October 28, 2021
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The EU has published a draft of the laws that will implement the Basel III bank capital rules to tighten banks' capital requirements beginning in 2025, rather than 2023, as proposed by the Basel Committee. The EU said that by 2030 the new rules will increase mandatory bank capital by less than 9%, but banks say the figure will be much larger.
Full Story: Reuters (10/28),  Asset Servicing Times (10/27),  Financial Times (subscription required) (10/27),  Independent (Cork, Ireland) (10/28) 
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In a hearing that is part of his nomination to become permanent chairman of the US Commodity Futures Trading Commission, acting chair Rostin Behnam testified before the US Senate Agriculture Committee on issues including climate related risks to financial markets, voluntary carbon markets and the regulatory environment for digital assets.
Full Story: Reuters (10/27),  The Block (10/27),  BNN Bloomberg (Canada) (10/27) 
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How COP26 will shape ESG and impact investing
Simon Puleston Jones, co-founder and CEO of Climate Solutions, explains how COP26 might influence the flow of capital aimed at tackling the climate crisis. Simon also explains the educational journey taking place around ESG and impact investing.
Industry News and Trends
Experts told a conference that seeing a disconnect between the culture of resilience versus the planning is a warning sign that a firm may not be ready for another pandemic-like stress. Federal Reserve Bank of New York supervisor in operational risk governance Rick Cech said that some financial firms "just count up loss events, but it's more important to say what drove the event."
Full Story: Risk (subscription required) (10/28) 
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The Bank of Canada terminated its quantitative easing stimulus program and said it will start raising interest rates earlier than previously expected. The central bank said it could start pushing up borrowing costs as soon as April.
Full Story: BNN Bloomberg (Canada) (10/27),  Financial Times (subscription required) (10/27) 
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The European Central Bank has named 30 members to its recently formed Digital Euro Market Advisory Group to advise the national central banks within the euro zone on creating and distributing a central bank digital currency. The group plans to meet quarterly starting next month, offering consultations between sessions during the 24-month digital euro investigation phase.
Full Story: The Block (10/27) 
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Federal Reserve board member Randal Quarles challenged the suggestion by European Central Bank President Christine Lagarde that central banks can issue digital currencies to improve financial inclusion without harming the retail banking sector by distributing the currencies through banks. "You're saying that I'll still need a bank account in order to use my central bank digital currency, so I need a bank account anyway, so how is this helping financial inclusion?" he asked.
Full Story: MLex (10/25) 
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Regulatory Roundup
UK Chancellor Rishi Sunak has said the government will lower its surcharge on bank profits from 8% to 3% starting on April 1, 2023, as well as exempt some smaller banks from the surcharge. The combined effect of all the changes to the surcharge backed by Sunak will cut government revenues by about £4 billion in the five years ending in 2027, the Office for Budget Responsibility said.
Full Story: Financial News (UK) (tiered subscription model) (10/27),  The Guardian (London) (10/27) 
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Entities that expect to continue to use Libor once the benchmark expires at the end of this year in the form of a "synthetic Libor" or "zombie Libor" are mistaken, Michael Hsu, acting Comptroller of the Currency, told an online event sponsored by the Alternative Reference Rates Committee. "Let me be clear: the federal financial regulators have said no new Libor exposures - zombie or otherwise - after December 31 2021, and we mean it," he said.
Full Story: Practice Insight (10/27) 
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ISDA News and Events
The ISDA-Clarus RFR Adoption Indicator increased to an all-time high of 20.3% in September compared to 17.5% the prior month. The indicator tracks how much global trading activity (as measured by DV01) is conducted in cleared over-the-counter and exchange-traded interest rate derivatives that reference the identified risk-free rates (RFRs) in six major currencies. To view the September 2021 report, click here.
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The ISDA Regional Events are back! In-person attendance available in New York and London
ISDA's 2021 Regional Events will bring delegates cutting-edge intelligence and analysis on key topics in the derivatives and capital markets, as well as exclusive insights from leading regulators and senior market leaders. Click here to register & view the agenda for your region!
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Derivatives play an essential role in carbon markets. This paper describes the role of derivatives in carbon markets and reviews exchange-traded and over-the-counter carbon derivatives. Click here to read the full report.
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