Blog: Congress Joint Economic Committee touts economic benefits of Baby Bonds – Financial Regulation News – Financial Regulation News

The Congress Joint Economic Committee (JEC) recently released a report touting the benefits of automatic child trust accounts or Baby Bonds, noting the resource offers economic opportunities and social mobility.

© Shutterstock

“The transition to adulthood is a challenging time for everyone,” JEC Chairman Rep. Don Beyer (D-VA) said. “Ensuring that children can enter this defining stage of life with a nest egg would open up a world of possibilities and provide new pathways to building wealth. And the positive effects of Baby Bonds are not limited to only the children and families who directly benefit from these accounts: When young adults can pursue education, start businesses and buy homes, it creates economy-wide benefits.”

Over seven million domestic families do not have access to a bank account, leaving individuals vulnerable to predatory lenders and financial instability.

“Baby Bonds are also powerful tools for reducing economic inequities by providing disadvantaged children with seed money to build a more promising future for themselves and future generations,” Beyer concluded. “These kinds of investments would be an important step toward promoting an economy that works for all.”

Dr. Darrick Hamilton, University Professor and Founding Director of the Institute on Race, Power and Political Economy at The New School, noted wealth’s true essence is functional.

“What it can do for you…wealth is as much the beginning as it is the end of an economically secure life,” Hamilton said. “Baby Bonds guarantee a birthright to capital, a nest egg, so to speak, for every child, to have a pathway to the prosperity that wealth provides. With Baby Bonds, the privilege of wealth would no longer be an exclusive domain of the wealthy. We applaud Chair Beyer and JEC’s leadership on building momentum to bring this to the American people.”

Blog: Public Company Accounting Oversight Board outlines KPMG sanctions – Financial Regulation News – Financial Regulation News

Public Company Accounting Oversight Board (PCAOB) officials have detailed seven settled disciplinary orders sanctioning the tax and advisory firm KPMG and individuals for a series of alleged violations.

© Shutterstock

The $7.7 million in penalties addressed alleged violations of professional auditing standards, quality control standards, and PCAOB rules.

“These actions should send the message to KPMG and all other registered firms that the PCAOB is committed to rooting out misconduct wherever it occurs and will employ all sanctions at its disposal to protect investors and improve audit quality,” PCAOB Chair Erica Y. Williams said.

The Board alleged KPMG Colombia violated PCAOB rules and standards in connection with the agency’s 2016 inspection of the firm. PCAOB also charged the firm with violating quality control standards relating to audit documentation and the firm’s internal training program.

The PCAOB sanctioned KPMG UK for allegedly violating PCAOB quality control standards related to integrity and personnel management.

The PCAOB also sanctioned KPMG UK for allegedly failing to reasonably supervise an unregistered audit firm in four consecutive audits of a public company client.

The Board determined KPMG UK was found to have violated, in connection with the same four audits, PCAOB standards regarding due professional care, audit planning, audit committee communications, and quality control – adding the firm made several inaccurate filings on PCAOB Form AP regarding other audit clients.

Additionally, the PCAOB sanctioned KPMG India and KPMG India engagement partner Sagar Pravin Lakhani based on KPMG India’s quality control failures and Lakhani’s supervisory and documentation failures in connection with a practice of signing off on blank placeholder work papers during the 2017 audit of a public company.

Blog: Bill to close shadow banking loophole introduced in Senate – Financial Regulation News – Financial Regulation News

U.S. Sens. Sherrod Brown (D-OH), Bob Casey (D-PA), and Chris Van Hollen (D-MD) introduced a bill in the Senate that would require companies that own an industrial loan company (ILC) to be subject to the same rules and consumer protections as traditional banks.

© Shutterstock

ILCs are state-chartered banking institutions whose holding companies are not subject to supervision by the Federal Reserve due to a loophole in the Bank Holding Company Act. As a result, ILCs owned by tech companies like Square are not subject to the same regulatory safeguards as traditional banks.

Their bill, the Close the Shadow Banking Loophole Act, would close this loophole. Thus, companies that acquire an ILC must be subject to the same supervision by the Federal Reserve as any other bank holding company under the Bank Holding Company Act. It would also provide a carve-out for existing ILCs.

“Letting Big Tech and commercial companies operate banks without proper oversight will only open doors for predatory lending, invasions of consumer privacy, and broader financial instability,” Brown, chair of the Senate Committee on Banking, Housing, and Urban Affairs, said. “To protect consumers’ pocketbooks and ensure a strong banking system for Main Street, we need to ensure all banking institutions play by the same rules.”

