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DoddFrank Cheatsheet IT

Nov 27, 2014

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Editors Letter

The Complete Works of Dodd-Frank (Abridged)Weighing in at slightly less than 1,000 pages, the Dodd-Frank Wall Street Reform and Consumer Protection Act is not at the top of most peoples reading list. Much of the legislation is written in legalese and typical Congressional jargon. Its dense, confusing, complicated and often boring (as the editors of the InformationWeek Financial Services group reminded me whenever they had the chance). So when I was asked recently by a CIO if we read the entire law, I responded: Well, someone had to do it. Our mission was to dissect DoddFrank to gure out whats important and what isnt. The goal was to compile a shortened version a cheat sheet, if you will for readers who want to know more about the law but simply dont have the time to sit down and read the massive, historic document. Make no mistake: Dodd-Frank is important the most important piece of nancial legislation since Reg NMS, Check 21 or Solvency II, at least and, occasionally, eye-opening. The law touches on all parts of nancial services and will change the way that many types of nancial products are bought, sold and traded. So here is the InformationWeek Financial Services Dodd-Frank Cheat Sheet from the editors of Advanced Trading, Bank Systems & Technology, Insurance & Technology and Wall Street & Technology. The end product is a relatively brief 39-page document. For those of you who arent attorneys or Congressional legislators, the Cheat Sheet distills Dodd-Frank down to its essential implications, providing laymans denitions of the rules, information about the laws impact on technology, important deadlines, additional resources and more. While the Cheat Sheet isnt a substitute for reading the entire legislation (just as Cliffs Notes arent a substitute for reading Hamlet), it will help executives get up to speed on the new requirements. Happy reading.

Dodd-Frank Wall Street Reform and Consumer Protection ActTitle IFinancial Stability Title IIOrderly Liquidation Authority Title IIIEnhancing Financial Institution Soundness Title IVRegulation of Advisers & Hedge Funds Title VInsurance Title VIRegulation of Bank & Savings Companies Title VIIWall Street Transparency and Accountability Title VIIIPayment, Clearing & Settlement Supervision Title IXInvestor Protections Title XBureau of Consumer Financial Protection Title XIFederal Reserve System Provisions Title XIIImproving Access to Mainstream Financial Institutions Title XIIIPay It Back Act Title XIVMortgage Reform & Anti-Predatory Lending Title XVMiscellaneous Provisions Title XVISection 1256 Contracts Additional Resources

Greg MacSweeney Editorial Director InformationWeek Financial Services

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Dodd-Frank Wall Street Reform and Consumer Protection Act H. R. 4173 Table of Contents

Title IFinancial Stability 4 Title IIOrderly Liquidation Authority 6 Title IIITransfer of Powers to the Comptroller of the Currency, the Corporation, and the Board of Governors 8 Title IVRegulation of Advisers to Hedge Funds and Others 9 Title VInsurance 11 Title VIImprovements to the Regulation of Bank and Savings AssociationHolding Companies and Depository Institutions 13 Title VIIWall Street Transparency and Accountability 15 Title VIIIPayment, Clearing, and Settlement Supervision 18 Title IXInvestor Protections and Improvements to the Regulation of Securities 20 Title XBureau of Consumer Financial Protection 22 Title XIFederal Reserve System Provisions 25 Title XIIImproving Access to Mainstream Financial Institutions 26 Title XIIIPay It Back Act 28 Title XIVMortgage Reform and Anti-Predatory Lending Act 30 Title XVMiscellaneous Provisions 34 Title XVISection 1256 Contracts 36 Additional Resources 37

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Title IFinancial Stabilityf the 16 Titles contained in the nearly 1,000-page DoddFrank legislation, Title I is the most straightforward and arguably the least controversial. Title I establishes two new bodies to share insight and information across the disparate arms of the U.S. nancial services industry the Financial Stability Oversight Council (FSOC) and the Ofce of Financial Research (OFR), which fall under the supervision of the U.S. Treasury Department.Essence of Title I The aim of these two new bodies is to form an agency that will be responsible for the rst time for looking at the overall systemic risk in the nations nancial institutions. The government (namely the Treasury), Wall Street, and the banking and insurance sectors have operated within their own regulatory silos for decades. Now, with the creation of the FSOC, the regulatory leaders of those silos will meet frequently to discuss the strengths and vulnerabilities of their particular silos. The FSOCs Role: The FSOC will be headed by the Secretary of the Treasury. The other members will include the chairman of the Federal Reserve; the Comptroller of the Currency; the director of the Bureau of Consumer Financial Protection; the chairpersons of the SEC, FDIC and CFTC; the director of the Federal Housing Finance

