House bill would provide framework to calculate risk in the options markets

Legislation recently introduced in the U.S. House of Representatives seeks to require regulatory agencies to develop a framework to better calculate risk in the options markets.© Shutterstock The bill – the Options Market Stability Act of 2019 (H.R. 4233) – is designed to reduce the impacts of market volatility on everyday investors. “Recent options volatility […]

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Legislation recently introduced in the U.S. House of Representatives seeks to require regulatory agencies to develop a framework to better calculate risk in the options markets.

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The bill – the Options Market Stability Act of 2019 (H.R. 4233) – is designed to reduce the impacts of market volatility on everyday investors.

“Recent options volatility has indicated the immediate need for adjustments to existing regulations over these markets. We cannot ask investors to stand by as government bureaucrats drag their feet to modernize outdated rules,” U.S. Rep. Lance Gooden (R-TX), who introduced the bill, said. “My legislation, the Options Market Stability Act of 2019, will require federal regulators to issue a final rule establishing a system to better calculate and account for risk in the options markets. The rules over our financial system must be accurate in their targeting and agile when change is needed.”

Rep. Patrick McHenry (R-N.C.), ranking member on the House Financial Services Committee, supports the legislation.

“Committee Republicans are committed to supporting everyday investors as they save for retirement, their child’s education, or a home for their family,” McHenry said. “I am glad to see Congressman Gooden take action to modernize the regulatory framework for calculating risk in the options markets, which will provide stability and protection for these folks. I appreciate his leadership on the Financial Services Committee and his work in Congress to build on the gains Republicans have achieved for the American people.”

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Bill targets expansion of retirement plan access

A group of Republican senators recently urged colleagues to pass legislation they said is designed to expand retirement plan access for millions of Americans.© Shutterstock Sen. Tim Scott (R-SC) recently joined Sens. Susan Collins (R-ME), Joni Ernst (R-IA), Cory Gardner (R-CO) Rob Portman (R-OH), Martha McSally (R-AZ) and Thom Tillis (R-NC) in forwarding correspondence to […]

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A group of Republican senators recently urged colleagues to pass legislation they said is designed to expand retirement plan access for millions of Americans.

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Sen. Tim Scott (R-SC) recently joined Sens. Susan Collins (R-ME), Joni Ernst (R-IA), Cory Gardner (R-CO) Rob Portman (R-OH), Martha McSally (R-AZ) and Thom Tillis (R-NC) in forwarding correspondence to Senate Majority Leader Mitch McConnell (R-KY) espousing the benefits of the Setting Every Community Up for Retirement Enhancement Act, or SECURE Act.

“This legislation would allow older workers and retirees to contribute more to their retirement accounts, increase 401(k) coverage to part-time employees, prevent as many as four million people in private-sector pension plans from losing future benefits, protect 1,400 religiously affiliated organizations whose access to their defined contribution retirement plans is in jeopardy, and do the right thing for Gold Star families,” the legislators wrote.

Bill proponents maintain the legislation would aid in addressing what they deemed the nation’s retirement crisis and help workers of all ages invest and save for their futures.

The measure gained House passage by a 417-3 margin, officials said, noting it would benefit not only the nation’s elderly but also Gold Star families, apprenticeship program participants, low-income scholarship recipients, and children of fallen first responders.

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Bill seeks to lower the cost of higher education

The House Committee on Education and Labor has introduced a measure designed to overhaul the higher education system by lowering the cost of college for students and families.© Shutterstock Lawmakers said the College Affordability Act would improve the quality of higher education through stronger accountability while expanding opportunities by providing students the support and flexibility […]

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The House Committee on Education and Labor has introduced a measure designed to overhaul the higher education system by lowering the cost of college for students and families.

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Lawmakers said the College Affordability Act would improve the quality of higher education through stronger accountability while expanding opportunities by providing students the support and flexibility needed for success.

