Year in Review: Legislation and Guidance for Financial Institutions in 2013
January 20, 2015
The regulatory world for federally regulated financial institutions (FRFIs) continued to get more complex in 2013, with a multitude of legislative and regulatory initiatives being proposed and implemented in the course of the year. We summarize these developments below.
Canada’s Economic Action Plan 2013
A New Consumer Code
On March 21, 2013, the federal government published its Economic Action Plan 2013: Jobs, Growth and Long-Term Prosperity (the Action Plan). Among other initiatives, the Action Plan announced the government’s intention to develop a comprehensive financial consumer code for FRFIs to replace the currently dispersed mix of financial consumer protection legislation and regulations. On December 3, 2013, the government published a concepts-based Consultation Paper regarding the proposed consumer code, seeking input from the industry and the public at large on new approaches to financial consumer protection regulation in Canada. Three main topics were canvassed in the Consultation Paper: a principles-based approach to market conduct regulation; enhancements to the existing regulatory framework, including the possible introduction of a general duty of fairness that FRFIs will owe to their customers; and stakeholder engagement in financial consumer protection issues. These initiatives, if implemented, will give rise to real operational change for FRFIs in Canada. The comment period for the Consultation Paper ends on February 28, 2014. For more details, see our Blakes Bulletin: Year-end Blizzard for Financial Institutions.
The 2013 Action Plan also announced the federal government’s intention to:
- support provincial efforts to regulate all payday lending-type high interest rate products, and raise awareness of the fact that Government of Canada cheques can be cashed free of charge at any bank in Canada;
- implement changes to limit the use of portfolio mortgage insurance and prohibit the use of government-backed insured mortgages as collateral in securitization vehicles that are not sponsored by Canada Mortgage and Housing Corporation;
- establish, cooperatively with provinces and territories, a common securities regulator, and if a timely agreement cannot be reached on a common regulator, propose legislation to carry out its regulatory responsibilities consistent with the decision rendered by the Supreme Court of Canada (for more details on this initiative, see our Blakes Bulletin: Federal Government Advances Plan for National Securities Regulator);
- continue to review federal legislation and, where appropriate, introduce further changes to support the over-the-counter derivatives reform;
- examine whether the conflict of interest provisions contained in the financial sector statutes remain consistent with the overall government policy as outlined in the Conflict of Interest Act;
- implement a comprehensive risk management framework for Canada’s systemically important banks;
- remove some residency requirements to provide flexibility for financial institutions to efficiently structure the committees of their boards of directors; and
- review the regulatory framework, including the process for approval of new financial institutions, to ensure that it promotes the entry and growth of smaller institutions while preserving the safety and soundness of the sector.
Speech from the Throne
On October 16, 2013, the Governor General delivered the Speech from the Throne, setting out the federal government’s policy agenda for the next parliamentary session. According to the speech, the government will take additional steps to protect Canadian consumers by requiring that the cost of different payment methods be adequately disclosed to consumers; that “pay to pay” policies requiring customers to pay extra to receive paper bills be discontinued; and by expanding no-cost basic banking services to Canadians.
LEGISLATION AND GUIDANCE
Parliament has enacted two budget implementation bills to implement the 2013 Action Plan: the Economic Action Plan 2013 Act, No. 1, which received royal assent on June 26, 2013 and the Economic Action Plan 2013 Act, No. 2, whichreceived royal assent on December 12, 2013. In addition, significant changes to the regulatory landscape for FRFIs were introduced by way of new legislation and regulatory guidance. These legislative and regulatory initiatives are outlined below.
New Guidance from OSFI
New Corporate Governance Guideline
On January 28, 2013, the Office of the Superintendent of Financial Institutions (OSFI) released a revised version of its Guideline on Corporate Governance, which was first issued in 2003. The most significant changes to the guideline are in the areas of board composition and competencies; risk governance, including a requirement to implement risk appetite frameworks; and the roles of the chief risk officer and the audit committee (see our Blakes Bulletin: OSFI Releases Final Corporate Governance Guideline).
Looking ahead to 2014, it is expected that OSFI will closely monitor the implementation of the requirements of this guideline, alongside the new Principles for an Effective Risk Appetite Framework issued by the Financial Stability Board on November 18, 2013, particularly with respect to designing and implementing an effective risk appetite framework appropriate for financial institutions.
