A Closer Look:
The Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act is one of the most complex pieces of legislation ever written. Financial service firms and other impacted organizations are just beginning to understand the Act's many facets and its full impact.

Through this series, recognized leaders in our Regulatory practice will take A Closer Look at how the Act will impact several distinct market segments. Many of the new reforms and implementation issues are currently unclear and are subject to rule-making processes and various statutorily directed studies. PwC will continue to monitor developments and provide additional insight and analysis.

 
US regulatory outlook: The beginning of the end US regulatory outlook: The beginning of the end - July 2014
Four years since Dodd-Frank, several key rulemakings remain.

 
Volcker rule clarity: Waiting for Godot - May 2014
While banks continue to wait for regulatory guidance, five key questions need answering.
 
Stress testing: A look into the Fed’s black box - April 2014
Making sense of the results from CCAR 2014.
 
Liquidity coverage ratio: No blood, but sweat and tears - April 2014
Expect changes to the US Liquidity Coverage Ratio when finalized this quarter.
 
Derivatives: Global convergence becomes global confusion - September 2013
The CFTC offers a road map and timeline for cross border derivatives regulation, but much uncertainty remains.
 
Money market funds: The SEC’s long awaited proposal - July 2013
The SEC recently issued a proposed rule that would fundamentally alter money market fund regulation and disclosure.
 
Model risk mitigation and cost reduction through effective documentation - June 2013
This A Closer Look discusses regulatory requirements and leading practices around model documentation, and how high-quality documentation can help mitigate model risk and reduce model-related costs.
 
The evolution of model risk management - May 2013
This A Closer Look discusses what the new model risk management guidance means holistically for banks and provides a high-level roadmap for evolving the model risk management function.
 
Money market reform in flux
Reading the tea leaves on money market fund regulation - October 2012
The mutual fund industry, securities regulators, the Department of the Treasury and banking regulators are engaged in a contentious debate about whether reforms are needed to make money market mutual funds more resilient and resistant to “runs,” and if so, what type of reforms would be best. In this A Closer Look, we summarize the existing options for reform and their impact, and handicap possible next steps.
 
The creation and usage of Legal Entity Identifiers (LEIs) - September 2012
The recent financial crisis has created a universal awareness of reference data and helped elevate it from a back office concern to a critical business function. Specifically, global regulators have recognized that the consistent identification of clients and counterparties must be a key foundational component in any effort to manage systemic risk. Enter the global legal entity identifier (the “LEI”).
 
US Basel III Regulatory Capital Regime and Market Risk Final Rule - July 2012
In a long-anticipated but not eagerly-awaited action, the three federal banking agencies released three notices of proposed rulemaking that will revise regulatory capital rules for US banking organizations and align them with the Basel III capital standards that were issued in December 2010 and subsequently updated in 2011 (Basel III). In this A Closer Look, we review and analyze the new regulatory capital rules.
To read this A Closer Look, please click here.
 
SIFI standards: Single counterparty exposure limits - April 2012
In this A Closer Look, we review and analyze the Federal Reserve Board's new standards for systemically important financial institutions (SIFIs) that introduce a single counterparty exposure (concentration) limit.

To read this edition, please click here.
 
The FSOC SIFI Designation Proposal for Nonbank Financial Companies - December 2011
In this A Closer Look, we review and analyze this latest guidance on the process and key factors leading to designation. In addition for NBFCs that believe they may be vulnerable to a SIFI designation, we also describe steps that can be taken to assess the likelihood of designation and the types of information likely to be necessary to counter any such designation in the FSOC three-stage process.

This edition should be of particular interest to insurance companies, specialty lenders, hedge funds, asset managers and other NBFCs that may be concerned about being designated as a SIFI.
 
The Volcker Rule Proposal: Regulators Propose Restrictions on "Covered Funds" - December 2011
In October 2011, the FRB, OCC, FDIC, and SEC issued a Proposed Rule to implement the Volcker Rule provisions of the Dodd-Frank Act, which prohibits proprietary trading by banking entities and restricts those entities from sponsoring, investing in, or having certain relationships with hedge funds and private equity funds.