“The College Affordability Act immediately cuts the cost of college for students and families and provides relief for existing borrowers,” Rep. Bobby Scott (D-VA), committee chairman, said. “At the same time, it improves the quality of education by holding schools accountable for their students’ success and it meets students’ individual needs by expanding access to more flexible college options and stronger support – helping students graduate on time and move into the workforce.”

Provisions of the bill include the restoration of state and federal investments in public colleges and universities; making college affordable for low- and middle-income students by increasing Pell Grants value; and easing the burden of student loans by making existing student loans cheaper and easier to pay off.

“This bill takes a positive step on one of the most common-sense student loan reforms by recognizing the need for better federal loan disclosures,” Consumer Bankers Association President and CEO Richard Hunt said. “Borrowers deserve to know the true cost of federal student loans, and the Department of Education should bring federal loan disclosures, which currently mask the cost, in line with the pro-consumer standards required of private lenders.”

Hunt also noted, “the overall bill falls short when it comes to dealing with the cost of college, which has to begin with fundamental reforms to federal student loan programs. These virtually unlimited programs have fueled both skyrocketing tuitions and student debt burdens – and the bill remains silent on this fact.”

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SEC appoints White House Aide to Public Company Accounting Oversight Board

Rebekah Goshorn Jurata has been appointed by the Securities and Exchange Commission (SEC) to serve on the Public Company Accounting Oversight Board (PCAOB).Rebekah Goshorn Jurata Jurata, whose term will expire on Oct. 24, 2024, currently serves as special assistant to the President for Financial Policy and is responsible for advising the President and the National […]

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Rebekah Goshorn Jurata has been appointed by the Securities and Exchange Commission (SEC) to serve on the Public Company Accounting Oversight Board (PCAOB).

Rebekah Goshorn Jurata

Jurata, whose term will expire on Oct. 24, 2024, currently serves as special assistant to the President for Financial Policy and is responsible for advising the President and the National Economic Council Director on an array of financial services policy matters.

“Rebekah brings significant public service experience, including at the SEC, and a deep understanding of our financial markets, that will complement the skills that Bill, Jay, Jim, and Duane bring to the Board,” SEC Chairman Jay Clayton said.

The PCAOB is responsible for overseeing the audits of public companies and broker-dealers, officials said, as a means of protecting the interests of investors while advancing public interest in the preparation of informative, accurate and independent audit reports.

“I am honored to continue to serve the public as a Board member of the PCAOB,” Jurata said. “I look forward to working with my fellow Board members to protect investors and strengthen audit quality.”

Clayton said, in addition to Jurata’s appointment, SEC Commissioner Hester Peirce has been chosen to lead the agency’s coordination efforts with the PCAOB Board, in coordination with Chief Accountant Sagar Teotia and the Office of the Chief Accountant.

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Fed finalizes rules to reduce compliance for less risky banks

The Federal Reserve Board finalized rules last week that reduce compliance requirements for banks with less risk while maintaining more stringent requirements for the largest and most complex banks.© Shutterstock Banks with $100 billion or more in total assets would be separated into four different categories based on asset size, cross-jurisdictional activity, reliance on short-term […]

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The Federal Reserve Board finalized rules last week that reduce compliance requirements for banks with less risk while maintaining more stringent requirements for the largest and most complex banks.

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Banks with $100 billion or more in total assets would be separated into four different categories based on asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposure. Firms in the lowest risk category will have reduced compliance requirements, owing to their smaller risk profile. As the risk of a firm increases and it moves into a new risk category, its requirements will increase.

The rules are consistent with changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

“Our rules keep the toughest requirements on the largest and most complex firms,” Fed Board Chair Jerome Powell said. “In this way, the rules maintain the fundamental strength and resiliency that has been built into our financial system over the past decade.”

The Fed Board says the changes will result in a 0.6 percent decrease in required capital and a reduction of 2 percent of required liquid assets for all banks with assets of $100 billion or more.

The rules do not reduce capital or liquidity requirements for firms in the highest risk categories, including U.S. global systemically important banks.

“The final rules maintain our objective from the proposals: develop a regulatory framework that more closely ties regulatory requirements to underlying risk,” Vice Chair for Supervision Randal K. Quarles said.

