Joint Release on Stress-Test Guidance
On July 30, the FDIC, Fed and OCC released a request for comment on proposed guidance describing supervisory expectations for stress tests required by the Dodd-Frank Act to be conducted on medium-sized financial companies (with total consolidated assets between $10 billion and $50 billion). Comments on the proposed guidance must be submitted by September 25. Joint Release. Proposed Guidance.
IOSCO Recommendations on Rating Agencies
On July 30, the International Organization of Securities Commissions published a report recommending supervisory colleges for internationally active credit rating agencies. IOSCO Release. IOSCO Report.
SEC Broker-Dealer Financial Responsibility Final Rules
On July 31, the SEC announced the adoption of amendments to the net capital, consumer protection, books and records, and notification rules for broker-dealers. The rule amendments will be effective 60 days after publication in the Federal Register. SEC Release. SEC Final Rules.
In addition, the SEC also adopted amendments to Rules 17a-5 and 17a-11 under the Securities Exchange Act of 1934 to increase compliance standards and protections for investors with assets being held by broker-dealers. Under the rules, audit requirements for broker-dealers will be strengthened in the following ways: (i) a broker-dealer that has custody of the customers' assets must file a "compliance report" with the SEC to verify they are adhering to broker-dealer capital requirements, protecting customer assets they hold and periodically sending account statements to customers; (ii) a broker-dealer that does not have custody of its customers' assets must file an "exemption report" with the SEC citing its exemption from requirements applicable to carrying broker-dealers; and (iii) all broker-dealers (regardless of custody) must engage a PCAOB-registered independent public accountant to prepare a report based on an examination of certain statements in the broker-dealer's report. In addition, under the proposed rules, broker-dealer examinations will be enhanced by: (i) a requirement for filing a new quarterly report (Form Custody) that contains information about whether and how it maintains custody of its customers' securities and cash and (ii) a requirement for all broker-dealers to agree to allow SEC or SRO staff to review the work papers of the independent public accountant. The effective date for the requirement to file Form Custody and the requirement to file annual reports with SIPC is December 31, 2013. The effective date for the requirements relating to broker-dealer annual reports is June 1, 2014. SEC Press Release. SEC Final Rule.
Making Home Affordable Supplemental Directive
On July 30, the Obama Administration released a supplemental directive providing updates to the Making Home Affordable program, specially with respect to the Second Lien Modification Program (2MP). Supplemental Directive.