Regulatory update

§ SOLVENCY II IMPLEMENTATION MEASURES

During the members meeting held on 26 and 27 January, CEIOPS, the Committee of European Insurance and Occupational Pensions Supervisors, adopted the third and final advices on Solvency II Level 2 implementing measures. The advices are based on 6,856 comments on the individual papers from 126 stakeholders from national and European associations and insurance undertakings (for example insurance companies, mutuals, law firms and investment banks). To view the advices go to: www.ceiops.eu/content/view/706/330/.

§ WORKPLACE PENSION REFORM – UK

The final batch of regulations to deliver the ground breaking workplace pension reforms were unveiled 12 January 2010, reflecting the fact that the UK Government has worked closely with stakeholders and employers to maintain the consensus and ensure the regulations are responsive to their needs and concerns. Learn more about the reform at www.dwp.gov.uk/policy/pensions-reform/.

§ ENHANCE COMPENSATION AND CORPORATE GOVERNANCE DISCLOSURE – US

The SEC has adopted rules to enhance the compensation and corporate governance disclosures of public companies, including investment companies, in proxy statements and registration statements. The new rules include two categories of amendments specifically relating to investment company disclosures: (1) enhanced director and nominee disclosures; and (2) new disclosures concerning board leadership structure and the board's role in risk oversight. The new rules amend disclosures in fund proxy statements and information statements where action is to be taken with respect to the election of directors. Funds are also required to include expanded disclosures in their SAI.

SEC Final Rule, Release Nos. 33-9089, 34-61175 and IC-29092 (available 16 December 2009). Compliance Date: Generally, 28 February 2010. The compliance date varies for new and existing funds – see http://sec.gov/rules/.

§ US HOUSE OF REPRESENTATIVES PASSES FINANCIAL SERVICES REFORM LEGISLATION

On 11 December 2009, the US House of Representatives approved H.R. 4173, the ‘Wall Street Reform and Consumer Protection Act of 2009.’ The legislation is designed to enhance federal regulation of the US financial system in response to the recent financial crisis. The legislation would create the Financial Services Oversight Council (Oversight Council), chaired by the Secretary of the Treasury, to advise Congress on financial, domestic and international regulatory developments, and to identify, monitor and address potential threats to the stability of the US financial system.

The Wall Street Reform and Consumer Protection Act of 2009, H.R. 4173, 111th Cong. (2009); Beagan Wilcox Volz, ICI to Congress: Beware of Reform Bill's 'Adverse Consequences,' Ignites, 16 December 2009; ICI Memorandum No. 24036 (21 December 2009) (available at www.ici.org).

§ SEC ADOPTS AMENDMENTS TO INVESTMENT ADVISER CUSTODY RULE – US

The SEC has adopted amendments to the investment adviser custody rule, Rule 206(4)-2 under the Investment Advisers Act, to provide additional safeguards when a registered adviser has custody of client assets and to encourage the use of independent custodians.

‘Custody of Funds or Securities of Clients by Investment Advisers’, SEC Release No. IA-2968 (30 December 2009) is available on the SEC’s website at http://sec.gov/rules/final/ia-2968.pdf.

§ UPDATE TO GIPS STANDARDS 2010

Based on the principles of fair representation and full disclosure, the Global Investment Performance Standards (GIPS®) provide an ethical framework for the calculation and presentation of investment performance for investment management firms. Firms that comply with the Standards provide investors with consistent and transparent presentations of the firm’s performance. The 2010 edition improves the consistency and precision of the Standards and introduces the concept of fair value and specific provisions related to risk.

The revised version reflects the joint cooperation of 32 country sponsors of GIPS across Europe, the Middle East, North America, Africa and the Asia-Pacific region. Learn more at www.cfapubs.org/doi/abs/10.2469/ccb.v2010.n5.1.