The federal government also introduced amendments to financial institutions legislation affecting corporate governance of FRFIs. In particular, the Economic Action Plan 2013 Act, No. 1 eased the residency requirements for directors of FRFIs to enable them to structure board committees more efficiently. The Economic Action Plan 2013 Act, No. 2 repealed the prohibition against federal and provincial government employees and Crown agents being directors of FRFIs.
Capital Regulation and Risk Management: Banks and Trust and Loan Companies
On January 1, 2013, the new Capital Adequacy Requirements Guideline (CAR Guideline) issued by OSFI in December 2012 came into force, implementing the Basel III capital adequacy requirements. By January 1, 2013, FRFIs were required to meet the seven per cent “all-in” common equity tier-one capital target set by OSFI.
All non-common Tier 1 and Tier 2 capital instruments issued by FRFIs after January 1, 2013 must comply with the non-viability contingent capital (NVCC) requirements set out in the CAR Guideline. Pursuant to the NVCC requirements, non-common Tier 1 and Tier 2 capital instruments of a FRFI must have, in their terms and conditions, a clause requiring a full and permanent conversion of the instruments into common shares upon the failure of the FRFI. In 2014, it is expected that the government will release a white paper on the “bail-in” requirements for certain categories of senior debt, providing for a framework for the write-down or conversion into equity of some senior unsecured debt of a failing FRFI.
On March 26, 2013, OSFI announced that Canada’s six largest banks have been identified as domestic systemically important banks (D-SIBs) in accordance with the criteria set out by the Bank for International Settlements’ Basel Committee on Banking Supervision (Basel Committee) and will be subject to continued supervisory intensity, enhanced disclosure, and a one per cent risk-weighted capital surcharge by January 1, 2016. The Autorité des marchés financiers, the Quebec financial institutions regulator, also announced on June 19, 2013 that it has designated Desjardins Group as a domestic systemically important financial institution in Quebec.
On June 6, 2013, OSFI issued an advisory to establish expectations with respect to the management of foreign exchange settlement risk (FXSR) by banks, bank holding companies and trust and loan companies. The basis for this advisory is the Supervisory Guidance for Managing Risks Associated with the Settlement of Foreign Exchange Transactions issued by the Basel Committee. The OSFI Advisory sets out FXSR principles against which FRFIs are expected to assess their practices in the course of normal compliance reviews, taking into account the nature, size, complexity and risk profile of their foreign exchange transactions. FRFIs are also expected to develop a plan to remedy any deficiencies that come to light during such assessments. Reviews of FRFIs’ practices surrounding the FXSR principles will be considered in line with the annual supervisory planning process.
On July 3, 2013, OSFI released the final Advisory on Public Disclosure Requirements related to Basel III Pillar 3. This advisory provides clarification on the implementation of the disclosure rules issued by the Basel Committee for all institutions starting in the third quarter of 2013 and builds on OSFI’s November 2007 Advisory on Pillar 3 Disclosure Requirements.
On August 6, 2013 OSFI issued a ruling on the application of exceptions that may be granted in relation to the calculation of the assets to capital multiple (ACM) under International Financial Reporting Standards. The ruling describes the specifics of a situation involving National Housing Act Mortgage-Backed Securities and how OSFI concluded with respect to the treatment under the ACM.
On August 21, 2013, OSFI issued a letter clarifying the application of the Credit Valuation Adjustment (CVA) capital charge in Chapter 4 of the CAR Guideline and the treatment of market risk hedges used for the purposes of mitigating CVA risk. The changes will be reflected in the next revision of the CAR Guideline. In the interim, the annex of the OSFI August 21, 2013 letter will reflect the new CVA methodology.
On November 29, 2013, OSFI issued a draft guideline on Liquidity Adequacy Requirements (LAR Guideline). The LAR Guideline establishes the framework within which OSFI will assess whether a bank, a bank holding company, or a trust or loan company maintains adequate liquidity. The LAR Guideline should be read together with the Basel Committee’s Principles for Sound Liquidity Risk Management and Supervision and OSFI’s Guideline B-6: Liquidity Principles. OSFI has established two minimum standards under the proposed CAR Guideline: the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR), and has identified additional liquidity metrics where OSFI reserves the right to apply supervisory requirements as needed.
