Announcing Our New Product: RegAlytics / US Alerts™!

Thank you for your many years of supporting 8of9. The moment we’ve all been waiting for has finally arrived.

8of9 is proud to launch our free beta program for RegAlytics / US Alerts™!

The beta testing starts April 29th so sign up soon! Beta participants will receive daily Excel spreadsheets with every rule that came out in the United States. All we want in return is your honest feedback every Friday.

Testers like you will help us create the most useful regulatory update product in the industry. You will be alongside Fortune 50 companies, major financial regulators, major exchanges and FMUs, and nine of the eleven SIFI’s!


Sign up HERE.


Once you sign up- here’s what to expect:


  • You will receive daily emails from with an update of all regulations that came out the previous weekday (e.g., the Monday update will include data from the previous Friday). This will start Monday, April 29, 2019 and end Friday, May 31, 2019. Feel free to skim it, ignore it, or relish every word.
  • During beta, you’ll also receive a survey every Friday. We’d like you to give us honest feedback about how useful the product was.
  • We will use your data to deliver our fantastic US Alerts products and communications!




The 8of9 Team


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A Chronology of the Basel Accords


1974: Formation of BCBS

In the wake of the collapse of the Bretton Woods system of international monetary management, policymakers from the G10 countries formed the Basel Committee on Banking Supervisions (BCBS) in an effort to build a new international financial structure. The Basel Accords (Basel I, II, III, and IV) are highly influential policy recommendations published by the BCBS. These accords are not legally binding unless adopted by national policymakers and form the basis of capital requirement guidelines for financial institutions in countries that have adopted BCBS policies.



1988: Basel I Initial Policy Created

This policy recommendation focused on credit risk by creating a bank asset classification system. This system grouped a bank’s assets into five risk categories based on the nature of the debtor. These assets, called risk weighted assets (RWAs), could then be analyzed to assess leverage ratios and minimum capital requirements.



1992: Basel I Implemented

In G10 countries to varying degrees.



2004: Basel II Introduced by BCBS

Introduced the “three pillars” concept, refined the definition of a risk-weighted asset, and divided the eligible regulatory capital of a bank into three tiers.

Three Pillars

• Pillar 1 - Minimum capital requirements: compels banks to maintain minimum capital ratios of regulatory capital over risk-weighted assets.

• Pillar 2 - Supervisory review: framework for national regulatory bodies to deal with various types of risks, including systemic risk, liquidity risk and legal risk.

• Pillar 3 - Market discipline: special disclosure requirements used to analyze a bank’s risk exposures, risk assessment processes and capital adequacy.

Capital Tiers

Tier 1 capital = strictest definition of regulatory capital and includes shareholders' equity, disclosed reserves, retained earnings and certain innovative capital instruments. 

Tier 2 = Tier 1 instruments + various other bank reserves, hybrid instruments, and medium- and long-term subordinated loans. 

Tier 3 = Tier 2 + short-term subordinated loans.

Risk Weighted Assets

Risk weighted assets are the denominator in regulatory capital ratios and are calculated by using the sum of different assets that are multiplied by the respective risk weights for each asset type. The riskier the asset, the higher its weight.



2008: Financial Crisis

Basel II was in the process of being implemented when the process was interrupted by the 2008 financial crisis.



2009: Basel III Upgrades Basel II

Basel III was created to improve parts of Basel II that were now seen as deficient after the financial crisis. Policymakers felt that by increasing both the quantity and quality of regulatory capital and liquidity in financial institutions, the overall stability of the financial system could be improved.

Minimum Capital Requirements

Basel III lays out stricter capital requirements compared to Basel I and II. A bank’s regulatory capital in Tier 2 and Tier 3 remained the same, but Tier 1 was subdivided into Common Equity Tier 1 and additional Tier 1 capital.

Credit Expansion and Detraction Requirements

This policy introduced certain requirements for regulatory capital, specifically for large banks to cushion against the ups and downs created during credit expansion and credit contraction.



2016: Basel IV Unveiled

The BCBS published a set of large-scale amendments to the Basel III framework, known throughout the industry as Basel IV, that are to be implemented by 2027. Basel IV creates weighty implementation challenges in the areas of:

• calculating risk weighted assets, regardless of risk type and irrespective of whether standardized approach or internal models are used;

• increasing risk sensitivity under the standardized approach (SA) for credit risk, counter-party risk, securitizations, market risk, CVA, operations risk, and disclosure;

• the internal rating based (IRB) approach framework that is likely to increase capital requirements for the affected exposure; and

• improvements to data and IT architecture.