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Agency; and the chairman of the National Credit Union Administration Board. The nal member is an appointee of the President of the United States (with the advice and consent of the U.S. Senate). The committees makeup is historic in that members of non-banking institutions will be at the same table with traditional bank regulators. According to industry observers, the FSOC would be able to look at, for example, the hedge fund sector on one hand, and the insurance and banking sectors on the other. The new regulatory body would be in a position to identify a developing pattern of suspicious or worrisome behavior in the markets and to take steps to correct the problem or reduce the risk to the market participants and the entire market itself. For example, the members of the FSOC could identify the early development of a bubble or a margin spreading to an unusual degree and take steps to rectify it. It is also the responsibility of the FSOC to issue a report to Congress that describes the health of the United States nancial system. Each member will attest that the federal government is taking all steps to attain and sustain nancial stability and keep systemic risk in check, or provide additional measures that need to be implemented. FSOCs Power: The FSOC has quite a bit of authority. It has the authority to impose on the Systemically Important Financial Institutions also known as SIFIs or Too Big to Fail banks additional capital, liquidity and other forms of regulatory restraints that are designed to cure the systemic problem(s) that it has identied. The FSOC also may compel any bank or nonbank nancial institution with assets of more than $50 billion to submit certied reports of the rms nancial condition, its systems for monitoring

Dodd-Frank Wall Street Reform and Consumer Protection ActTitle IFinancial Stability Title IIOrderly Liquidation Authority Title IIIEnhancing Financial Institution Soundness Title IVRegulation of Advisers & Hedge Funds Title VInsurance Title VIRegulation of Bank & Savings Companies Title VIIWall Street Transparency and Accountability Title VIIIPayment, Clearing & Settlement Supervision Title IXInvestor Protections Title XBureau of Consumer Financial Protection Title XIFederal Reserve System Provisions Title XIIImproving Access to Mainstream Financial Institutions Title XIIIPay It Back Act Title XIVMortgage Reform & Anti-Predatory Lending Title XVMiscellaneous Provisions Title XVISection 1256 Contracts Additional Resources

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Title IFinancial Stability

and controlling risk, and transactions with subsidiaries that are regulated by banks; and disclose company activities that could have a disruptive impact on nancial markets or the overall nancial stability of the country. The FSOC does not have a set schedule for meetings. On January 18, 2011, it released a number of documents pertaining to the U.S. nancial markets, including a study and set of recommendations on how to implement the Volcker Rule, the subset of Title VI of Dodd-Frank that prohibits U.S. rms from investing their own funds in investment schemes in order to avoid any conict on their clients behalf. This report is 81 pages long and includes 10 recommendations to effectively implement the Volcker Rule against proprietary trading. The recommendations include requiring banks to sell or wind down all proprietary trading desks, requiring banks to implement robust compliance, and requiring rms to perform quantitative analysis to detect prop trading without provisions for safe harbors. The OFRs Role: The Ofce of Financial Research was created to improve the quality of the industrys data for more robust and sophisticated analysis of the nations nancial system and to make regular reports to Congress. The cornerstone of the OFRs mandate is to oversee and create standards for data that can reveal a rms scal health and the entire industrys risk exposure. The OFR will establish a data center to standardize, validate and maintain the data necessary to help regulators identify vulnerabilities in the system as a whole, and a research and analysis center to conduct, coordinate and sponsor research to support and improve regulation of nancial rms and markets.

Dodd-Frank Wall Street Reform and Consumer Protection ActTitle IFinancial Stability Title IIOrderly Liquidation Authority Title IIIEnhancing Financial Institution Soundness Title IVRegulation of Advisers & Hedge Funds Title VInsurance Title VIRegulation of Bank & Savings Companies Title VIIWall Street Transparency and Accountability Title VIIIPayment, Clearing & Settlement Supervision Titl

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