The LCR aims to ensure that an institution has an adequate stock of unencumbered high-quality liquid assets that consists of cash or other highly liquid assets to meet its liquidity needs for a 30-day liquidity stress scenario. The minimum LCR requirement for Canadian institutions will be set at 100 per cent and will come into force on January 1, 2015 with no phase-in period. The LCR should be reported to OSFI monthly, with the operational capacity to increase the frequency to weekly or even daily in stressed situations at OSFI’s discretion. Institutions should also notify OSFI immediately if their LCR has fallen, or is expected to fall, below 100 per cent.
The NSFR, the other main standard introduced in the draft LAR Guideline, establishes a minimum acceptable amount of stable funding based on the liquidity characteristics of FRFI’s assets and activities over a one-year horizon. The NSFR standard is structured to ensure that long-term assets are funded with at least a minimum amount of stable liabilities in relation to their liquidity risk profiles. Note that references to the NSFR in the draft LAR Guideline are intended as a placeholder given that the Basel Committee is scheduled to review the NSFR standard over the 2013-14 period. OSFI intends that the NSFR, including any revisions, will become a minimum standard by January 1, 2018. FRFIs can provide comments on the LAR Guideline by January 24, 2014.
Capital Regulation: Insurance Companies
On February 28, 2013, OSFI released a revised version of Guideline B-9: Earthquake Exposure Sound Practices following a public consultation that began in August 2012. The revised guideline represents a principles-based approach to managing earthquake exposure. On July 31, 2013, OSFI also issued a memorandum outlining the proposed measure of earthquake exposure and earthquake financial resource formula within the Minimum Capital Test (MCT). The memorandum includes a proposed revision to the annual Earthquake Exposure Data Form (EEDF). OSFI anticipates that both the revised MCT guideline on earthquake risk exposure and the EEDF will become effective January 1, 2015.
Following an in-depth review of the regulatory capital framework for federally regulated property and casualty (P&C) insurers, on May 24, 2013, OSFI issued a Discussion Paper and a Quantitative Impact Study regarding OSFI’s proposed changes to the Regulatory Capital Framework for Federally Regulated Property and Casualty Insurers. OSFI’s Discussion Paper outlined the proposed changes to the MCT for Canadian P&C insurers and the Branch Adequacy of Assets Test for branches of foreign P&C insurance companies. The comment period for the consultation ended on July 31, 2013. On December 20, 2013, OSFI released the Draft MCT Guideline for public consultation. The comment period ends on March 15, 2014. The final MCT Guideline is expected to be issued in the summer of 2014 and will be applicable for the year 2015. The Capital Impact Summary of the Proposed Changes to the 2015 Regulatory Capital Framework for Property and Casualty Insurers is available here.
On November 8, 2013, OSFI issued proposed changes to Guideline A, Minimum Continuing Capital and Surplus Requirements (MCCSR) for Life Insurance Companies. The final revised MCCSR Guideline was issued on December 20, 2013 and came into effect on January 1, 2014. OSFI has issued an Impact Analysis Statement outlining the changes made to the MCCSR Guideline. In addition, OSFI has requested that life insurers participate in several quantitative impact studies, including Quantitative Impact Study No. 5 issued on November 1, 2013, to gather information and assess the potential impact of the major components of the revised life insurance regulatory capital framework.
Following consultations with the insurance industry, on November 11, 2013, OSFI published the final versions of Guideline E-19 Own Risk and Solvency and Assessment (ORSA), and Guideline A-4 (Internal Target Capital Ratio for Insurance Companies), which has been renamed Regulatory Capital and Internal Capital Targets. Both guidelines have an implementation date of January 1, 2014. OSFI has requested that insurers inform their OSFI relationship manager by March 31, 2014 of the expected date in 2014 when their ORSA report will be available. OSFI has also published an Impact Analysis Statement for both guidelines and has issued an accompanying letter that provides a summary of the key comments received by OSFI from the industry and an explanation of how they were dealt with in the final guidance. For more details, see our Blakes Bulletin: OSFI Updates: ORSA and Life Insurance Regulatory Framework.
Amendments to Federal Financial Institutions Legislation
The Economic Action Plan 2013 Act, No. 2 introduced amendments to the Bank Act, the Trust and Loan Companies Act,the Insurance Companies Act andthe Cooperative Credit Associations Act aimed at clarifying the rules for certain indirect acquisitions of foreign financial institutions.