Following our earlier A Closer Look titled The Volcker Rule Proposal: A Focus on Proprietary Trading, this A Closer Look describes the proposed prohibition on banking entities’ sponsoring, investing in, or having certain relationships with hedge funds or private equity funds.
 
SEC and CFTC Adopt Final Rules Requiring Registered Advisers to Private Funds to File New Form PF - November 2011
In October 2011, the SEC and the CFTC adopted final rules as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act to require registered advisers to report on new Form PF information concerning the private funds they advise. Focused on private funds’ basic operations and strategies, the information reported on Form PF will aid the SEC, the CFTC, and the FSOC in their assessment of systemic risk. While the final rules on Form PF were anticipated, they are complex, and will have significant operational impact on registered advisers to private funds. This A Closer Look describes the final rules requiring new Form PF and their impact.
 
The Volcker Rule Proposal: A focus on proprietary trading- October 2011
The Financial Crisis Inquiry Commission cited a plethora of causes for the financial crisis. Proprietary trading, however, was not one of them. Notwithstanding the FCIC’s findings—or lack thereof—the Federal Reserve, FDIC, OCC and SEC recently issued the long-awaited proposed rule implementing the Volcker Rule of the Dodd-Frank Act. The Proposed Rule, which closely follows the language and presumptions spelled out in the Act, constructs the most far-reaching regulatory prohibition in US financial history by prohibiting proprietary trading not only in FDIC-insured institutions, but also in any affiliate thereof—irrespective of its business or geographic location. In a surprise to many foreign banks, the Proposed Rule not only applies to their US branches and agencies (insured or uninsured) and their US affiliates, but it would also draw in their businesses located outside of the US to the extent that they engage in transactions which have a US nexus, defined very broadly. This A Closer Look focuses primarily on the proprietary trading aspects of the Proposed Rule—we will cover the fund aspects of the Proposed Rule in a future A Closer Look. Our objective here is not to provide a detailed analysis of the Proposed Rule, but rather to try and help answer the broader question - "what should I do now?"
 
Special Edition: Unfinished Business: Dodd-Frank - Entering Year Two- September 2011
With the one-year anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act now behind us and with the benefit of a year’s experience, this A Closer Look reviews what has been accomplished under Dodd-Frank and analyzes what is yet to come. As we consider year two, we provide a brief look back and a longer look forward, focusing on the key issues and questions we hear often in the marketplace about Dodd-Frank and its implementation.
 
Derivatives Regulation and Changing Market Infrastructure for Nonfinancial Companies- July 2011
Regulators have been actively working toward finalizing the complicated and controversial mosaic of proposals intended to reform the derivatives markets as envisioned in the Dodd-Frank Act. Companies that use swaps will face new regulatory, business and operational challenges as dealers, counterparties and other swap market participants become subject to new clearing, margin and collateral requirements, recordkeeping and reporting duties, and new trade execution alternatives. This A Closer Look focuses on the potential impact of the new derivatives market reform for companies outside the financial services industry.
 
SEC Adopts Final Rules for Investment Adviser Registration- July 2011
On June 22, 2011, the SEC adopted final rules as mandated by the Dodd-Frank Act to require many advisers to private funds -- which were previously exempt from registration -- to become registered as investment advisers with the SEC. The final rules also establish new exemptions from the adviser registration rules. The deadline for advisers to register is March 30, 2012. In addition, the final rules will require advisers to submit new information to the SEC periodically -- even those advisers that are exempt from registration. These final rules, while anticipated, will have significant impact on advisers to private funds. This A Closer Look describes the final rules and their impact on investment advisers.
 
SEC Adopts Final Rules Establishing Whistleblower Program- July 2011
On May 25, 2011, the SEC adopted final rules to implement a whistleblower program as established by the Dodd-Frank Act. The whistleblower program requires the SEC to pay awards to eligible whistleblowers who voluntarily provide the agency with original information about a violation of the federal securities laws that leads to a successful enforcement action in which the SEC obtains monetary sanctions totaling more than $1 million. This A Closer Look describes the final rule and its impact.
 
Impact On Swap Data Reporting- June 2011
Swap data reporting is a cornerstone of the new derivatives regime created by the Dodd-Frank Act. In an effort to increase transparency and integrity in the derivatives markets, proposed Dodd-Frank regulations will require information about every swap or security-based swap (SBS) transaction to be sent to new swap data repositories or a government agency. This A Closer Look describes the proposed swap data reporting rules and suggested responses for swap market participants.
 
