismiss an action brought by BlackRock.  BlackRock, as a holder in numerous trusts for which BNY Mellon serves as trustee, alleges that BNY Mellon failed to (i) provide notice of breaches of seller representations and warranties, (ii) enforce seller repurchase obligations, (iii) provide notice of events of default, and (iv) act prudently upon learning of events of default.  The court exercised supplemental jurisdiction over state law claims concerning 243 trusts, holding that the claims arise out of the same operative facts as those of the federal claims concerning 17 other trusts.  The court permitted BlackRock's breach of contract claims to proceed, but dismissed fiduciary duty claims as duplicative of the contract claims.  Judge Daniels also dismissed Trust Indenture Act claims in light of the Second Circuit's holding that the TIA does not apply to the trusts like those at issue, and dismissed negligence and conflict of interest claims for failure to adequately state a claim. Decision.

BCBS Reports on Regulatory Consistency of Risk-Weighted Assets for Credit Risk in the Banking Book

On April 1, the Basel Committee on Banking Supervision ("BCBS") issued its second report: an analysis of risk-weighted assets ("RWA") for credit risk in the banking book.

The report's first objective is to identify the main drivers of RWA variation and evaluate their effects. The report distinguishes between risk-based drivers (i.e. those drive by underlying differences in risk) and practice-based drivers (i.e. those that reflect differences in bank practices and regulatory environments). The second objective of the report is to highlight where there is potential to modify current standards either to reduce practice-based RWA variation or to simplify the capital framework of internal ratings-based models and increase its comparability.

The report also contains sound practices relating to institutions' intendent model validation functions, which the BCBS observed during the study. Report.

ESMA Consults on Guidelines on Disclosure of Information on Commodity Derivatives Markets or Related Spot Markets under MAR

On March 30, the European Securities and Markets Authority ("ESMA") opened a public consultation on draft guidelines under the Market Abuse Regulation ("MAR").

ESMA is consulting on its proposed non-exhaustive indicative list of information expected or required to be published on commodity derivatives markets or spot markets for the purposes of determining inside information regarding commodity derivatives and of triggering the prohibitions for insider dealing.

Under MAR, inside information in relation to commodity derivatives must relate to either the commodity derivatives themselves or to the related spot commodity contract. However there is a wide variety of commodities markets and commodity derivatives markets which may require distinguishing between types of information specific to these markets. ESMA is giving further consideration to the scope of the instruments or products concerned.

ESMA will consider all comments received by May 20. Consultation Paper.

EBA Publishes Report on Benchmarking of Remuneration Practices at the European Union Level and Data on High Earners in 2014

On March 30, the European Banking Authority ("EBA") published aggregated data on high earners earning €1 million or more per financial year.

The EBA has analyzed the data provided to it for the year 2014 and compared it to the 2013 data. The main results of its analysis are:

• the number of high earners increased significantly between 2013 and 2014 (+22 per cent);
• there is now a higher overlap of the population of high earners with that of staff identified as having a material impact on the institution's risk profile. This percentage increased significantly after the regulatory technical standards on identified staff entered into force in 2014;
• the supervisory framework for remuneration is still not sufficiently harmonized with the application of deferral and payout in instruments differing significantly among Member States and among institutions;
• following the introduction of a limitation on the ratio between the variable and the fixed remuneration of 100 per cent (or 200 per cent with shareholders' approval), the ratio for all identified staff decreased to 65.5 per cent in 2014 from 104 per cent in 2013; and
• the increase in fixed remuneration for identified staff is not material compared to the overall administrative costs.

The report forms part of the work that the EBA does with the European Commission to review the effectiveness of remuneration provisions. Report.