Managing Your LIBOR Transition

Welcome back to our discussion on the LIBOR transition! Debt instruments based on the London Interbank Offered Rate (LIBOR) will be “transitioned” using new benchmarks, called “Risk-Free Rates” (RFR), resulting in healthier financial instruments by the end of 2021. Financial institutions in the U.S. will transfer to SOFR, the U.K. will transfer to SONIA, Switzerland will transfer to SARON, Japan will transfer to TONA, and the E.U. will transfer to ESTER.

If you haven’t already, check out our introduction to the transition, the important players, and why it’s important here.


2019 LIBOR Update

On February 21, 2019, Megan Butler of the Financial Conduct Authority (FCA) provided an overview of the progress around the LIBOR transition. Butler explained that LIBOR is now an outdated concept, because our current market systems have changed so drastically from those within which LIBOR was created to function. Key takeaways from the speech included:

  • Issuance Improvement: Advanced firms are progressing on the adoption of the new RFRs (such as SONIA) in place of LIBOR through efforts by many large bond issuers, such as the European Investment Bank (EIB), when issuing new large floating rate notes. This is quickly becoming common practice.
  • Firms Feedback: In September 2018, the FCA wrote a joint letter of notice with the Prudential Regulation Authority (PRA) to the CEOs of major banks and insurers in the U.K. requesting that they quantify their LIBOR exposure and detail how they will manage identified risks. Since reviewing these responses, the FCA can state that many firms showed substantive progress in preparing for the transition. This letter also served as a catalyst for several firms to start identifying senior managers responsible for implementing transition programs.
  • Buy-side: In response to learning that the buy-side (debt instrument purchasers) is transitioning much more slowly than the sell-side (debt instrument issuers), the FCA spoke directly to two issues raised by firms participating in derivatives markets:
    • First, firms want to wait for liquidity to develop. In response, the FCA stated that new numbers show there is currently liquidity available in new key markets, meaning firms can benefit right now from liquid markets in LIBOR rates.
    • Secondly, firms claim that dealing costs are a deterrent to transitioning. Dealing costs are expenses incurred by buyer and/or seller during a transaction involving derivatives. These expenses mostly come from the due diligence stage of a transaction, which requires legal costs, appraisal costs, and tax costs. In response, the FCA suggested that firms wary of these costs could choose to unwind LIBOR derivatives and replace them with RFR derivatives as part of their day-to-day adjustment of hedges or positions. This may decrease dealing costs, because the FCA’s suggestion to “unwind” LIBOR derivatives and “put on” RFR derivatives in their place could be done in small amounts each day.

Butler concluded by stating that the biggest obstacle to a smooth transition is inertia and encouraged all firms to begin their transitions now.

Read the full speech here.


Steps for Managing Your Transition from LIBOR to SOFR

Any firms currently holding debt instruments based on LIBOR must take part in the transition. Firms must invest resources in the following transition activities:

  1. Inventory of all LIBOR-affected products and documentation
  2. Changing governance structures
  3. Performing impact assessments
  4. Remediating legacy contracts referencing LIBOR
    • ISDA master agreements must be replaced/amended
    • Original documentation for retail mortgages and consumer/business debt tied to LIBOR must be amended
    • Mortgage-Backed Securities, loans, and floating rate bonds will need to be addressed with contracts
  5. Negotiating with clients
    • Reaching consensus with all parties that shifting from LIBOR to RFR (i.e., SOFR) is fair and reflective of the original interest rate and risk in LIBOR
  6. Negotiating with regulators
  1. Managing increased regulatory obligations for risk management and consumer disclosure (if a financial institution continues to issue securities and contracts that mature post-2021 which reference LIBOR)

If you require support with your LIBOR transition, 8of9 can help! Reach out to with any questions.

CCAR for Beginners


The Comprehensive Capital Analysis and Review (CCAR) was created in the wake of the 2008 financial crisis as a way for regulators to ensure that financial institutions are resilient enough to face future disasters. This test is administered once a year by the Federal Reserve Board and assesses the resiliency of Bank Holding Companies (BHCs) that have at least $50 billion in total consolidated assets based on their capital adequacy and capital planning.

Relevant institutions submit their CCAR reviews in order to build confidence with the general public and demonstrate that they are prepared in the event of a potential disaster. Firms are incentivized to give their CCAR assessments top priority because failure to pass the test will bar a firm from taking “capital actions,” such as distributing dividends or share buybacks, which senior management and investors would find unacceptable.


An understanding of different types of capital is essential.  CCAR’s main function is to create a clear and thorough understanding of a financial institution’s overall assets and how they will be managed in times of stress. These assets are first “weighed” by their level of riskiness to create the Risk Weighted Assets (RWA) figure, then categorized as Tier 1, Tier 2, or Tier 3 Capital.

