PH FedACTion: Financial Regulatory Updates

Daily Financial Regulation Update - Wednesday, April 8, 2020

April 09, 2020

FedACTion Task Force

PH Client Alerts

COVID-19: Borrower’s Guide to Paycheck Protection Program (PPP) Loans

April 8, 2020

The U.S. Department of Treasury and the Small Business Administration have continued to issue guidance and update their FAQs on the Paycheck Protection Program (PPP) as recently as April 8, 2020. This Paul Hastings alert consolidates information made available to date on PPP and provides a guide to borrowers on applying for and obtaining PPP loans.

Major Developments

COVID-19: Treasury Updates Paycheck Protection Program FAQs with Additional Guidance

April 8, 2020

The U.S. Department of Treasury and Small Business Administration (SBA) updated their FAQs on the Paycheck Protection Program (PPP) with additional guidance clarifying that lenders may use their own promissory note or an SBA form of promissory note and confirming the start date for determining a borrower’s payroll costs over an eight-week period for purposes of potential loan forgiveness begins on the date the lender makes the first disbursement of the PPP loan to a borrower and provides that the lender must make the first disbursement no later than ten days from the date of loan approval.


Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing and Urban Development, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

Federal Agencies

Department of Treasury

COVID-19: Treasury Releases FAQs on Loans to Passenger and Cargo Air Carriers, Certain Eligible Businesses and Businesses Critical to National Security

April 6, 2020

The U.S. Department of Treasury released FAQs on loans to passenger and cargo air carriers, certain eligible businesses and businesses critical to national security under the CARES Act.

Securities and Exchange Commission

COVID-19: SEC Staff Update Guidance for Conducting Shareholder Meetings in Light of COVID-19 Concerns

April 7, 2020

The SEC’s updated guidance includes a new section on delays in printing and mailing of a full set of proxy materials; an updated section on changes in date, time, and location of a shareholder meeting to clarify that it applies to special meetings; and an updated section on changes in date, time, and location of a shareholder meeting to include the position of the staff of the Division of Investment Management with respect to a meeting held by an investment company in connection with a business combination or certain other transactions.

National Credit Union Association

COVID-19: NCUA Issues Letter to Credit Unions Outlining Small Business Administration (SBA) Loan Programs to Help Small Businesses and Members During the COVID-19 Pandemic

April 7, 2020

The National Credit Union Association’s (NCUA) letter provides an overview of the Paycheck Protection Program (PPP) and information about the Small Business Association’s (SBA) Economic Injury Disaster Loan program, an existing SBA program expanded by the CARES Act to provide economic support to small businesses to help them overcome the temporary loss of revenue they experience because of the pandemic. The NCUA confirms it will not criticize credit unions’ good faith efforts to prudently use the SBA programs with members affected by COVID-19.

Freddie Mac

COVID-19: Temporary Servicing Guidance Related to COVID-19

April 8, 2020

Freddie Mac has issued revised guidance to servicers relating to the potential impact of the CARES Act on servicers. Topics addressed in the guidance include: credit reporting requirements; foreclosure moratorium; bankruptcy motions for relief from automatic stay; forbearance plans; and quality right party contact (QRPC). Additionally, Freddie Mac has clarified that its requirements for the Servicing of Mortgages for Freddie Mac Borrowers impacted by COVID-19 related hardships (as described in Bulletin 2020-4) are separate and distinct from its requirements for the Servicing of Mortgages and Borrowers impacted by an Eligible Disaster.

State Agencies

New York Department of Financial Services


April 8, 2020

The New York State Department of Financial Services (DFS) has issued a new emergency regulation requiring health plans to defer the payment of insurance premiums due under individual and small group commercial health insurance plans through June 1, 2020 for consumers and businesses experiencing financial hardship due to the COVID-19 pandemic. This follows Governor Cuomo’s announcement and Executive Order No. 202.14.


