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US Regulatory Research

US Regulatory Updates

US Regulatory Research


U.S. Labels China Currency Manipulator

On 5 August, the Department of the Treasury (“Treasury”) labeled China a currency manipulator after China’s central bank allowed the Chinese yuan to fall to a new low against the U.S. dollar. According to Treasury’s press release on the matter, “As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest action.”

U.S. Appeals Court Upholds Fines Levied Against Chinese Banks for Failing to Produce Records

On 6 August, the U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court’s imposition of $50,000-per-day fines against three Chinese banks for failing to produce records the U.S. government had subpoenaed in its investigation how North Korea finances its nuclear weapons program. The investigation centers on a Chinese front company allegedly used by North Korea to sell hundreds of millions of dollars of coal in a manner that circumvented the sanctions regime keeping North Korea out of U.S. markets. All three of the Chinese banks hold correspondent accounts in the United States, and two of the Chinese banks also operate branches in the United States      

U.S. Congress

The U.S. Congress was in recess last week.

SEC & Securities

SEC Announces Roundtable for Main Street Investors

On 5 August, Securities and Exchange Commission (“SEC”) Chairman Jay Clayton, announced a roundtable for Main Street investors in Chicago on Thursday, 15 August. Clayton and Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy, will participate in the roundtable, which will focus on: (i) tips to avoid fraud, (ii) the impact of costs and fees, and (iii) the key differences between broker-dealers and investment advisers. The roundtable follows the SEC’s 5 June adoption of a package of rulemakings and interpretations, which include Regulation Best Interest, the new Form CRS Relationship Summary, and two new interpretations under the Investment Adviser Act of 1940.

SEC Adopts Amendments to Codify Exemption to Credit Rating Agency Rule

On 7 August, the SEC adopted rule amendments codifying an existing exemption for credit rating agencies registered as nationally recognized statistical rating organizations (“NRSROs”). The exemption (i) is from Exchange Act Rules 17g-5(a)(3), 17g-7(a), and 15Ga-2 and (ii) applies if the offer and sale of a security or money market instrument being rated are not issued by a U.S. person and all offers and sales of the security or money market instrument by any issuer, sponsor, or underwriter will occur outside the U.S. Since 2010, the SEC has provided temporary conditional exemptions from rules requiring each NRSRO to maintain a password-protected website containing a list of each structured financial product for which it is currently in the process of determining an initial credit rating. This list must be made available free to other NRSROs. Additionally, Rule 15Ga-2 requires NRSROs to disclose the findings and collusions of any third-party due diligence report it obtained during the rating process. The SEC stated, “The Commission granted this relief in light of concerns raised by various securities regulators and market participants that local securitization markets may be disrupted if the rule applied to transactions outside the United States.”

SEC Commissioner Peirce Gives Speech to the American Chamber of Commerce of Japan

On 7 August, SEC Commissioner Hester Peirce gave a speech to the American Chamber of Commerce of Japan in Tokyo. In the speech, she highlighted both concerns about the small number of companies going public and changes to the regulatory regime to cut costs for companies. Peirce also stated that the proxy voting process, transfer agents, and new rules for digital assets are on the SEC’s agenda. Lastly, she emphasized the importance of materiality-based disclosure. Peirce said, “The attempt to supplement financial materiality with social significance could undermine our other efforts to ensure that companies and their investors are not bearing the cost of producing and analyzing unnecessary disclosure.”

SEC Proposes Changes to Regulation S-K Disclosure Rules

On 8 August, the SEC announced proposed rule amendments to Regulation S-K. The proposal seeks to improve disclosures and lessen the compliance burden for companies by (i) ensuring disclosures are of material information, (ii) replacing a count of the number of employees with a measure of human capital resources, (iii) removing the prescribed five-year window for disclosures about the general development of a business, and (iv) raising the threshold for disclosure of environmental proceedings involving the government from $100,000 to $300,000 to account for inflation. SEC Chairman Clayton remarked, “The proposals reflect a thoughtful mix of prescriptive and principles-based requirements that should result in improved disclosures and the elimination of unnecessary costs and burdens.” The proposals stem from the SEC’s Report on Review of Disclosure Requirements in Regulation S-K, which was mandated in the Jumpstart Our Business Startups Act. The proposed changes are the first update to Regulation S-K since 1982. Comments are due on the proposal within 60 days following its publication in the Federal Register.