Tier 1 Capital includes assets that are immediately available in the event of an emergency and can be efficiently utilized in a way that will keep losses minimal. An example of this is common equity because it does not have to be repaid and there are no payments/dividends owed on it. Tier 2 Capital includes assets that can help keep losses minimal under distressed bank conditions, but not as efficiently as Tier 1 assets. An example of this is long term subordinated debt because it must be repaid (even if at a later time) and payments (like interest) are owed, which devalue the asset. Tier 3 Capital typically consists of debt that must be paid back very quickly (e.g. subordinated short-term debt, senior tranche debt, etc.). Because Tier 3 Capital must be paid back on an accelerated schedule, it cannot be relied upon for the purposes of CCAR and is therefore excluded from calculations of capital adequacy.

During the stress test, the Federal Reserve Board uses a figure called the Capital Adequacy Ratio (CAR). The Fed inserts the bank’s capital types into an equation that results in a number which is either higher or lower than the CAR. This bar is set to prevent commercial banks from becoming leveraged to the point of insolvency in the event of economic or financial turbulence. The equation for the CAR is as follows:

CAR = [Tier 1 Capital + Tier 2 Capital] / [Risk Weighted Assets]

Often, a large portion of a financial institution’s assets are loans (debt), and the “weight” or level of risk is assessed by looking at the source of the loan and the underlying value of the collateral. A common example would be a loan for a commercial building. The regulators would consider whether the building is fully leased, to understand if it is generating enough interest and payments from leases to pay the loan off, while also considering the value of the building itself.

Stress Testing and Capital Governance

CCAR assesses firms on both a qualitative and quantitative basis.

Qualitatively: the Federal Reserve will examine how robust, and forward-looking an institution’s capital planning processes are. They will also evaluate a firm’s controls and accountability structures for capital management and capital credit risk management. This includes assessment of a firm’s:

  • Corporate governance structure
  • Risk management
  • Hierarchy of responsibility
  • Capital Plan

The Capital Plan is a written presentation of a company’s planning strategies and capital adequacy processes, which includes the following mandatory elements:

  • Assessment of the expected uses and sources of capital over the planning horizon (including estimates of projected revenues, losses, reserves and pro forma capital levels)
  • Description of all planned capital actions over the planning horizon
  • Discussion of business plan changes that are likely to impact capital adequacy or liquidity
  • Description of the process for assessing capital adequacy
  • Description of capital policy

Quantitatively: firms are assessed based on various “stress tests.” A stress test is an examination of what would happen to a bank under varying adverse conditions (including regional economic strain, national economic strain, global economic strain). These conditions are simulated with the use of financial models, some of which are mandated under the Dodd Frank Act Stress Test (DFAST) (a related capital review which is purely quantitative), and others which are designed by the firm itself. In addition, the largest and most critical firms in the world are tested for how they would respond to Global Market Shock (GMS). GMS effectively simulates aspects of the 2008 financial crisis to evaluate how SIFIs would respond in a similar scenario today.


Financial institutions that pass CCAR review are permitted to raise and pay out their dividends and repurchase shares.

Financial institutions that fail CCAR testing may fix discrepancies in their capital planning and internal control policies and resubmit their capital plans to the Fed for approval. Until a firm passes CCAR or creates changes that receive the Fed’s approval, it is barred from taking capital actions. Additionally, the results of CCAR are made public, and failing hurts the reputation of the institution often resulting lack of confidence from the general pubic.

Applying Project Management In The Regulatory Space

An Interview with 8of9’s Newest Associate Josh Clemente

8of9 is excited to welcome Josh Clemente to our team! Josh brings a wealth of experience in data and capital markets to his work at 8of9. One of his superpowers is amazing project management skills. Josh’s experience with project management began while working for an e-discovery company in the LegalTech space, where he led teams extracting data from personal electronic devices to then feed into databases for litigation proceedings. With a B.A. in Business from Villanova University, he later continued his education with an M.B.A. from the Stern School of Business at NYU while he enhanced his skills as a project manager at Amalgamated Bank in their technology department.

We sat down with Josh to ask him a few questions about how he hopes to apply his experience with project management to 8of9’s business strategy, and his passions inside and outside of 8of9.

How do you plan to utilize your project management experiences in your work at 8of9?

Consulting work is really where the MBA and project management experience kicks in. Because I know how to work quickly, think on my feet, and understand the inner workings of a financial institution, I am comfortable being thrown into the fire with a new team and a tight deadline. My past experiences working with different types of teams allow me to recognize the strengths of my fellow teammates. Learning how the team fits together always moves the project forward more smoothly.

