Final Rule

Davis Polk Client Memorandum: Banking Agencies Simplify Capital Rules for Non-Advanced Approaches Firms

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The U.S. banking agencies have released a final rule amending the U.S. Basel III capital rules to simplify the capital treatment of capital deductions and recognition of minority interests for non-advanced approaches banking organizations, as well as implementing certain technical amendments applicable to both advanced approaches and non-advanced approaches banking organizations.

The final rule will:

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Visual Memorandum: SEC’s Security-Based Swap Capital, Margin and Segregation Rules

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On June 21, 2019, the SEC adopted security-based swap (SBS) capital, margin and segregation requirements (the SEC Rules) for SBS dealers (SBSDs) and major SBS participants, revised the capital and segregation requirements for broker-dealers that are not SBSDs to the extent they engage in SBS activities, and increased the minimum capital requirements for broker-dealers authorized to use internal models to compute net capital. The SEC Rules do not start the registration or compliance clock for SBSDs.

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Davis Polk Visual Memorandum: SEC Adopts Regulation Best Interest, Form CRS and Related Advisers Act Interpretations

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The SEC adopted its long-awaited Regulation Best Interest, establishing new standard of conduct regulations for SEC-registered broker-dealers and their associated persons that are natural persons.  At the same time, the SEC adopted (i) a new relationship summary disclosure requirement, on Form CRS, for broker-dealers and investment advisers who offer services to retail investors and (ii) two interpretive releases—one on the investment adviser fiduciary duty and the other on the solely incidental exemption for broker-dealers from the investment adviser regulations.

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SEC Adopts Enhanced Order Handling Disclosure Requirements

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The SEC recently voted to adopt amendments to Rule 606 of Regulation NMS (the “Final Rule”) that expand broker-dealers’ disclosure obligations with regard to how they handle investors’ orders.

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Visual Memorandum: The Federal Reserve’s Large Financial Institution Rating System — Final Rule

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The Federal Reserve has finalized a new supervisory ratings system for large financial institutions (LFIs), discussed in our visual memorandum here.  The new LFI rating system, which reflects the three core areas of focus in the Federal Reserve’s current LFI supervisory framework—capital, liquidity and governance and controls—is meant to fully align with the Federal Reserve’s current supervisory programs and

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