Impact on Advisers to Private Equity Funds- May 2011
The Dodd-Frank Act will for the first time bring private equity fund advisers under the oversight of the SEC. The SEC recently indicated that private fund advisers—including advisers to private equity funds—will have until the first quarter of 2012 to complete their SEC registration and come into compliance with their new obligations under the Advisers Act. Advisers should use this brief additional time to ensure that they have implemented effective controls and compliance programs and are fully ready for registration. This A Closer Look describes the impact of Dodd-Frank on private equity advisers and looks into some of the particular issues they’ll face.


 
Impact on Disclosures Related to the Use of “Conflict Minerals" - April 2011
While Dodd-Frank is predominantly focused on financial regulatory reform, it also includes a number of corporate governance and disclosure requirements that are designed to achieve other public policy objectives. Among these is Section 1502, which requires new procedures and disclosures by all issuers (domestic and foreign) who use so-called “conflict minerals” in their products or manufacturing processes. In this A Closer Look, we focus on the potential impact on all companies that use these types of minerals.


 
Incentive-Based Compensation Requirements for Certain Firms- April 2011
The Dodd-Frank Act requires enhanced disclosure of incentive-based compensation arrangements by certain banks, credit unions, investment advisers, brokerage firms, and other financial institutions. It also prohibits any type of incentive-based compensation that, in the regulators determination, encourages inappropriate risks by providing excessive compensation, or has the potential to cause material financial loss to the covered firm. Regulators are directed to jointly adopt rules and guidelines to implement this provision. This A Closer Look provides a description of the incentive-based compensation restrictions and describes the proposed rule and its impacts, should the rule become final in its present form.


 
Reporting by Private Fund Advisers on Form PF- March 2011
The SEC and the CFTC recently proposed a new rule that would require registered investment advisers to private funds to file new reports that would help the agencies assess those advisers’ systemic risk. The proposal is intended to implement Section 404 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. If adopted, the rule would impose substantial reporting burdens on affected advisers, particularly those with over $1 billion in assets under management. This A Closer Look describes the proposal and its possible impact on advisers to hedge funds, private equity funds, and liquidity funds.


 
Impact on Human Capital- March 2011
A stated goal of the Dodd-Frank Act was to improve transparency and accountability in the US financial system. Due to the Act’s breadth and the time regulators will need to interpret and implement its many provisions, industry experts anticipate that it will take several years for changes to be fully instituted. This A Closer Look will look at the impact of Dodd-Frank to an organization and its human capital.


 
A Uniform Fiduciary Standard for Broker-Dealers and Investment Advisers: The SEC's Study- March 2011
The SEC recently released Study on Investment Advisers and Broker-Dealers, its staff’s study evaluating the standards of care for broker-dealers and investment advisers when providing personalized investment advice and recommendations about securities to retail customers. This A Closer Look describes the study, as well as some of the implications of its recommendations.


 
SEC Study on Investment Adviser Oversight- March 2011
On January 19, 2011, the SEC released its study on the need for enhanced examination and enforcement resources for investment advisers, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. This A Closer Look describes the study and the three options it proposes in more detail.


 
Special Edition: Dodd-Frank at the Six-Month Milestone, A Work in Process- March 2011
As a part of our ongoing Dodd-Frank A Closer Look series, we are pleased to provide you with a special edition in our A Closer Look series. This special edition A Closer Look, Dodd-Frank at the Six-Month Milestone, A Work in Process, summarizes the key progress on Dodd-Frank at the six-month milestone.


 
Impact on Thrifts & Thrift Holding Companies - February 2011
While many financial and nonfinancial companies will see their businesses change under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank, or “the Act”), perhaps no group faces more substantial challenges to its business model’s long-term viability than thrifts and thrift holding companies. Technically, thrift holding companies are regulated as "savings and loan holding companies." We use instead "thrift holding companies" to reflect the fact that thrift is a more encompassing description of institutions with a savings association charter. This A Closer Look explores the impact of Dodd-Frank on thrifts and thrift holding companies.