What are you most excited about regarding your work at 8of9?

What excites me most about 8of9 is how much they value educating and developing their staff. The opportunity to learn a variety of new skills and techniques, and then put them to use to service our clients is a very exciting prospect. There’s also a great atmosphere of collaboration among the talented people in the office, who have such diverse professional backgrounds and love to share their experiences and challenges.

How do you see 8of9 supporting financial institutions with regulatory challenges?

It’s clear to me, as a relative newcomer, that the 8of9 team has their finger on the pulse of the needs of the financial services industry. The leadership team has years and years of experience solving regulatory problems and does a fantastic job of anticipating upcoming challenges. Their robust understanding of the industry combined with the company’s innovation and intense drive prove that they are highly capable of bringing a newfound clarity to financial regulations. 8of9 is also able to bring simplicity to these regulations through RegTech products and thought leadership.

What are some of your interests and passions outside of work?

I love finding different ways to experience the outdoors. This past year, a group of friends and I went to Washington to summit Mt. Rainier. It was a surreal experience and unbelievable challenge, and it taught me a lot about my own perseverance and strength.

Proposed Changes to Volcker Rule

The Fed, OCC, FDIC, SEC and CFTC released a notice of proposed rulemaking on December 18, 2018 to amend the Volcker Rule. These changes have been proposed to create consistency with the statutory amendments under the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was enacted on May 24, 2018.

The proposed modifications include:

1. Clarifying and narrowing the definition of banking entity
2. Amending the restriction on name-sharing between banks and hedge funds or private equity funds

The definition of banking entity will be narrowed to reduce the regulatory burden on community banks by excluding institutions that do not have, and are not controlled by a company that has:

• Total trading assets and liabilities greater than 5% of total consolidated assets; and
• Over $10 billion in total consolidated assets

This proposal makes clear that this exemption only applies to institutions that are below both thresholds.

The name-sharing restriction under the Volcker Rule does not allow a banking entity, or a banking entity affiliate, to share the same name, or a variation of the same name, with a private equity fund or hedge fund that it organized or offered.

The proposed changes would allow name-sharing between a private equity fund or hedge fund and the banking entity that is an investment adviser to that fund, under three conditions:

• The name does not contain the word “bank;”
• The investment adviser is not a bank holding company for purposes of Section 8 of the International Banking Act of 1978 (IBA), an insured depository institution, or a company that controls an insured depository institution; and
• The investment adviser does not share the same name or a variation of the same name with any such entities.

The first condition is part of the Volcker Rule and would remain unchanged. The definition of “sponsor” under the Volcker Rule would also be modified to conform to these proposed amendments.

Written comments from the public must be submitted within 30 days of publication of the proposal in the Federal Register.

Welcome Back & Happy 2019!

Happy New Year! We’re so excited to be back at 8of9 after an amazing holiday season. As we begin 2019, we’re eager to tackle the challenges ahead.

As the year begins, we’re already seeing potential changes in regulation. Two of these proposed changes involve the Volcker Rule.  One proposed change is clarifying the definition of “banking entity” and the second proposed change is allowing name sharing between banks and their respective hedge funds and/or private equity firms.

One of the biggest regulatory challenges this year will be Brexit, with the UK’s exit from the EU scheduled for March 29th, 2019. Many financial institutions are ramping up their efforts to prepare for effects of this exit.

We have a request for our readers: Are you interested in learning more about regulatory developments delivered in a comprehensive format? We’re currently looking for beta testers for a new product. If you’re interested, contact

We have so much planned for 2019 and can’t wait to share it! Thank you for your continuous support.

Keep an eye out for our timeline listing all the important regulatory deadlines internationally and domestically for 2019!

We’re back and ready to tackle 2019!

Introduction to the LIBOR Transition

What is LIBOR?

London Interbank Offered Rate (LIBOR) has been utilized by financial institutions as a reference point for establishing interest rates on a variety of debt instruments. It has become one of the most commonly used tools determining short-term interest rates globally.

LIBOR is an average rate which large banks in London use to borrow unsecured short-term loans from other banks. LIBOR is offered in five different currencies and seven different time frames for maturity. It is issued by the ICE Benchmark Association.



Financial institutions will be transitioning away from LIBOR by the end of 2021. This “end of LIBOR” date was stated by the FCA’s CEO in 2017 and it seems international financial firms and regulators are very much on board with this phase out, especially because of distrust of LIBOR post-scandal. Additionally, LIBOR may no longer be provided or become too risky to be relied upon by the end of 2021.  UK entities are leading the charge away from LIBOR. The FCA has instructed UK banks and insurance companies to submit transition plans by December 25, 2018.


