Financial Services Quarterly Report: First Quarter 2018

April 04, 2018

A review of recent developments in the international financial services industry, including:

  • SEC Liquidity Rule Guidance and Rulemaking – A More Flexible Approach
  • LIBOR – Where Are We Now?
  • Hong Kong SFC Publishes Consultation Proposals on Public Fund Requirements
  • Luxembourg Implements Fourth EU AML Directive
  • Event Report – Funds Congress 2018
  • Cryptocurrency and Blockchain Tracker
  • Brexit Impact Analysis Report
  • U.S. Financial Regulation Reform Tracker
  • World Compass

 

SEC Liquidity Rule Guidance and Rulemaking – A More Flexible Approach 

The U.S. SEC's “Liquidity Rule” under the Investment Company Act of 1940 has presented the fund industry with thorny interpretive questions and compliance challenges. Recently, the SEC and the staff of its Division of Investment Management addressed some of these questions and challenges through new rulemaking and guidance, including through the issuance of responses to frequently asked questions. Also, the SEC delayed the compliance deadline for certain elements of the Liquidity Rule and issued a proposed rule that would modify certain liquidity-related disclosure requirements. 

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LIBOR – Where Are We Now? 

The key take-away from a speech by the Chief Executive of the UK’s Financial Conduct Authority was that, post-2021, the FCA would not compel contributor banks to voluntarily sustain LIBOR. The speech effectively set a 2021 deadline for action on the reference rate, which did not necessarily sound the end of LIBOR but indicated a date by which reform must be made. The speech made clear that, in the absence of actual transactions to form the basis of LIBOR quotations, the benchmark is not sustainable in its current form. The consequences of this development are wide-ranging. 

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Hong Kong SFC Publishes Consultation Proposals on Public Fund Requirements 

Following an initial “soft” consultation with industry participants and relevant stakeholders, the Securities and Futures Commission launched a three-month consultation on proposed amendments to the Code on Unit Trusts and Mutual Funds. The consultation ended on 19 March 2018. The proposals are intended to create new opportunities and foster financial innovation in the market, and to align the regulatory regime with international standards, including recommendations from IOSCO and the Financial Stability Board. 

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Luxembourg Implements Fourth EU AML Directive 

The EU AML4 Directive – a directive aimed at combatting money laundering and terrorist financing – has finally been transposed into Luxembourg law, several months after the June 2017 deadline for its implementation, through the entry into force of a law amending the Luxembourg AML Law. The AML Law now sets out new requirements relating to, inter alia, the due diligence obligations for all professionals subject to the AML Law. The legal framework is generally more rigorous, and professionals are subject to increased sanctions in the case of non-compliance. 

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Event Report – Funds Congress 2018

In February, we were pleased to welcome over 1,200 delegates to our annual Funds Congress, a thought leadership and networking event sponsored by Dechert, Carne and PwC. Now in its seventh year, the Funds Congress is the largest central London event bringing together asset managers from all classes and jurisdictions to consider themes that will define the year ahead in fund management. The keynote speakers included: Manny Roman, CEO of PIMCO; Robert Taylor, head of global asset management regulatory strategy at the UK’s FCA; Troy Paredes, former U.S. SEC Commissioner; and Baroness Manningham-Buller, former head of Britain’s Security Service, M15. 

Here are Funds Congress Key Takeaways and Funds Congress Highlight Videos. 


Cryptocurrency and Blockchain Tracker 

Cryptocurrencies and the encrypted, decentralized blockchain protocol that underpins them have grown from abstract theories to a transformational force that is disrupting the way many industries will operate for decades to come. To assist our clients around the globe in navigating this rapidly evolving space, Dechert has launched a Cryptocurrency and Blockchain Technology websiteSubscribe to Tracker updates. 

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Introducing the Brexit Impact Analysis Report 

Dechert’s Brexit Impact Analysis is a new online tool which draws on your responses to a series of multiple-choice questions to provide your business with a tailored printable overview of your exposure to the main risks of Brexit. 

Get your report today » 


U.S. Financial Regulation Reform Tracker 

To assist clients in navigating the reform of the regulation of U.S. financial services by Congress and the Trump Administration, Dechert has created a Financial Regulation Reform Tracker website. Lawyers contributing to the Tracker include members from Dechert’s banking, investment management, derivatives, corporate, securities, finance/securitization, employee benefits and litigation groups. Subscribe to Tracker updates. 

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Dechert’s World Compass 

World Compass is a web-based subscription service that offers investment firms 24/7 access to concise global marketing and distribution guidance in approximately 100 jurisdictions worldwide, updated regularly to ensure accuracy. World Compass modules cover: commercial lending; cross-border marketing of funds and investment management services; and beneficial ownership reporting. 

Read more » 


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