The bill has been endorsed by several organizations, including the National Community Reinvestment Coalition, the Independent Community Bankers of America (ICBA), Americans for Financial Reform, the Bank Policy Institute, the Center for Responsible Lending, the Credit Union National Association, the National Association of Federally-Insured Credit Unions, and PNC Financial Services Group, among others.

“The ILC loophole allows large commercial and technology firms to own full-service banks while skirting regulatory oversight—threatening the financial system, endangering consumers and the economy, and creating an uneven regulatory landscape. The Close the Shadow Banking Loophole Act will ensure a safe and sound financial system and protect the longstanding U.S. policy separating banking and commerce,” Rebeca Romero Rainey, president and CEO at ICBA, said.

The Bank Policy Institute also backs the proposed legislation.

“BPI supports Chairman Brown’s effort to close the ILC loophole and guarantee equal treatment for entities providing indistinguishable products and services under the law. Any entity seeking the benefits of bank ownership must be held to the same rules that apply to banks to prevent unacceptable risks to consumers, taxpayers, and the existing financial framework,” Ed Hill, senior vice president and head of government affairs at BPI, said.

Blog: VASP Included in Newly Amended Hong Kong AML Regulations – Securities.io

A bill to amend the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) has been passed by the Legislative Council in Hong Kong. One of the amendments to AMLO seeks to introduce a licensing regime for virtual assets service providers (VASP). An earlier proposed amendment bill specified that the licensing regime would take effect from March 1, 2023, but it has since been postponed. A circular issued by the Hong Kong Monetary Authority, states that the provisions for the regulation of VASPs will come into operation on June 1, 2023, to provide ample time for preparatory work.

The Financial Action Task Force (FATF) defines virtual asset service providers (VASP) as any natural or legal person who, as a business, conducts operations or activities such as:

  • the exchange between virtual assets and fiat;
  • exchange between one or more forms of virtual assets;
  • transfer of virtual assets;
  • virtual asset custody on behalf of clients or providing a platform that enables users to store virtual assets; and
  • participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset for or, on behalf of another natural or legal person.

Hong Kong is not the only territory to announce licensing requirements for VASPs. In April, The Central Bank of Cuba announced, via released documents, that it will begin issuing VASP licenses.

Crypto Regulation and Adoption in Hong Kong

The move to issue licenses to VASPs is an indication that Hong Kong is lowering the guardrails of its strict crypto rules. The licensing regime for VASPs is a move towards legalizing retail crypto trading in Hong Kong and sustainably growing the virtual assets ecosystem.

Virtual assets are being recognized in Hong Kong as an important asset class or commodity; hence, the need to regulate them and the platforms or exchanges on which they are traded, in such a way that they are subjected to similar regulations to traditional financial institutions. Based on the new amendment, all virtual assets trading platforms will register with the Securities and Futures Commission (SFC) and be subjected to internal control, disclosure requirements, and on-premise inspection, among other compliance demands.

The SFC first released an opt-in framework for regulating and issuing licenses to crypto exchanges, in 2019. To ensure the activities of crypto exchanges fall within the purview of regulators, the SFC proposed that only virtual asset platforms that offer to trade at least one security token will be given a license. The SFC also limited the licensed exchanges to only servicing professional investors who understand the complexities of virtual assets, or investors with an investment portfolio of at least HK$8 million (~ $1 million).  The new licensing regime aims to bring virtual asset platforms under the direct purview of the SFC.

Hong Kong’s policies on cryptocurrencies differ from the stringent crypto rules of mainland China. At the Hong Kong FinTech week held in October, Hong Kong’s Financial Services and Credit Bureau issued a policy statement on virtual assets. An excerpt from the policy statement on the development of virtual assets in Hong Kong reads: “As an international financial center, Hong Kong is open and inclusive towards the global community of innovators engaging in virtual assets business. The government in conjunction with financial regulators is working towards providing a facilitating environment for promoting sustainable and responsible development of the virtual asset sector in Hong Kong.”

Hong Kong is setting the pace for the regulation of virtual assets and virtual asset platforms. With its clear-sighted crypto rules, Hong Kong is creating a crypto regulatory playbook that might serve as a template for other regulators in years to come.