The rules were jointly developed with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. They will be effective 60 days after publication in the Federal Register.

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SEC appoints new Asset Management Advisory Committee

The Securities and Exchange Commission (SEC) has formed a new Asset Management Advisory Committee.© Shutterstock The committee was established to provide the commission with diverse perspectives on asset management. They will offer advice and recommendations on trends and developments affecting investors and market participants, the effects of globalization, and changes in the role of technology […]

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The Securities and Exchange Commission (SEC) has formed a new Asset Management Advisory Committee.

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The committee was established to provide the commission with diverse perspectives on asset management. They will offer advice and recommendations on trends and developments affecting investors and market participants, the effects of globalization, and changes in the role of technology and service providers.

The committee consists of outside experts, including retail and institutional investors, small and large funds, intermediaries, and other market participants.

“Asset management is a critical component of our markets and is especially important to Main Street investors,” SEC Chairman Jay Clayton said. “This committee will help the Commission ensure that our regulatory approach to asset management meets the needs of retail investors and market participants at a time when the industry is evolving rapidly. I would like to thank each of the committee members for agreeing to participate on this important committee.”

The committee will begin a two-year term on Nov. 1.

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CUNA supports President’s executive order regarding regulatory agencies

The Credit Union National Association (CUNA) is supporting President Donald Trump’s recent issuance of an executive order requiring regulatory agencies to seek comment on federal guidance and enhance its public communication.© Shutterstock “Americans deserve an open and fair regulatory process that imposes new obligations on the public only when consistent with applicable law and after […]

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The Credit Union National Association (CUNA) is supporting President Donald Trump’s recent issuance of an executive order requiring regulatory agencies to seek comment on federal guidance and enhance its public communication.

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“Americans deserve an open and fair regulatory process that imposes new obligations on the public only when consistent with applicable law and after an agency follows appropriate procedures,” Trump wrote. “Therefore, it is the policy of the executive branch, to the extent consistent with applicable law, to require that agencies treat guidance documents as non-binding both in law and in practice, except as incorporated into a contract, take public input into account when appropriate in formulating guidance documents, and make guidance documents readily available to the public.”

CUNA President/CEO Jim Nussle said the executive order is a step toward addressing what he called regulatory overreach.

“In recent years, we have seen federal agencies try to exceed their statutory authority and skirt their obligations under the Administrative Procedures Act by issuing guidance in lieu of new regulation,” Nussle said. “This practice runs counter to our nation’s democratic principles, and we appreciate the President’s line in the sand on the matter. As America’s trusted partner for member-driven financial services, we look forward to this moment serving as a springboard toward ensuring the rulemaking process is a more democratic, input-driven process, leading to thoughtful, informed regulations that protect consumers and advance our country.”

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Federal proposals target taxpayer regulatory relief

The Department of the Treasury and Internal Revenue Service (IRS) have issued a series of  proposed regulations the agencies said are designed to address taxpayer regulatory relief initiatives.© Shutterstock The proposed modifications address the possibility of altering a debt instrument, derivative or other financial contract to replace a reference rate based on an interbank offered […]

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The Department of the Treasury and Internal Revenue Service (IRS) have issued a series of  proposed regulations the agencies said are designed to address taxpayer regulatory relief initiatives.

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The proposed modifications address the possibility of altering a debt instrument, derivative or other financial contract to replace a reference rate based on an interbank offered rate (IBOR).

The changes would allow taxpayers to avoid adverse tax consequences from changing the terms of debt, officials added, noting the proposed rules respond to a request for guidance from the Alternative Reference Rates Committee (ARRC), a broad-based committee of private sector and ex-officio government stakeholders convened by the Board of Governors of the Federal Reserve System.

“A smooth and successful transition away from IBOR and towards an alternative rate, is important for the stability of global financial markets,” Treasury Secretary Steven T. Mnuchin said. “These proposed regulations provide certainty and clarity to taxpayers as they make the critical transition away from IBOR.”