The Players:

  • The Financial Conduct Authority (FCA) – UK regulatory body responsible for LIBOR oversight, recommended the expiration date for LIBOR as the end of 2021
  • ICE Benchmark Administration (IBA) – Administers and publishes LIBOR
  • The Federal Reserve – Power to assign responsibility to the ARRC
  • Alternative Reference Rate Committee (ARRC) – Tasked by the Fed, responsible for the transition from US Dollar LIBOR to a new benchmark replacement rate
  • The International Swaps and Derivatives Association (ISDA) – International trade organization governing OTC derivatives, provided reports regarding derivative contracts and LIBOR


The Deadlines:

  • Submission of transition plans by UK banks & insurance companies – December 25, 2018
  • Expiration of LIBOR - December 31, 2021


What do we do now?

There is a transition from LIBOR to other benchmarks, called “Risk-Free Rates” (RFR), which differ by each currency currently using LIBOR (USD, GBP, CHF, JPY, EUR). In the U.S., we would transfer to SOFR. The U.K. will transfer to SONIA.  Switzerland will transfer to SARON. Japan will transfer to TONA. The European Union will transfer to ESTER (available as of October 2019).

Check back in January for our blog post detailing action steps for your LIBOR transition.

In the meantime, 8of9 would be happy to provide expertise to support your LIBOR transition. Email to set up a conversation!



Happy Holidays from All of Us at 8of9!

What better way to kick off the holiday season than coming together as a team? This past week we were able to celebrate this phenomenal time of year with some of our families and friends! Our very own Aaron Heisler, surprised us with a gauntlet of holiday contests. From mini basketball to regulatory trivia to eating competitions, we were challenged mentally and physically! 

Take a look at some of the fun! 

Happy Holidays from the entire 8of9 team! 

Brexit: the UK’s Temporary Permission Regime

With the UK’s departure from the European Union (EU) set to March 29, 2019, the financial services industries in both the EU and the UK expect to be vastly changed by Brexit.

There are two possibilities for how the UK will exit the EU:

  1. The UK leaves the EU with an implementation period.
  2. The UK leaves the EU without an implementation period, in which case the Temporary Permission Regime (TPR) will go into effect.

Implementation Period: With an implementation period, the UK has until December 31, 2020, to fully transition out of the EU. This allows the continuation of passporting, allowing financial firms in any EU member state to sell services in all other member states, which is a right that majority of EU/UK financial firms have utilized. After the UK’s departure, passporting will no longer be a viable option for EU firms that operate in the UK or vice versa. An implementation will extend the ability to passport until the end of 2020, allowing financial firms time to seek alternate authorizations between the EU and the UK.

TPR: Without an implementation period, EU firms that operate in the UK and UK firms that operate in the EU would lose passporting rights on the exit day of March 29th, 2019. To prevent disruption to EU firms operating in the UK, the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have proposed the Temporary Permission Regime (TPR). TPR is expected to last no longer than three years after the exit day. This plan allows for EU firms to seek the appropriate authorization and/or recognition needed by UK regulators to continue operation.

How they differ: The implementation period and the Temporary Permission Regime differ in that the implementation period was agreed to by both EU and UK governments. During the implementation period, the UK would be permitted to act as a member state, without voting rights in the EU body. TPR will only come into effect if the UK leaves the EU without an implementation period. It was created by UK regulators to deter problems created by the UK leaving the EU without a withdrawal agreement.

In the event that TPR or an implementation period doesn’t go into effect, Brexit-related regulatory issues may arise:

  1. There are trillions of pounds in existing derivatives and insurance contracts.

For derivatives to be cleared, firms are required to use a recognized venue. When the UK departs from the EU, it is likely that London would no longer be recognized as a venue to clear derivatives. This could potentially cause banks to breach existing regulations. Firms have already voiced concerns on this issue that due to the sheer volume of their positions, it would be impossible to move to an approved EU venue by the exit day. UK regulators have responded that they are prepared to issue temporary licenses to EU firms and EU regulators will likely respond in kind. However, some member states, such as France, do not have the authority to issue temporary licenses.

  1. UK firms cannot continuously trade securities with the EU unless permission is granted by the European Commission (EC).

The UK is required to demonstrate to the EC that UK financial and securities regulations are equivalent to those enforced by the EU. The commission in Brussels has issued a statement that the financial industry needs to be prepared for a variety of Brexit outcomes and should have contingency plans prepared.