Blog: TotalEnergies SE: Statement in Compliance With the Article 223-16 of the General Regulation of the Financial Markets Authority (Autorité des marchés financiers) – Business Wire

PARIS–(BUSINESS WIRE)–Regulatory News:

TotalEnergies SE (Paris:TTE) (LSE:TTE) (NYSE:TTE) :

Date

Total number of shares

Number of voting rights exercisable at

Shareholders’ meetings

November 30, 2022

2,619,131,285

2,690,846,033

A total number of 2,809,052,739 voting rights are attached to the 2,619,131,285 underlying TotalEnergies shares (referred to as ‘theoretical voting rights’), including:

  • 118,206,706 voting rights attached to the 118,206,706 TotalEnergies shares held by TotalEnergies SE that cannot be exercised pursuant to the provisions of the Articles L. 225-111 and L. 225-210 of the French Commercial Code.

Blog: Harry and Meghan series attack on Brexit ‘jingoism’ is wrong, says Lord Frost – Yahoo News

(REUTERS)

Tory peer Lord Frost has lashed out at the Harry and Meghan docuseries, saying its claim that 2016 Brexit referendum sparked an outbreak of “jingoism and nationalism” was wrong.

James Holt, executive director of the Sussexes’ Archewell Foundation, describes Brexit as a “perfect storm that gave credence to jingoism and nationalism” in the Netflix series.

The former Palace spokesperson said leaving the EU “gave people with really horrible views on the world a little bit more strength and confidence to say what they wanted to say”.

Harry added: “So the EU commissioned a report in 2016, exactly the same time that our relationship became public.

“It warned that if the government isn’t going to do anything or if the media aren’t going to sort themselves out, then a culture war, that already existed, was going to become huge and become a real problem.”

Lord Frost, Boris Johnson’s former Brexit minister, said the claims “resurrects the tired old criticism that our decision to leave the EU was driven by racism – and even asserts that such attitudes worsened pressures on their marriage”.

He told the Daily Mail: “This smear just does not stand up to examination. All opinion surveys show that Britain is an unusually welcoming country to people of all backgrounds, has among the lowest levels of racism in Europe, and is most positive about diversity.”

The Brexit hardliner also suggested the Sussexes’ “are either ignorant of the real facts or making deliberately incorrect claims for political reasons”.

No 10 said on Friday that boycotting Netflix was not government policy, after Tory minister Guy Opperman suggested he would stop watching the streaming platform over the Harry and Meghan’s criticism of the royal family.

“I would urge everyone to boycott Netflix and make sure that we actually focus on the things that matter,” the employment minister told BBC’s Question Time – calling the Sussexes a “troubled couple”.

A Downing Street spokesperson later told reporters that it was “a matter for the public what channels they want to watch”.

Meanwhile, Tory MP Bob Seely is planning to bring forward proposed legislation that could eventually strip Harry and Meghan of their royal titles.

The Isle of Wight accused the Duke of Sussex of “attacking” the monarchy, calling it a “political issue”.

He suggested he could bring forward a short private members’ bill in the new year that, if passed, would see the MPs vote on a resolution that could give the Privy Council the power to downgrade the couple’s royal status.

Blog: UK defends new post-Brexit finance reforms – RTL Today

Britain on Friday launched a post-Brexit plan to relax curbs on its powerhouse City sector introduced after the 2008 financial crisis, denying the reforms will bring about new instability.

Prime Minister Rishi Sunak insisted the government was not being reckless in scrapping “ringfencing” of assets held by the biggest banks, to separate their retail arms from riskier investment operations.

“No, the UK has always had and always will have an incredibly respected and robust system of regulation for the financial services sector,” Sunak told reporters.

“But it’s also important to make sure the industry is competitive -– there are a million people employed in financial services and they’re not just in London, in the City.”

The ringfencing policy was introduced after the 2008 global financial crisis, to help banks survive another meltdown.

The so-called “Edinburgh reforms”, announced in the Scottish capital by finance minister Jeremy Hunt, also eased capital requirements for smaller lenders.

The government has already said it plans to lift a cap on bankers’ bonuses, and to require UK regulators to prioritise growth and competitiveness, alongside market stability.

It says the reforms have been enabled by Britain’s exit from the European Union.

Brexit is allowing the government to “reshape our regulatory regime and unleash the full potential” of the finance industry, said Hunt, who voted in 2016 to stay in the EU.