 
Impact on Swap Dealers and Major Swap Participants - January 2011
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a person who engages in significant swap activities may be regulated as a “swap dealer” or “major swap participant”. Swap dealers and major swap participants must register and comply with numerous regulatory requirements that include reporting, recordkeeping, business conduct, collateral management, capital, liquidity, and margin standards. This A Closer Look offers PwC's perspective on how swap dealers and participants will be defined and regulated.


 
Impact on Asset Managers - December 2010
The SEC proposes new rules to implement the investment adviser registration and exemption requirements of Dodd-Frank and to require reporting by both registered and exempt advisers. This A Closer Look provides our perspective on the new rules.


 
Impact on Executive Compensation - December 2010
Dodd-Frank will require some major changes in executive compensation arrangements at public companies. These new provisions will have a direct impact on the way corporate America seeks input from shareholders on the terms of executive compensation programs and discloses information about those programs. In this A Closer Look, we focus on the Act’s requirements associated with executive compensation arrangements, and explore some of the strategic, operational, and financial reporting decisions companies will face as implementation of the Act gets underway in 2011.


 
Impact on Nonfinancial Companies - December 2010
Most nonfinancial companies are aware of the corporate governance provisions of Dodd-Frank that will require certain near-term changes; however, many companies may not have focused on other ways the Act will directly or indirectly impact their operations and strategy. At this early stage of implementation, the key question for many nonfinancial companies is "What is the Act's potential impact on my business?" -- whether in the form of more regulation, increased costs, or having to adapt to new structural features, ways of doing business, and managing risk in the financial markets. This A Closer Look provides context and perspective on areas of Dodd-Frank of particular concern to nonfinancial companies.


 
Impact on Advisers to Real Estate Funds - November 2010
Dodd-Frank impacts investment advisers in multiple ways. Some of these ways are quite clear, such as the requirement for hedge fund and private equity fund managers to register with the SEC; others will become clear once regulators begin setting rules to define the Act and the scope of its coverage. This A Closer Look provides an initial perspective on the impact the Act may have on advisers to real estate funds.


 
Impact on Securitization Activities: the Retention Requirements - October 2010
Subtitle D of Title IX of Dodd-Frank is intended to prompt improved practices and enhanced disclosures with respect to securitization activities. The Act is expected to significantly impact the activities and reporting of entities involved in the securitization of financial assets - including issuers of asset-backed securities and their sponsors, as well as originators of the underlying collateral sold to such securitizers. In this A Closer Look, we focus on Section 941 of Subtitle D, which deals exclusively with credit risk retention.


 
Impact on Information Technology and Data - October 2010
While there is still much to be done by regulatory agencies regarding Dodd-Frank mandated rulemaking, it is clear that there will be an impact on IT platforms and the associated data architecture. These impacts start with required changes to business operating models and extend to the underlying business applications and data structures that support them. This A Closer Look provides an initial perspective on the impact the new rules may have on financial services firms and IT service providers to the Financial Services industry and how they will need to address these IT and data changes.


 
Impact on Credit Rating Agencies - September 2010
Dodd-Frank will have a significant impact on the activities, organization, and practices of the nationally recognized statistical rating organizations (NRSROs or credit rating agencies). The Act imposes new liability exposure on the credit rating agencies, mandates new internal control requirements, places specific prohibitions to address conflicts of interest, and provides for increased SEC oversight. This A Closer Look provides some context and perspective on the new law and its implications for NRSROs.


 
Impact on Non-US Asset Managers - August 2010
Dodd-Frank is likely to have significant impact on non-US asset managers who have clients in the US. Managers that were formerly exempt from registration will need to register as investment advisers with the SEC. This A Closer Look continues our examination on how Dodd-Frank will likely impact asset managers, particularly those not based in the US.


 
Impact on Foreign Banking Organizations and Foreign Nonbank Financial Companies - August 2010
Dodd-Frank applies US national treatment policies to foreign banking organizations (FBOs) that do business in the United States. The Act also reaches foreign nonbank financial companies (NFCs) that are predominantly engaged in financial activities in the United States and that are found by the FSOC to be systemically important and required to be supervised by the FRB. This A Closer Look continues our review of the "systemically important" provisions of Dodd-Frank and examines the impact some of these provisions may have on FBOs and foreign NFCs.