CFTC & Derivatives

Executive Appointments

On 7 August, Commodity Futures Trading Commission’s (“CFTC”) Chairman Tarbert announced the following appointments to the CFTC’s executive leadership team: (i) Summer Mersinger, as Director of the Office of Legislative and Intergovernmental Affairs, and (ii) Suyash Paliwal, as Director of the Office of International Affairs

Bank Regulators 

Fed Announces Real-Time Payment Service

On 5 August, the Federal Reserve (“Fed”) announced it “will develop a new round-the-clock real-time payment and settlement service, called the FedNow Service, to support faster payments in the United States.  The Fed believes that the FedNow Service has “the potential to become widely used and to yield economic benefits for individuals and businesses by providing them with more flexibility to manage their money and make time-sensitive payments.” The Fed anticipates the FedNow Service to be available in 2023 or 2024.  

Fed Governor Brainard Delivers Remarks at Fed Town Hall

On 5 August, Fed Governor Lael Brainard spoke at a Fed townhall event in Kansas City, Missouri. Brainard addressed the FedNow Service, highlighting a range of positive benefits of the FedNow Service, including building a modern payment infrastructure and fostering a dynamic and resilient payment infrastructure that serves everyone. She stated that the “U.S. retail payment infrastructure lags behind many other countries” and expressed a need for long-term solutions to counter this. Brainard also highlighted the Fed’s mission of “providing nationwide access on fair, transparent terms,” claiming that the FedNow Service will allow “faster payments to reach banks of all sizes and their customers across the country.”  

FDIC Issues List of Banks Examined for CRA Compliance

On 5 August, the Federal Deposit Insurance Corporation (“FDIC”) issued a list of banks which have been recently evaluated for compliance with the Community Reinvestment Act “(CRA”). The CRA is intended to “encourage insured banks and thrifts to meet local credit needs, including those of low- and moderate-income neighborhoods.”

OCC Releases CRA Evaluations

On 8 August, the Office of the Comptroller of the Currency (“OCC”) released a list of CRA performance evaluations. The list contains the ratings of 42 “national banks, federal savings associations, and insured federal branches of foreign banks.”  

OCC Issues Bulletin Regarding Host State Loan-To-Deposit Ratios

On 9 August, the OCC issued a bulletin to inform national banks how host state loan-to-deposit (“LTD”) ratios are used to determine compliance with the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. The ratios “are used to compare a bank’s statewide LTD ratio with the host state LTD ratio for banks in a particular state.” These comparisons are done to determine whether a bank may be subjected to sanctions by the OCC. 


o   August 12: The OCC and the FDIC will cohost a roundtable in Jacksonville, Florida, to discuss small business lending.

o   August 13-14: The OCC and the FDIC will cohost a forum in Jacksonville, Florida, to “address best practices in disaster responsiveness, community resilience programs, and lessons learned.”

o   August 13: Comments are due on the CFTC’s proposed rule on “Procurement Contracts.”

o   August 13: The SEC’s Small Business Capital Formation Advisory Committee will hold a public meeting, the agenda for which is yet to be finalized.

o   August 14: The SEC will host the 38th Annual Government-Business Forum on Small Business Capital Formation.

o   August 15: The SEC will host a roundtable with Main Street investors.

o   August 16: Comments are due on the Fed’s proposal for “technical updates to its Freedom of Information Act procedures and on its rules governing the disclosure of confidential supervisory information.”

o   September 5: The SEC’s Investor Advisory Committee will meet telephonically regarding the proxy process.

Ianthe Zabel
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