He stressed that “we have learned the lessons of that (2008) crash, we put in place some very important guardrails, which will remain”.

“But the banks have become much healthier financially since 2008,” the chancellor said, adding the reforms would help the City better compete with US and Asian markets.

Since Brexit, the City has slipped behind Paris and Amsterdam by some measures. At Brussels’ insistence, UK finance was not covered by Britain’s EU trade treaty.

– No Brexit dividend? –

And there is mounting concern about the everyday effects on people and businesses of increased costs and border delays.

Brexit has not helped tame red-hot inflation or cut soaring food bills, according to recent research from the London School of Economics.

“I think this whole idea that there is a massive dividend from Brexit (for finance) is flawed,” economics professor Steve Schifferes at City, University of London, told AFP.

The ringfencing reform “is the most controversial bit (and) the most unwise” aspect of the proposals, he added.

Fran Boait, executive director of the pro-consumer campaign group Positive Money, said the end to ringfencing was “extremely concerning”.

“Behind the spin, today’s announcements amount to wide-ranging deregulation that threatens to destabilise an increasingly fragile financial sector, with huge risks to the public and little benefit,” she said.

– ‘Race to the bottom’ –

The opposition Labour party, which is tipped in opinion polls to form the next government, also expressed unease.

But Miles Celic, chief executive of business lobby group TheCityUK, welcomed the “comprehensive” package.

“Boosting the industry’s competitiveness and securing the UK’s position as a world-leading international financial centre is an investment in the nation’s success and in communities across the country,” he said.

Under the reforms, the Treasury said it would axe “hundreds of pages of burdensome” EU-era rules that are deemed detrimental to economic growth and company investment.

“This will establish a smarter regulatory framework for the UK that, is agile, less costly and more responsive to emerging trends,” it said.

However, the government’s push to deregulate after Brexit has run into criticism that it intends a “race to the bottom”, depriving Britons of important protections enacted by the EU.

Blog: Edinburgh Reforms likely marginal in impact, neither majorly boosting competitiveness or watering-down rules – MKFM

Depending on your point of view, Jeremy Hunt’s proposed reform of financial regulations represents a potentially significant boost to the competitiveness of the UK’s financial services sector or a potentially dangerous watering-down of rules put in place to prevent a re-run of the financial crisis.

The truth, as ever, is that it is probably somewhere in between.

The first thing to say is that it is absolutely vital for the sector to remain competitive. Financial services is something the UK does well – it is one of the country’s great strengths.

As the Treasury pointed out this morning, it employs some 2.3 million people – the majority outside London – and the sector generates 13% of the UK’s overall tax revenues, enough to pay for the police service and all of the country’s state schools.

And there is little disputing that the UK’s competitive edge has been blunted during the last decade.

Part of that, though, is not due to post-crisis regulations but because of Brexit. Some activities that were once carried out in the Square Mile, Canary Wharf and elsewhere in the UK are now carried out in other parts of continental Europe instead.

That has hurt the City. Amsterdam, for example, has overtaken London as Europe’s biggest centre in terms of volumes of shares traded.

The move away from EU regulations

The government takes the view, though, that Brexit has provided an opportunity to make the UK’s financial services sector more competitive, in that the UK can now move away from some EU regulations.

A good example here is the EU-wide cap on banker bonuses – something that numerous City chieftains say has blunted the UK’s ability to attract international talent from competing locations such as New York, Singapore and Tokyo.

The big US investment banks that dominate the City, such as JP Morgan, Goldman Sachs, Bank of America, Citi and Morgan Stanley, have on occasion struggled to relocate some of their better-paid people to London because of the cap. So, although it may look politically risky to do so during a cost of living crisis, it is a sensible move that is highly likely to generate more taxes for the Treasury.

Similarly uncontentious is a planned relaxation of the so-called ‘Solvency II’ rules, another EU-wide set of regulations, which determine how much capital insurance companies must keep on their balance sheets. The insurance industry has long argued that this forces companies to keep a lot of capital tied up unproductively.

Relaxing the rules will enable the industry to put billions of pounds worth of capital to more productive use, for example, in green infrastructure projects or social housing. Few people dispute this is anything other than a good idea.

Another reform likely to be universally welcomed by the industry is the sweeping away of the so-called PRIIPS (packaged retail and insurance-based investment products) rules. Investment companies have long argued that these inhibit the ability of fund managers and life companies to communicate effectively with their customers and even restrict customer choice.