Revised Incorporation Guides for FRFIs
On May 9, 2013, OSFI revised the Incorporation Guides for the incorporation of banks, trust and loan companies, and insurance companies, which provide applicants seeking to incorporate such FRFIs with an overview of the application process, information requirements and administrative guidance. The Incorporation Guides were last updated in August 2004.
OSFI also revised the following Transaction Instructions:
- Acquisition or Increase of a Significant Interest in, and/or Acquisition of Control of, a Federally Regulated Entity
Changes to Related Party Rules
In November 2013, OSFI announced in its Forward Regulatory Plan 2013-2015 that Related Party Transactions Regulations are expected to be amended to permit additional categories of transactions to be undertaken between a FRFI and a related party. In particular, the proposed amendments to the regulations prescribe two additional types of transactions with related parties as permitted transactions:
- transactions related to the acquisition of actively traded securities of a third party from a related party, the disposition of actively traded securities to a related party, and the acquisition of actively traded securities of a related party, all through the facilities of a recognized stock exchange; and
- transactions related to the taking of a security interest in securities of a related party if, in the event of default, recourses are not limited to those securities and if it is for the purpose of good risk management.
The proposed amendments also clarify that deposits with a related party are only permissible if such deposits meet the conditions set out in the legislation that expressly deal with deposits with related parties. Industry associations were provided with a version of the regulations in June 2012. Final regulations are expected to be introduced in 2014.
On November 8, 2013, OSFI announced that it has revised its approach to the granting of approvals by the Superintendent for reinsurance with a related party. Effective January 1, 2014, approvals will generally be granted in respect of each related reinsurer as opposed to each reinsurance arrangement with the related reinsurer. In other words, the approval of the Superintendent will relate to the applicant’s intention to cause itself to be reinsured – through one or more reinsurance arrangements on an ongoing basis – by a specific related reinsurer rather than in respect of each particular reinsurance arrangement with that related reinsurer. OSFI notes that the revised approach is intended to better align with reinsurance industry practices and to provide OSFI with additional insight into FRFIs’ risk exposure to related reinsurers. On December 31, 2013, OSFI released a revised Transaction Instruction for Superintendent approvals for reinsurance with a related party.
New Advisory on Ownership Interest in Commodities
On January 9, 2013, OSFI issued a new advisory on Ownership Interests in Commodities. The advisory sets out the circumstances in which OSFI will consider taking an ownership interest in commodities by a FRFI to be permitted under the applicable financial institutions legislation as generally appertaining to the business of providing financial services. The advisory also outlines minimum prudential standards for FRFIs engaging in such activities.
Revisions to the LEFP Framework
On February 27, 2013, OSFI updated its Instruction Guide on Administrative Procedures for the Late and Erroneous Filing Penalty (LEFP) Framework. The LEFP Framework was introduced to encourage the prompt filing of error-free returns by FRFIs and imposes financial penalties for institutions that fail to make such filings. The updated LEFP Framework clarifies that an appeal from a financial penalty imposed under the LEFP Framework is intended only for situations where a FRFI can demonstrate “compelling” reasons for objecting to a penalty, such as a major systems failure or a major power outage.
Proposed Changes to OSFI Assessment Methodology
On October 15, 2013, OSFI announced that it had undertaken a review of the Assessment of Financial Institutions Regulations, 2001 for all FRFIs to ensure that assessments appropriately reflect the time and resources that OSFI devotes to supervising and regulating individual financial institutions. OSFI’s Consultation Paper is proposing to make two changes to its current assessment methodology. The first change would amend the basis on which minimum and base assessments are currently calculated (i.e., the average total assets). The second proposed change updates the minimum amount assessed and proposes a methodology to help these minimum charges keep pace with growth in base assessments over time. The comment period for the consultation ended on November 29, 2013.
New Guidance on Cyber Security
On October 28, 2013, OSFI released Cyber Security Self-Assessment Guidance for FRFIs. The self-assessment guidance sets out six broad areas, each with more specific cyber security preparedness principles. For each criterion, FRFIs are required to rate their current degree of maturity on a scale of one to four (with “one” meaning that the FRFI has not yet implemented the principle and “four” meaning that the FRFI has fully implemented the principle enterprise-wide). For more information, see our Blakes Bulletin: OSFI Releases Cyber Security Self-Assessment Guidance.
