Regulatory+changes

=**SEPA**= The Single Euro Payments Area (SEPA) is enforcing new schemes to execute euro-denominated credit transfers and direct debits, two of the major cashless forms of payments. SEPA is a self-regulatory response to a political vision, seeking to provide harmonized payment services (credit transfers, direct debits, cards), where euro-denominated payments within the European Union will be treated as domestic payments with the aim of eliminating cross-border barriers and increasing competition across Europe. =Faster payment service= The Faster Payment Service, launched in 2008 in the U.K., is a banking initiative that allows for retail payment transactions to be exchanged between participants in near real-time. Participating banks make up 95% of payments traffic in the U.K. =The Basel accords= Traditionally, trade finance claims have received preferred treatment on the part of national and international regulators, and by international financial agencies, on grounds that trade finance was one of the safest forms of all finance. The relatively favourable treatment was reflected in the moderate rate of capitalization for cross-border trade credit in the form of letters of credit and similar secure instruments under the Basel I regulatory framework, put in place in the late 1980s and early 1990s. New rules were introduced with the later Basel II framework. Basel II was deemed in particular to provide a stronger link between risk, risk management and capital. With the collapse of trade in late 2008 and early 2009, the regulatory treatment of trade credit under Basel II became an issue and was discussed by professional banking organizations, regulators and international financial institutions. In reaction to the credit crisis, the Basel Committee issued the text of Basel III rules on bank capital adequacy and liquidity in December 2010. Endorsed by the G20, “Basel III” aims to raise capital levels and quality standards and promote the build-up of capital buffers, enhance risk calculations and coverage, cap leverage ratios. It additionally plans two liquidity ratios—the Liquidity Coverage Ratio (LCR, to be met by 2015) and Net Stable Funding Ratio (NSFR, to be met by 2018)—to address both short and longer-term liquidity needs. =Dodd-Frank Act= The Dodd-Frank Act, law since July 2010, contains a set of reforms on a wide range of regulatory and supervisory topics, with provisions relating to capital, liquidity and risk requirements for U.S. financial institutions. Initiatives such as Basel III and the Dodd-Frank Act are designed to reduce systemic risk and strengthen the ability of financial institutions to withstand systemic shocks. These initiatives are raising capital and liquidity requirements.