Governance News

The FSA has recommended proposals for implementing aspects of the Payment Services Directive (PSD), which require countries in the European Economic Area (EEA) to regulate payment services. Under the PSD, FSA will be responsible for the authorisation and registration requirements and will need to make a small number of Handbook changes to: apply its complaints handling rules to payment services firms; change the jurisdiction of the Financial Ombudsman Service so that it can perform the out-of-court redress function required by the PSD; and introduce an approach to enforcing the Payment Services Regulations that mirrors its general approach to enforcement under the Financial Services and Markets Act 2000 (FSMA).

Tagged: finance investment, governance

The SEC has voted unanimously to update and modernise disclosure requirements for foreign companies to help U.S. investors acquire timely financial information. The rule amendments will give investors an instant electronic access to foreign company disclosure documents on the internet, eliminating the requirement for foreign companies without SEC-registered securities to submit paper disclosures. The commission has adopted a set of rule amendments, two of them being: Foreign Issuer Reporting Enhancements, which update Securities Exchange Act filing requirements; and amendments concerning Exchange Act Rule 12g3-2(b), which will allow certain exemptions to a foreign private issuer.

Tagged: finance investment, governance

The OECD Working Party on Private Pensions has drafted guidelines to help pension regulators and supervisory authorities improve pension fund governance. The guidelines cover the issues on the need for balanced representation of stakeholders in pension fund boards, greater expertise and knowledge among board members, and risk-based governance structures and mechanisms. The OECD has welcomed public comments on this draft until 1 October 2008.

Tagged: governance

The EU has published two consultation documents on Credit Rating Agencies (CRAs); first, related to the conditions for authorisation, operation and supervision of CRAs and second, proposing policy options to tackle excessive reliance on ratings in EU legislation. For efficient oversight of EU over CRAs, the consultation document proposes two options. The first option is based on a reinforced co-ordination role for the Committee of European Securities Regulators (CESR) and strong regulatory co-operation between national regulators; while the second option would combine the establishment of a European Agency for the EU-wide registration of CRAs and the reliance on national regulators for the supervision of CRA activities.

Tagged: finance investment, governance

The SEC has released a ComplianceAlert letter after conducting compliance examinations of the firms registered with the SEC. The ComplianceAlert identifies common deficiencies and weaknesses found by the examiners while determining whether the firms are in compliance with the federal securities laws and regulations. The ComplianceAlert is aimed to foster robust compliance in the securities industry by providing information and enable chief compliance officers to deal with any similar issues faced by them in their firms. Some of the areas examined were: personal trading by investment advisory employees, soft dollar practices by advisers, mutual funds' proxy voting practices, issues identified at broker-dealers affiliated with insurance companies, use of mortgage financing as credit for the purchase of securities.

Tagged: governance

IASC Foundation has published a discussion document, Review of the Constitution: Public Accountability and the Composition of the IASB - Proposals for Change, containing proposals within the first phase of the organisation’s five-yearly Constitution Review. The proposal would firstly, establish a formal link between the organisation and a Monitoring Group, comprising representatives of public authorities and international organisations that have requirements for accountability to public authorities and secondly, expand the membership of the IASB to 16 members and add new guidelines regarding the geographical diversity of the members of the IASB.

Tagged: governance

The FSA is to discuss on a proposal pertaining to the disclosure by financial institutions on the liquidity support provided by central banks to them. The proposal recommends legitimate interest for delays in disclosure, except in cases where immediate disclosure could lead to loss of confidence among consumers, increase liquidity problems and threaten the solvency of the financial institution.

Tagged: governance

In light of an increased risk of market abuse through short selling due to the current market conditions, the FSA advised it has been considering measures to maintain market confidence and prevent the potential market abuse during rights issues. As well as recommendations to increase transparency, the regulator is also introducing provisions in its Code of Market conduct effective from 20 June. These will include disclosure of significant short positions in stocks admitted to trading on prescribed markets where rights issues are taking place. Other options sought by the FSA are restricting the lending of stock of securities in rights issues for the purposes of enabling short selling; and restricting short sellers from covering their positions by acquiring the rights to the newly issued shares.

Tagged: governance

The SEC has proposed a comprehensive series of credit rating agency reforms that would increase transparency to the ratings process and avoid the kind of turmoil the credit markets have recently faced. Some of the proposals included in the first part of the proposal were to prohibit the credit rating agency from issuing a rating on a structured product unless information on assets underlying the product was available and from structuring the same products that they rate. Other proposals were the requirement of credit rating agencies to make all of their ratings and subsequent rating actions publicly available to facilitate comparisons, to make an annual report of the number of ratings actions they took in each ratings class, and require the maintenance of an XBRL database of all rating actions. The second part of the proposal required the credit rating agencies to differentiate the ratings they issue for on structured products from those they issue on bonds.

Tagged: governance

The Pension Protection Fund has published its three year plan to meet the challenges ahead. This comes at a time of its third year anniversary and PPF Chief Executive, Partha Dasgupta said: “Following our third anniversary, the PPF is now firmly part of the pensions landscape and we are carrying out all the tasks given us by the Pensions Act 2004. But we recognise we have still more to do and the next three years will undoubtedly be as challenging as the last three. Areas of priority indicated included maintaining financial resilience, developing the pension protection levy so that it better represented the long-term risk that final salary pension schemes posed to the PPF, development of a long term investment strategy, use of new technologies to streamline PPF work and the strengthening of collaborative relationships.

Tagged: governance