BIS Releases Basel III Monitoring Report 2019

The Basel Committee’s latest Basel III monitoring exercise shows that on a fully phased-in basis, the capital shortfalls at the end-December 2018 reporting date are €23.5 billion for Group 1 banks at the target level. These shortfalls are almost 75% smaller than in the end-2015 cumulative QIS exercise, thanks mainly to higher levels of eligible capital. For Group 1 banks, the Tier 1 minimum required capital (MRC) is expect to increase by 3% following full phasing-in of the final Basel III standards relative to the initial Basel III standards. This compares with an increase of 3.2% at end-2017. On average, at end-June 2018, the total change in Tier 1 MRC at the target level was higher at 5.3% for Group 1 banks. This higher increase was largely driven by the higher market risk impact prior to the application of the recalibrated 2019 standard. The final Basel III minimum requirements are expected to be implemented by January 1, 2022 and fully phased in by January 1, 2027.

FCA Finds MiFID II Research Unbundling Rules Working Well for Investors

Multi-firm review findings published this week by the FCA has found that, post-MiFID II, most asset managers have chosen to pay for research from their own revenues, instead of using their clients’ funds. Firms have also improved their accountability and scrutiny of both research and execution costs, including where firms have chosen to charge research costs to clients. This has resulted in investors in UK-managed equity portfolios saving around £70 million in the first six months of 2018 across a sample of firms. The review also indicated that research budgets have fallen by 20-30%.

Firms Still Uncertain About Libor Transition

Although four out of five financial providers have Libor transition plans in place, just 18% say their plan is mature, while only one in five say they are operationally ready for the change – according to the Accenture 2019 Libor Survey. Almost half (41%) do not feel they have a unified and consistent approach to transition and remediation, while two in five believe that regulatory uncertainty and lack of clarity are hampering execution of their remediation efforts.

RegTech Spending to reach $127bn by 2024, Says Juniper

New data from Juniper Research forecasts that the value of RegTech spending will exceed $127 billion by 2024, up from $25 billion in 2019. This growth will be driven by a dramatic rise in the automation of resource-intensive tasks, such as those involved in KYC (Know Your Customer) checks and increasing use of AI in transaction monitoring. Global regulatory compliance costs are also set to soar, from just under $278 billion to more than $316 billion over the next five years. In Europe, this growth is likely to be driven by regulatory divergence post-Brexit which, while disruptive, could create new opportunities for RegTech.

Luxoft Forms Strategic Alliance with Fenergo

Luxoft, a DXC Technology company, has become a Global Platinum Member of client lifecycle management (CLM) specialist Fenergo’s partner ecosystem. Luxoft will offer Fenergo’s client community members professional consulting services to enable the rapid systems integration and deployment of Fenergo’s platform and suite of digital capabilities. The Fenergo ecosystem currently consists of 300 global organisations, of which just three are platinum members.

Compliance.ai Launches Premium Content

Compliance.ai has launched Premium Content, a new offering to help compliance professionals keep up with banking and financial regulations. The service provides users with access to contextualized regulatory subscription content including legal interpretations of regulations, publications from law firms, compliance manuals, guidance from content publishers and industry experts, online compliance training as well as subscription based content relevant to banks and financial institutions. It also offers a curated listing of providers from law firms, advisory services and content publishers; and plans to correlate with tasks and workflows soon after launch.

AkinovA Deploys Trading Platform on OpenFin

AkinovA, an electronic marketplace for the transfer and trading of re/insurance risk, has selected OpenFin for the deployment of its trading platform. The integration with OpenFin allows users to access the AkinovA marketplace with an easy-to-use interface that looks and feels like a native app experience while enabling instant deployment and upgrades. AkinovA is the first insurtech company running on OpenFin.

SEC Further Delays Rule 606

On September 4, in response to a new request from the Financial Information Forum and the Security Traders Association, the SEC extended the compliance deadline for Rule 606 amendments. This represents the second extension for the routing practices regulation, which was first proposed in November 2018 with an original deadline of May 2019, and subsequently delayed to October 2019. The latest extension pushes the implementation deadline back to January 1, 2020 for all broker-dealers for Rule 606(a) and for self-routing broker-dealers for Rule 606(b), and to April 1, 2020 for broker-dealers who outsource routing activity.

FRTB Impact a Triple Threat, Finds ISDA

Final market risk capital rules will lead to a higher increase in bank capital requirements than previous estimates given by international regulators earlier this year, an undisclosed industry study has found, as reported by Risk.net – leading to concerns that the capital hike could force firms to scale back trading activities to meet the new rules.

In January 2019, the Basel Committee on Banking Supervision estimated the new regime would result in a 22% weighted average increase in capital. But a recent study by the International Swaps and Derivatives Association (ISDA) found that the impact could in fact be three times higher than expected.

New Money Laundering Division for FinCEN

The US-based Financial Crimes Enforcement Network (FinCEN) has launched its Global Investigations Division (GID), which will be responsible for implementing targeted investigation strategies rooted in FinCEN’s unique authorities under the Bank Secrecy Act (BSA) to combat illicit finance threats and related crimes, both domestically and internationally.

Matthew Stiglitz, a former Principal Deputy Chief in the US Department of Justice’s Criminal Division, will lead GID.