 
Impact on The SEC's Enforcement and Examination Activities - August 2010
Dodd-Frank enhances the enforcement and oversight powers of the Securities and Exchange Commission (SEC) in many respects. It provides the SEC’s Division of Enforcement with a host of new legal tools, some of which it has sought for years. This A Closer Look provides our initial perspective on how Dodd-Frank—along with the new rules that the SEC will adopt to implement it—will impact financial services firms and other securities market participants.


 
Impact on Systemically Important Bank Holding Companies, Nonbank Financial Companies, Financial Market Utilities and Payment, Clearing and Settlement Services - August 2010
Several parts of Dodd-Frank are focused on systemic risk concerns. Bank holding companies (BHCs) with $50 billion or more in consolidated assets are automatically designated as systemically important. Other categories — nonbank financial companies (NFCs), financial market utilities (FMUs) and payment, clearing, and settlement services — must be designated as systemically important. What is likely to trigger such designations? Will size always be the dominant factor?


 
Impact on Banks, Thrifts, and Their Holding Companies - August 2010
While much attention has been paid to Dodd-Frank’s new provisions relating to systemically important firms, other provisions of the Act affect all banking and thrift institutions. Those are the issues we highlight in this A Closer Look, putting specific emphasis on regulatory consolidation; capital adequacy considerations; the Volcker Rule; compensation standards; and new corporate compliance requirements for banks, thrifts, and their holding companies.


 
Impact on OTC Derivatives Activities - August 2010
Dodd-Frank will significantly change the oversight and structure of the US over-the-counter (OTC) derivatives markets. As regulatory implementation and supervisory determinations occur during the transitional periods over the next several years, the US derivatives markets’ scope, structure, execution mechanisms, pricing, margin/collateral requirements, and supervision will be reshaped. This A Closer Look provides some context and perspective on these key changes.


 
Impact on Consumer and Mortgage Banking - August 2010
Dodd-Frank will have wide-ranging impact on anyone providing retail financial services in the United States. Dodd-Frank creates a new independent regulator and supervisor, the Consumer Financial Protection Bureau (CFPB), which will have the authority to promulgate rules designed to ensure that US consumers receive clear, accurate information to help them evaluate mortgages, credit cards, and other financial products, and to protect them from hidden fees, abusive terms, and deceptive practices.


 
Impact on Insurance Companies - August 2010
This A Closer Look provides an initial perspective on the impacts of Dodd-Frank may have on insurance companies, from an overall regulatory structure standpoint as well as via new requirements that are applicable to portions of certain insurance companies’ business. Particularly for large global insurers and insurance companies that own thrift institutions, the potential designation as a systemically important nonbank financial institution will have a significant impact on how insurers navigate through their regulatory future. This A Closer Look provides an initial perspective on the impact some of these considerations may have on insurance companies.


 
Impact On Alternative Asset Managers Impact on Alternative Asset Managers - August 2010
All hedge fund and private equity fund advisers that are required to register with the SEC must do so before July 21, 2011, and must be fully compliant with requirements under the Investment Advisers Act of 1940 (Advisers Act). The SEC will draft rules to implement the Act, and will likely require advisers to private funds to file reports containing such information as the SEC deems necessary to protect investors or for the assessment of systemic risk. This A Closer Look provides our initial perspective on how Dodd-Frank may likely impact alternative asset managers.


 
Impact on Investment Advisers - August 2010
Dodd-Frank will impact investment advisers in multiple ways. Some of these ways are quite clear, such as the requirement for hedge fund and private equity fund managers to register with the Securities and Exchange Commission (SEC); others will become clear once regulators begin setting rules to define the Act and the scope of its coverage. This A Closer Look provides an initial perspective on the impact some of these considerations may have on investment advisers.


 
Impact on Retail-Broker Dealers - August 2010
Dodd-Frank may have a significant impact on broker-dealers, though much of the impact will depend on how regulators, including the Securities and Exchange Commission (SEC), interpret its mandate and craft implementing rules. This A Closer Look is our initial perspective on how Dodd-Frank and its implementing regulations could impact broker-dealers with respect to their obligations and interactions with retail investors.