Developments in Market Conduct Regulation and Guidance from FCAC
New Prepaid Payment Products Regulations
On December 4, 2013, the federal government introduced Prepaid Payment Products Regulations, which set out a federal consumer protection framework for prepaid payment products and granted the Financial Consumer Agency of Canada (FCAC) administrative oversight powers. An earlier version of the regulations was released for comment in October 2012, and the government has made some important changes to the original draft, based on stakeholder input. The regulations come into force on May 1, 2014. For more information, please see our Blakes Bulletin: Year-End Blizzard for Financial Institutions.
New Anti-Spam Legislation
On December 4, 2013, after lengthy delays and extensive consultation, the federal government announced that most of Canada’s anti-spam legislation (CASL), including the rules surrounding sending commercial electronic messages, will come into force on July 1, 2014. CASL also creates a private right of action for persons who have been affected by a contravention of a number of provisions of CASL, including the anti-spam provisions. The private right of action will not come into effect until July 1, 2017. The legislation will apply in respect of consumer and commercial customers and will have to be considered by all businesses. For more information, see our Blakes Bulletin: The Waiting Game is Over: Canada’s Anti-Spam Legislation Will Change the E-Communication Landscape.
New Complaints Regulations
On April 10, 2013, the Minister of Finance announced the final publication of the Complaints (Banks, Authorized Foreign Banks and External Complaint Bodies) Regulations(Complaints Regulations) in respect of the resolution of complaints by bank customers. The Complaints Regulations establish criteria for ministerial approval of external complaints bodies and set out the obligations of banks and authorized foreign banks in respect of any complaints (from consumers or commercial clients) they receive and deal with. The Complaints Regulations also introduce a new requirement for banks and authorized foreign banks to report to the public annually on the functioning and performance of their complaint handling processes. The FCAC also issued an Application Guide for External Complaint Bodies and a Guidance on Internal Dispute Resolution, which sets out the principles that the FCAC considers essential for the establishment of an effective and accountable internal dispute resolution process for all FRFIs. The Complaints Regulations, the Application Guide and the Guidance took effect on September 2, 2013 (see our Blakes Bulletin: Update: Final Complaints Regulations Published Plus New FCAC Guidance). Organizations that are planning to submit an application to become external complaints bodies can contact the FCAC to request a checklist to assist with their application.
New Guidance on the CDC Code
On February 13, 2013, FCAC released the Commissioner’s Guidance CG-10 in respect of the Code of Conduct for the Credit and Debit Card Industry in Canada (CDC Code). The new FCAC Guidance addresses three compliance issues identified by the FCAC: a lack of transparency in respect of some sales and business practices, a lack of clarity of disclosures where multiple merchant service agreements are required, and multiple contract cancellation fees. All payment card networks were expected to incorporate the required amendments into their operating rules within 90 days of the publication of Guidance CG-10. The Guidance came into force on November 12, 2013.
Amendments to Credit Business Practices Regulations Now in Force
On June 21, 2013, amendments to Credit Business Practices Regulations came into force. The amendments require express consent from a credit card holder before credit card cheques may be distributed to the credit card holder.
New Mortgage Prepayment Penalty Disclosure Guidance Now in Force
On March 4, 2013, the FCAC Guidance CG-9 on Mortgage Prepayment Penalty Disclosure came into effect. The Guidance sets out the information that FRFIs are expected to incorporate into their mortgage prepayment disclosure documents and the FCAC’s expectations with respect to compliance with the Cost of Borrowing Regulations.
Financial Literacy Leader Position Created
On March 27, 2013, the Financial Literacy Leader Act (FLL Act) came into force. The FLL Act amends the Financial Consumer Agency of Canada Act to create the position of Financial Literacy Leader (FLL) within the FCAC. The FLL is to be appointed by the federal government to exercise leadership at the national level to strengthen the financial literacy of Canadians.
Developments in Anti-Money Laundering and Sanctions Regulation
New Regulations Coming into Force in February 2014
On February 13, 2013, amendments to the general regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PC Act) were registered and published in final form. The revised regulations will become effective on February 1, 2014. For more information, see our Blakes Bulletin: New Regulations Amending Canadian Anti-Money Laundering Legislation. It is expected that the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will issue revised guidelines reflecting the changes introduced by the amendments. OSFI is also expected to update its Guideline B8: Deterring and Detecting Money Laundering and Terrorist Financing to address the amendments made to the PC Act regulations.
On March 21, 2013, the Standing Senate Committee on Banking, Trade and Commerce released its report on the PC Act. The report was published as part of the Senate Committee’s five-year statutory review of Canada’s anti-money laundering legislation, which began in February 2012.
