The last two weeks have brought new plans for regulation of financial institutions and financial markets, in both the US and the UK. The global trend toward increased regulation of finance is bound to have significant effects on lending institutions over the next few months and years.
On May 20, the US Senate passed S. 3217, an extensive set of banking and financial regulatory reform legislation. This bill covers such areas as proprietary trading by banks, enhanced consumer protection (including creation of a new consumer financial protection agency), trading of over-the-counter derivatives, and many other things. Next steps will include trying to reconcile the content of this bill with the somewhat different version of a financial reform bill passed earlier by the House of Representatives, before the legislation moves forward to be signed by the President. To find out more about how this legislation might affect you, take a look at this summary of the Senate bill’s contents prepared by my partner Christopher Rissetto and others.
Meanwhile, across the pond, UK regulators are gearing up to further tighten the rules affecting financial markets. Similar to some initiatives in the US, the focus in the UK is on reforming over-the-counter derivative markets, strengthening global standards for clearing houses (including improving handling of defaults in the clearing and settlement system), increased transparency in non-equity markets, and oversight of credit rating agencies. Here’s a helpful guide to the UK proposals, along with some commentary from my partner Jacqui Hatfield, who leads Reed Smith’s Financial Services Advisory Group from our office in London.
For those in the US, enjoy the Memorial Day weekend and the unofficial start of summer!