Greg Kilminster
Head of Product - Content
FCA forms working group focused on sustainability in financial advice
The Financial Conduct Authority (FCA) has announced the establishment of an industry-led working group to assist the financial advice sector in providing advice to customers on products that claim to be sustainable. Daniel Godfrey has been appointed chair, and Julia Dreblow will serve as the vice-chair. The Personal Investment Management & Financial Advice Association (PIMFA) will provide the secretariat.
The FCA expects the group to report on how the advice sector can be supported in delivering good practice by the second half of 2024.
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JP Morgan Securities to pay $18 million for violating SEC whistleblower protection rule
The Securities and Exchange Commission (SEC) has announced settled charges against JP Morgan Securities LLC (JPMS) for violating a whistleblower protection rule that prohibits taking any action to impede an individual from communicating directly with the SEC staff about possible securities law violations.
According to the SEC’s order, from March 2020 through July 2023:
- JPMS regularly asked retail clients to sign confidential release agreements if they had been issued a credit or settlement from the firm of more than $1,000.
- Even though the agreements permitted clients to respond to SEC inquiries, they did not permit clients to voluntarily contact the SEC.
JPMS has agreed to the following:
- be censured;
- cease and desist from violating the whistleblower protection rule; and
- pay the $18 million civil penalty.
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EBA updates guidelines on ML/TF risks factors to include crypto-assets service providers
The European Banking Authority (EBA) has issued updated guidelines on money laundering and terrorist financing (ML/TF) risk factors. The revised guidelines now cover the risks associated with crypto-assets service providers (CASPs) and provide detailed steps that CASPs, as well as other credit and financial institutions, should take to manage such risks.
The new guidelines include:
- Specific risk factors that are unique to crypto-assets and CASPs.
- Guidance for credit and financial institutions on managing risks associated with non-authorised or unregulated CASP clients.
- Sector-specific guidance for CASPs on the factors they should consider when assessing ML/TF risks associated with their business relationships.
- Guidance on measures CASPs should apply to mitigating these risks.
The Guidelines will apply from 30 December 2024.
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EBA publishes CP on prudent valuation under CRR
The European Banking Authority (EBA) has published a Consultation Paper (CP) proposing amendments to the Draft Regulatory Technical Standards (RTS) on prudent valuation under Article 105(14) of Regulation (EU) No 575/2013, the Capital Requirements Regulation (CRR).
Under the prudent valuation framework, institutions are required to calculate additional valuation adjustments of their fair-valued financial instruments to ensure a reasonable level of certainty for prudential purposes.
These proposals include:
- Amendments to address targeted implementation issues and ensure a more harmonised application of the RTS.
- A framework for ‘extraordinary circumstances’ for prudent valuation, including conditions for determining the presence of such circumstances and rules for the calculation of AVAs under these circumstances.
To inform the calibration of certain aspects of the revised framework and assess the impact of the proposed changes, a quantitative impact study (QIS) will take place alongside the public consultation. The feedback obtained and the QIS results will be considered in the finalisation of the draft RTS.
The consultation period ends on 16 April 2024.
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EBA publishes report on NSFR framework
The European Banking Authority (EBA) has released a report on the prudential treatment of various items under the net stable funding ratio (NSFR) framework. The report aims to help the European Commission determine whether any legislative proposals should be submitted to the European Parliament and Council to modify the calculation of NSFR. To achieve this, the report examines data obtained from EU credit institutions to determine if alternative approaches, such as those used in the UK and US, would affect the NSFR of EU banks from a level playing field perspective.
The items covered are derivative contracts, securities financing transactions, and the holding of securities to hedge derivative contracts. For each item, the report:
- assesses the materiality in terms of its contribution to the total required stable funding; and
- evaluates the impact of any proposed changes to the current prudential treatment.
Overall, the EBA has concluded that no changes to the current legislation are necessary.
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APRA issues CP on superannuation prudential framework amendments
The Australian Prudential Regulation Authority (APRA) has published a consultation paper on minor and consequential amendments to the superannuation prudential framework. These changes are a direct result of legislative reforms in the financial reporting and audit requirements for superannuation outlined in the Treasury Laws Amendment (2022 Measures No. 4) Act 2023. The amendments primarily affect registrable superannuation entity auditors.
The consultation period ends on 28 February 2024.
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FINRA January fines summary
FINRA has published its latest disciplinary summary for January 2024 covering a range of enforcement actions.
Amongst the firms fined for violations are Bolton Global Capital, Robert W Baird & Co, Commonwealth Australia Securities LLC and TD Private Client Wealth LLC.
The briefing also details the numerous individuals fined or barred by the regulator.
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