Taxpayers and their parties may apply the proposed regulations to changes that occur, officials said, provided they apply the proposed regulations consistently, noting interested parties are invited to submit written comments on the proposed regulations through Nov. 25.

Although the market shift from IBORs to alternative rates is expected to be completed by the end of 2021, the guideline is being released as early as possible to facilitate an orderly market transition, officials said.

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Volcker rule changes approved by federal regulators

Federal financial regulators have finalized changes to the Volcker rule that are designed to simplify compliance requirements.© Shutterstock The Volcker rule, which was established as part of the Dodd-Frank Act, was enacted in 2013 to prohibit banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds. The […]

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Federal financial regulators have finalized changes to the Volcker rule that are designed to simplify compliance requirements.

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The Volcker rule, which was established as part of the Dodd-Frank Act, was enacted in 2013 to prohibit banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds.

The amended rule would alter the rule’s compliance requirements based on the size of a firm’s trading assets and liabilities. Specifically, firms that don’t engage in significant trading activities will have simplified and streamlined compliance requirements. However, institutions that do have significant trading activity will be subject to more stringent compliance requirements. Community banks are exempt from the Volcker rule. The revisions continue to prohibit proprietary trading. The regulatory agencies expect that the universe of trades that are considered prohibited proprietary trading will remain generally the same as they were previously.

Opponents of the revisions, like Sen. Jeff Merkley (D-OR), who helped draft the rule, said the changes will weaken consumer protections.

The changes were developed and approved by the Federal Reserve Board, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

The rules will take effect on Jan. 1, 2020. The compliance date is set for Jan. 1, 2021.

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House files court brief in support of independence of CFPB

The U.S. House of Representatives filed an amicus brief with the U.S. Supreme Court in support of the independence of the Consumer Financial Protection Bureau (CFPB).© Shutterstock The brief, filed in the case of Seila Law v. CFPB, follows an announcement by CFPB Director Kathy Kraninger that the agency would no longer defend the constitutionality […]

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The U.S. House of Representatives filed an amicus brief with the U.S. Supreme Court in support of the independence of the Consumer Financial Protection Bureau (CFPB).

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The brief, filed in the case of Seila Law v. CFPB, follows an announcement by CFPB Director Kathy Kraninger that the agency would no longer defend the constitutionality of the CFPB director’s for-cause removal provision. The CFPB’s for-cause removal provision is designed to provide independence to the agency and prevent the president from removing the CFPB director at will.

The Trump Justice Department urged the Supreme Court to strike down the for-cause removal protection for the director of this independent regulatory agency.

“As part of comprehensive Wall Street reform, Congress established an independent cop on the beat to protect seniors, servicemembers, veterans, college students, and all consumers in America against the abusive and predatory financial marketplace practices that led up to the Great Recession,” House Speaker Rep. Nancy Pelosi (D-CA) said. “By not defending the Consumer Bureau’s independence, the Trump Administration is choosing special interests over America’s consumers. As the lower courts have recognized in upholding the constitutionality of the for-cause provision, ‘Congress established the independent CFPB to curb fraud and promote transparency in consumer loans, home mortgages, personal credit cards, and retail banking.’ In the grip of President Trump, we have already seen the Consumer Bureau abandon its mission to protect the American people from unfair and predatory conduct.”

Rep. Maxine Waters, chair of the House Financial Services Committee, said the independence of the CFPB is essential.

“Despite previous court rulings that made it clear that the Consumer Bureau is constitutional and here to stay, Kathy Kraninger insists on working to undermine and politicize the agency at the expense of hardworking Americans,” Waters said. “This is yet another example of a Trump Administration appointee working to undermine the mission of the agency they were appointed to lead. I am pleased that the House of Representatives has filed a motion before the Supreme Court in support of the independence of the Consumer Bureau. As Chairwoman of the House Financial Services Committee, I will continue to defend the strong, independent structure of this agency to ensure it fulfills its important mission of protecting consumers as Congress intended.”

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