Regulatory Compliance Association Reviews

Recent Developments Regarding the Debate Over Extending Bank-Style Regulation to the Capital Markets™

Practice Edge 02

Date: October 14, 2015
General Session: 12 Noon to 1:30 PM EST
Location: Webcast (Free)

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Title I of the Dodd-Frank Act created a new council of regulators called the Financial Stability Oversight Council (FSOC), responsible for identifying and addressing threats to the U.S. financial system. Congress vested the FSOC with unprecedented powers to designate non-bank financial firms whose failure could threaten the stability of the U.S. financial system as “Systemically Important Financial Institutions” (SIFIs), thereby subjecting them to “prudential” supervision by the Federal Reserve and a host of bank-like regulatory burdens. FSOC’s mission and powers are striking similar to its sister star chamber in Europe, the Financial Stability Board (FSB), which also has been targeting U.S. financial institutions it deems systemically important despite having no legal authority to regulate them. After tagging numerous insurance firms, clearing firms, and so-called financial market “utilities” with the dreaded SIFI label, the FSOC and FSB set their sights on the asset management industry, first by proposing outlandish criteria for designating individual firms as SIFIs, and more recently by focusing on the “products and activities” of asset managers that could pose systemic risk.

This course will explore recent developments in the campaign by prudential regulators like the FSOC and FSB to extend bank-style regulation to the capital markets, including (i) questions relating to the legal authority of the FSOC and FSB to regulate the asset management industry, (ii) the import of their recent shift in focus to the “products and activities” of asset managers, and (iii) the implications – for firms, investors, markets, and the financial system – of subjecting elements of the asset management industry to prudential supervision and bank-like regulation.

The Speaking Faculty will put these unprecedented developments into their policy and historical perspective.

Students will master and be acquainted with the following at the conclusion of this session:

  • FSOC’s past and anticipated future activities with respect to SIFI designations
  • Similar initiatives at FSB and other international organizations, including questions about their legal authority to impose regulations on U.S. financial institutions absent a treaty
  • Focus of prudential regulators on asset management industry, including recent shift to “products and activities” of asset managers
  • Unique characteristics of asset management industry that make bank-like regulation and prudential supervision illogical
  • Implications of adding the Fed’s prudential supervision to regulation by a non-bank SIFI’s existing regulator (e.g., SEC, CFTC, or state authorities)

Session Chairman:

Walter Zebrowski, JD, CPA, Principal, Hedgemony Partners
Chairman, Regulatory Compliance Association

Senior Fellow from Practice:

Paul Atkins, JD, Chief Executive Officer, Patomak Global Partners

Guest Lecturers:

Brian Cartwright,PhD, JD, Senior Advisor, Patomak Global Partners
Kathleen Casey,JD, Senior Advisor, Patomak Global Partners

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