April 7, 2014

G L O B A L   R E G U L A T O R Y   O V E R V I E W

Tim RyanThe International Economic Forum of the AmericasPalm Beach Strategic Forum

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1 Status of Financial Sector Regulatory Reform

Status of EU Regulatory Rulemakings* Status of Dodd-Frank Rulemakings*

Source: Dodd Frank Progress Report, April 2014, Davis Polk Source: JPMorgan Estimates, March 2014

*Rulemaking counts are based on estimates and require judgment.

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The Regulatory Reform Agenda

Bank Recovery and Resolution Directive (BRRD)

Markets in Financial Instruments Directive (MiFID)

Money Market Funds

Leverage Ratio

Securitization/Risk Retention

Single Counterparty Credit Limits

Fundamental Review of the Trading Book

Mortgage/ Government-sponsored enterprise (GSE) Reform

Long Term Debt Requirement

Short-term Wholesale Funding

Net Stable Funding Ratio (NSFR)

Interest Rate Risk in the Banking Book

Volcker Rule

Title II

Title VII

European Market Infrastructure Regulation (EMIR)

Basel III

Capital Requirements Directive (CRD IV)

Liquidity Coverage Ratio (LCR)

Policy ImplementationPolicy completionNew/ Developing policies

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Capital and Liquidity Improving the banking sector’s ability to absorb losses arising from financial and economic stress Ensuring banks hold sufficient liquid assets to survive an acute liquidity stress and prevent over-reliance on

short-term wholesale funding

Improving the banking sector’s ability to absorb losses arising from financial and economic stress Ensuring banks hold sufficient liquid assets to survive an acute liquidity stress and prevent over-reliance on

short-term wholesale funding

Securitization Enhancing capital requirements and market standards for originators and investors to improve the strength

and safety of securitization markets Enhancing capital requirements and market standards for originators and investors to improve the strength

and safety of securitization markets

Data Reforms related to data quality, risk management, regulatory reporting, data security, privacy and data use Reforms related to data quality, risk management, regulatory reporting, data security, privacy and data use

Consumer Protection (Non-Mortgage Related)

Expanding regulatory oversight of the design, pricing, marketing, sale, and distribution of consumer financial products

Expanding regulatory oversight of the design, pricing, marketing, sale, and distribution of consumer financial products

Bank Structure Restricting banks from undertaking certain types of market activities, and insulating retail banking from

wholesale banking (i.e. Volcker) Restricting banks from undertaking certain types of market activities, and insulating retail banking from

wholesale banking (i.e. Volcker)

Money Market Funds Addressing the susceptibility of money market funds to runs and preventing a repeat of 2008 events Addressing the susceptibility of money market funds to runs and preventing a repeat of 2008 events

OTC Derivatives Enhancing pre- and post-trade transparency, promoting the use of electronic trading venues and central

clearing, and bolstering capital and margin requirements   Enhancing pre- and post-trade transparency, promoting the use of electronic trading venues and central

clearing, and bolstering capital and margin requirements  

Shadow Banking Credit intermediation that involves entities and activities outside the regular banking system, and raises

systemic risk concerns, in particular by maturity/liquidity transformation, leverage and flawed credit risk transfer, and/or regulatory arbitrage concerns

Credit intermediation that involves entities and activities outside the regular banking system, and raises systemic risk concerns, in particular by maturity/liquidity transformation, leverage and flawed credit risk transfer, and/or regulatory arbitrage concerns

Market Structure(Non-OTC Derivatives)

Includes technology advances and innovation, marketplace and post-trade fragmentation, cost containment, fluctuating trading volumes and volatility, and the need to deliver and enhance transparency industry-wide

Includes technology advances and innovation, marketplace and post-trade fragmentation, cost containment, fluctuating trading volumes and volatility, and the need to deliver and enhance transparency industry-wide

Mortgages Reforming the nation's housing finance system Reforming the nation's housing finance system

Too Big to Fail Ensuring the resolvability of systemically important financial institutions, including drafting living wills Ensuring the resolvability of systemically important financial institutions, including drafting living wills

Fiduciary Standards Proposals to standardize the care that investors receive from financial professionals, whether financial

advisers or broker-dealers Proposals to standardize the care that investors receive from financial professionals, whether financial

advisers or broker-dealers

Top 12 Regulatory Policy Issues for JPMC3

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Considerations as Regulatory Reform Moves to the Next Phase4

Management decision-making vs. regulator decision-making

Bond holders vs. shareholders/derivatives counterparties

Simplicity vs. complexity

Home vs. host >>> holding companies vs. subsidiaries

Push in vs. push out >>> ring-fencing vs. universal banking

Consistency vs. gold-plating

Banks vs. the shadows

Core vs. non-core

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