SEC announced that the Office of Information and Regulatory Affairs released the Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions. The Unified Agenda, which lists planned short- and long-term regulatory actions of administrative agencies, also covers planned actions for FDIC, FED, and OCC. The key planned regulatory actions by these agencies relate to the work on climate risk and other environmental, social, and governance (ESG) factors, regulatory capital rule, real estate lending standards, swap margin rule, and operational resilience standards.
The notable proposed SEC rulemaking areas entail disclosures for climate risk; human capital, including workforce diversity and corporate board diversity; and cybersecurity risk. Another key proposed rulemaking area set out in the Agenda involves requirements for investment companies and investment advisers related to ESG factors, including ESG claims and related disclosures. The notice of proposed rulemaking on climate change disclosures has been planned for October 2021 while the notice of proposed rulemaking on ESG requirements has been planned for April 2022. Follow are the additional key proposed and final rulemaking planned by administrative agencies:
- Proposed rule, which is being planned by FDIC, FED, and OCC in August 2021, to comprehensively revise the agencies’ risk-based capital rules, including revisions to the current standardized and advanced approaches capital rules. The agencies plan to issue this rule with the Credit Risk Transfer Rule and the Standardized Approach for Calculating the Exposure Amount of Derivative Contracts.
- Proposed rule to revise certain provisions of the agencies’ capital rules related to cleared transactions and the standardized approach for counterparty credit risk, which is used for calculating the exposure amount of derivative contracts under the agencies’ capital rules and was adopted in a final rule published on January 24, 2020. The proposed revisions would help to ensure that banking organizations implement the standardized approach for calculating the exposure amount of derivative contracts in a consistent manner and that the exposure measurement more appropriately reflects the economic substance of certain derivative transactions. In the Spring Unified Agenda, the indicated timeline for this notice of proposed rulemaking by FDIC, FED, and OCC is May 2021.
- Proposed rule, from FDIC, FED, and OCC, for revision of their respective capital requirements for market risk, which are generally applied to banking organizations with substantial trading activity. The US agencies expect the proposal to be generally consistent with the standards set forth in the Fundamental Review of the Trading Book (FRTB) published by the Basel Committee on Bank Supervision. The indicated timeline for the related notice of proposed rulemaking is May 2021.
Promulgation of regulations addressing quality control standards for automated valuation models, by CFPB, FDIC, FED, FHFA, NCUA, and OCC. Section 1473(q) of the Dodd-Frank Act requires that automated valuation models used to estimate collateral value for mortgage lending comply with quality control standards designed to ensure a high level of confidence in the estimates produced by automated valuation models; protect against manipulation of data; seek to avoid conflicts of interest; require random sample testing and reviews; and account for other factors the agencies deem appropriate. The agencies plan to issue a proposed rule to implement the requirement to adopt quality control standards sometime around December 2021
- Proposed amendments to the Real Estate Lending Standards to provide a consistent approach for calculating the ratio of loans in excess of the supervisory loan-to-value limits (LTV ratios) at all FDIC-supervised depository institutions. The notice of proposed rulemaking was planned for May 2021.
- Proposal to establish enhanced cyber risk management standards to increase the operational resilience of large and interconnected entities under their supervision and those entities' service providers. The proposal addresses five categories of cyber standards: cyber risk governance; cyber risk management; internal dependency management; external dependency management; and incident response, cyber resilience, and situational awareness. The proposal was initially published in October 2016 and FED expects further action on the proposal in April 2022.
- Proposal to establish risk-based capital requirements for depository institution holding companies that are significantly engaged in insurance activities. FED requested comments on the proposal in October 2019, with further action expected on the proposal in June 2021.
- Proposal on risk-based capital surcharges for global systemically important bank holding companies; with FED expecting further action on the proposal in December 2021.
- Interim final rule amending the regulations that require swap dealers, security-based swap dealers, major swap participants, and major security-based swap participants to exchange margin with their counterparties for swaps that are not centrally cleared (Swap Margin Rule). FED requested comments on the interim final rule in July 2020 and expects further action in June 2021.
Keywords: Americas, US, Banking, Securities, Climate Change Risk, ESG, Disclosures, Regulatory Capital, Basel, Credit Risk, Swap Margin Rule, Cyber Risk, Real Estate, Systemic Risk, G-SIBs, Market Risk, FRTB, SA-CCR, FED, FDIC, SEC
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