EU lawmakers agreed to new legislation on how EU and third-country clearing parties operating in the European Union should be supervised. According to the EU Council, the intended goal of the change is to enhance supervision of central counterparties ("CCPs") to take into account the increasing size, complexity and cross-border aspect of clearing within Europe. The legislation is also intended to improve the existing system for overseeing third-country clearinghouses and introducing a "two-tier" system distinguishing between non-systemically important CCPs ("Tier 2 CCPs") and systemically

The Financial Stability Oversight Council ("FSOC") proposal to address systemic risk issues with an "activities-based approach" was published in the Federal Register. Comments must be submitted by May 13, 2019. If adopted, rather than impose requirements on a single entity FSOC would identify, evaluate and address potential risks to U.S. financial stability that arise from particular activities and would seek to adopt regulations applicable to those activities. Only where an activities-based approach was not sufficient would FSOC consider the imposition of entity-specific requirements ( see

The Federal Reserve Board ("FRB") final rule amending the "capital plan rule" to limit the scope of potential objections to a firm's capital plan was published in the Federal Register ( see here for previous coverage). The final rule is effective as of March 13, 2019. The removal of the qualitative objection under the capital plan became effective on March 6, 2019. With the exception for firms that have received a qualitative objection in the immediately prior year, the FRB will not issue a qualitative objection to any firm, beginning on January 1, 2021.

A broker-dealer agreed to settle SEC charges, originally filed in March 2018, for failing to supervise one of its registered representatives and for ignoring various red flags indicating that the representative could be involved in market manipulation. According to the SEC Order, Wedbush Securities, Inc. ("Wedbush") was aware of aspects of a registered representative's manipulative trading of penny stocks, but Wedbush's supervisory policies and implementation systems failed to guide staff on how to properly investigate the activity and had no clear process for how to handle red flags of

The MSRB specified criteria for designating participants in the next required testing of the MSRB's business continuity / disaster recovery (BC/DR) plans. The designated participants will be firms that account for the most activity in specific transaction or market segments. The MSRB will notify designated participants that are obligated to take part in the testing.