Amendments to PC Act
The Economic Action Plan 2013 Act, No. 2 amended the PC Act to extend to the whole Act the protection for communications that are subject to solicitor-client privilege, and to provide that information disclosed by FINTRAC under subsection 65(1) of that Act may be used by law enforcement agencies only as evidence of a contravention of Part 1 of that Act.
Dealing with Foreign Jurisdictions
On February 22, 2013, the Financial Action Task Force (FATF) produced two public documents as part of its ongoing work to identify jurisdictions that may pose money laundering and terrorist financing risks to the international financial system. OSFI issued a statement outlining OSFI’s expectations for FRFIs with respect to the FATF documents. A similar statement was also issued by FINTRAC. FATF issued additional statements in June and October 2013 in respect of money laundering and terrorist financing risks associated with dealing with Iran, North Korea and other jurisdictions with regulatory deficiencies. Both OSFI and FINTRAC have issued notices (OSFI July Notice & OSFI November Notice and FINTRAC July Notice & FINTRAC November Notice) regarding these FATF statements.
On May 29, 2013, the federal government brought into force an amendment to the Special Economic Measures (Iran) Regulations. The amendment expands the Canadian sanctions in force against Iran, including the provision of financial services and financial transactions destined to or from Iran. The measures also prohibit imports from Iran and exports to Iran, and any investment in an entity in Iran. The list of designated entities established under the regulations is expanded to include a number of Iranian banks and financial institutions. Both OSFI and FINTRAC have issued notices setting out expectations for FRFIs to comply with the amended regulations.
On June 19, 2013, the Fighting Foreign Corruption Act, which introduces significant amendments to the Corruption of Foreign Public Officials Act (CFPOA), received royal assent. The amendments increase the maximum sentence of imprisonment under the CFPOA, eliminate facilitation payments, create a new books and records offence, and significantly expand the application of the CFPOA to the worldwide conduct of Canadian citizens and companies. These amendments are one of the most significant developments in Canada’s battle against bribery and corruption since the enactment of the CFPOA (see our Blakes Bulletin: Canada Strengthens International Anti-Corruption Legislation).
New Guidance for Publicly Announcing AMPs
On September 30, 2013, FINTRAC announced revised criteria for determining whether it will publicly name a reporting entity that has been the subject of an administrative monetary penalty (AMP) for contravening the PC Act and associated regulations. According to the new criteria adopted by FINTRAC, a reporting entity that is subject to an AMP will be publicly named if one of the following criteria is met: the reporting entity has committed a very serious violation; the base penalty amount is C$250,000 or more, before adjustments; or there is repeat significant non-compliance. For more information, see our Blakes Bulletin: New FINTRAC Guidance for Publicly Naming Businesses Subject to Penalties.
New Developments in Payment Clearing and Settlement Systems
Image Rule Project Completed
On August 12, 2013, amendments to the Canadian Payments Association’s (CPA) Automated Clearing Settlement System (ACSS) rules and standards to accommodate the final phase of the Image Rule Project came into force. The Image Rule Project was a four-phase initiative launched in 2008 aimed at enabling CPA members to exchange images of paper payment items electronically. With the Image Rule Project now complete, the ACSS rules provide a framework for CPA direct clearers to exchange electronic payment files containing image captured payments (ICP) with a partner institution that has agreed to participate in ICP Exchange. The implementation of ICP Exchange by participating FRFIs will follow in accordance with their internal imaging strategies. The CPA Board of Directors also approved minor technical amendments to Rules 10 and 12 of the Large Value Transfer System (LVTS), which also came into force on August 12, 2013.
Review of LVTS Rules
In November 2013, the CPA announced that, following a self-assessment of the LVTS system against the Principles for Financial Market Infrastructures issued in April 2012 by the Bank for International Settlements’ Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions, the CPA has adopted a three- to four-year program to address the gaps identified as part of such self-assessment.
Amendments to CPA Rules and a New Rule
The CPA Board of Directors approved multiple technical amendments to the ACSS and LVTS rules at their October 3, 2013 and December 5, 2013 meetings and approved a new Rule H3 – Correction of Electronic Bill Payment Errors. Rule H3 supports the CPA’s Bill Payment Error Corrections Framework.
We expect that the regulatory landscape for federal financial institutions will continue to change in 2014 at its current elevated pace.
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