European Commission

COVID-19: Commission provides guidance on allowing limited cooperation among businesses, especially for critical hospital medicines during the coronavirus outbreak

April 8, 2020

The European Commission has published a Temporary Framework Communication to provide antitrust guidance to companies cooperating in response to urgent situations related to the current coronavirus outbreak. In this context, the Commission is also issuing a “comfort letter” concerning a specific cooperation project aimed at avoiding situations of shortages of critical hospital medicines.

ESCALAR: Up to €1.2 billion to help high potential companies grow and expand in Europe

April 8, 2020

The European Commission is launching ESCALAR, a new investment approach, developed together with the European Investment Fund, that will support venture capital and growth financing for promising companies. It will provide up to €300 million aiming to increase the investment capacity of venture capital and private equity funds, triggering investments of up to €1.2 billion, or four times the original investment, to support such companies.

European Banking Authority

EBA updates impact of the Basel III reforms on EU banks’ capital and compliance with liquidity measures

April 7, 2020

The European Banking Authority (EBA) published two reports which measure the impact of implementing the final Basel III reforms and monitor the current implementation of liquidity measures in the EU. Because the reports are based on a June 30, 2019 reporting date, the reports do not reflect the economic impact of the COVID-19 pandemic on participating banks. Overall, the EBA estimates that the Basel III reforms, once fully implemented in 2028 after the additional delay of one year agreed by the Basel Committee, would determine an average increase by 16.1% of EU banks’ Tier 1 minimum required capital. The liquidity coverage ratio of EU banks, which was fully implemented in January 2018, stood at around 147% on average as of June 30, 2019.

Bank of England Prudential Regulatory Authority

COVID-19: PRA Sends Letter to Regulated Credit Unions Detailing PRA Rule Modification During COVID-19

April 8, 2020

The Prudential Regulation Authority’s (PRA) letter sets out details of a PRA rule modification available to all credit unions from April 8, 2020 until January 1, 2021; explains the PRA’s supervisory focus and priorities for credit unions in the current period of stress; and reiterates messages on regulatory reporting.

UK Financial Conduct Authority

COVID-19: FCA announces additional primary market measures to aid listed companies in raising new funding during COVID-19

April 8, 2020

The Financial Conduct Authority (FCA) announced a series of measures to help listed companies raise new funding while retaining an appropriate degree of investor protection. The package includes a combination of temporary policy interventions and reminders of some existing options for companies and their current and prospective shareholders. These include:

  1. Providing clarity on the FCA’s expectations about the due diligence supporting ‘working capital statements’ in share prospectuses given the significant economic uncertainties caused by coronavirus.

  2. The ability to apply to the FCA for waivers to ensure that shareholder approval can be sought for certain transactions without the need to hold a general meeting given government guidelines on social distancing.

  3. Welcoming recent industry work on placings of new shares to agree sensible steps to balance the pre-emption rights of existing shareholders with the need for these transactions to be done as efficiently as possible given the economic environment.

  4. Encouraging eligible companies to make use of the new simplified prospectus, introduced by the Prospectus Regulation last year. These prospectuses, recognizing that the investor base has access to a range of information already relating to the issuer, remove the need to include information such as organizational structure, capital resources, remuneration and benefits and board practices.

COVID-19: BCBS and IOSCO announce a one-year deferral of the remaining global initial margin requirements in response to coronavirus challenges

April 8, 2020

The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) published a joint statement announcing a one-year deferral of the September 2020 and September 2021 phase-ins of the global initial margin requirements for non-centrally cleared derivatives. Firms with an aggregate average notional amount (AANA) of uncleared derivatives exceeding EUR 50bn will now become subject to the initial margin requirements from September 1, 2021. Similarly, firms with an AANA of uncleared derivatives exceeding € 8 billion will now become subject to the initial margin requirements from September 1, 2022. These changes have been reflected in the revised BCBS-IOSCO global initial margin standards.

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