Mixed responses

The fund management industry is also likely to welcome a divergence away from EU rules on how VAT is applied to the services it provides. This could see lighter taxation of asset management services in the UK than in the EU and would certainly make the sector more competitive.

There will also be widespread interest in a proposed consultation over whether the Financial Conduct Authority should be given regulatory oversight of bringing environmental, social and governance ratings providers. This is an area of investment of growing importance and yet the way ESG funds are rated is, at present, pretty incoherent.

Bringing the activity into the FCA’s purview could, potentially, give the UK leadership in a very important and increasingly lucrative activity.

So far, so good.

More contentious are plans to water down ‘ring fencing’ regulations put in place after the financial crisis.

These required banks with retail deposits of more than £25bn to ring fence them from their supposedly riskier investment banking operations – dubbed by the government of the day as so-called ‘casino banking’ operations.

The rules were seen at the time by many in the industry as being somewhat misguided on the basis that many of the UK lenders brought down by the financial crisis – HBOS, Northern Rock, Bradford & Bingley and Alliance & Leicester – had barely any investment banking operations.

Implementing them has been hugely expensive and lenders have argued that the rules risked “ossifying” the sector.

There is no doubt that, at the margins, they have also blunted consumer choice. Goldman Sachs, for example, famously had to close its highly successful savings business, Marcus, to new customers after it attracted deposits close to £25bn. So lifting the level at which retail deposits must be ring-fenced to £35billion will be welcomed in that quarter.

Challenger banks such as Santander UK, Virgin Money and TSB, all of which have little investment banking activities, are among those lenders seen as benefiting.

Protecting citizens from “banking Armageddon”

Yet the move will attract criticism from those who argue the rules were put in place for a reason and that watering them down will risk another crisis.

They include Sir Paul Tucker, former deputy governor of the Bank of England, who told the Financial Times earlier this year: “Ringfencing helps protect citizens from banking Armageddon.”

It is also worth noting that watering down the ring fencing rules does not appear something that the banks themselves has been calling for particularly strongly. It is not, after all, as if they will be able to recoup the considerable sums they have already spent putting ringfences in place.

Click to subscribe to The Ian King Business Podcast wherever you get your podcasts

Equally contentious are proposals to give regulators such as the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority (PRA) a secondary objective of ensuring the UK’s financial services sector remains competitive alongside their primary objective of maintaining financial stability.

Sir John Vickers, who chaired the independent commission on banking that was set up after the financial crisis, wrote in the FT this week that the objective was either “pointless or dangerous”.

Senior industry figures have also raised an eyebrow over the move. Sir Howard Davies, chairman of NatWest, said earlier this year that he was “not keen” on the idea.

Pushback

More broadly, there may also be some scepticism over anything that sees the UK’s financial regulation move away from that of the EU.

The City was largely opposed to Brexit and, after it happened, the one thing it wanted more than anything else was a retention of the so-called ‘passport’ – enabling firms based in the UK to do business in the rest of the EU without having to go to financial regulators in each individual member state.

That was not delivered and has created in a great deal more bureaucracy for City firms as well as causing the relocation of some jobs from the UK to continental Europe.

The next best thing for the City would be so-called ‘equivalence’ – which would mean the EU and the UK’s financial regulations being broadly equivalent to the other side’s. The EU already has an existing arrangement with many other countries, such as the United States and Canada, and such a set-up with the UK would make it much easier for firms based here to do business in the bloc.

But critics of Mr Hunt‘s reforms argue that further movement away from the EU’s rules, as the chancellor envisages, would make it harder to secure the prize of an equivalence agreement.

Mr Hunt is almost certainly over-egging things when he likens these reforms to the ‘Big Bang’ changes made by Margaret Thatcher‘s government in 1986.

Big Bang was a genuine revolution in financial services that exposed the City to a blast of competition that, in short order, made the UK a global powerhouse in finance and which generated billions of pounds worth of wealth for the country.

The Edinburgh Reforms are likely to be far more marginal in their impact.

However, for those working in or running the financial services sector, the sentiment behind them will be welcomed.

Despite its importance in supporting millions of well-paid jobs, the sector has been more or less ignored by Conservative and Labour governments ever since the financial crisis.

Sky News

(c) Sky News 2022: Edinburgh Reforms likely marginal in impact, neither majorly boosting competitiven