FCA issues policy statement on access to regulated benchmarks. The UK Financial Conduct Authority published the final rules that establish requirements for fair, reasonable and non-discriminatory access to regulated financial benchmarks, which would require regulated benchmark administrators to grant access to and licenses to use benchmarks within three months following a written request and to assess different fees to different users only when objectively justified. The FCA indicated that the final rules will apply to benchmark users who are central counterparties, multilateral trading facilities and regulated markets until the EU Benchmarks Regulation is finalized. (2/8/2016) FCA press release.
ESMA Opinion on equivalence of Turkish prospectus disclosure requirements.The European Securities and Markets Authority, following its review of Turkish laws and regulations regarding disclosure requirements for prospectuses, released an Opinion concluding that a prospectus constructed according to Turkish prospectus requirements can serve as a valid prospectus under the Prospectus Directive. (2/8/2016) ESMA press release.
ESMA and ECB sign MOU to facilitate mutual cooperation. ESMA and the European Central Bank completed a Memorandum of Understanding that provides a framework for their mutual cooperation in performing their respective tasks and mandates under EU law. The MOU also includes a cooperative arrangement between the two regulators, relevant national central banks, and the competent authorities supervising central securities depositories. (2/8/2016) ESMA press release.
ESMA reveals 2016 supervisory priorities for credit rating agencies and trade repositories. ESMA released its supervisory priorities for credit rating agencies and trade repositories during 2016, which will focus on credit rating agencies’ governance and strategy as well as trade repository data quality and access, among other things. (2/8/2016) ESMA press release.
FCA policy statement extending certification regime to wholesale activities.The FCA published final rules extending the certification regime under the accountability framework to those carrying out wholesale activities, including algorithmic and high-frequency trading, as well as the client-dealing function in banks, building societies, and PRA regulated firms. Firms have until September 7, 2016, to apply the final rules. (2/4/2015) FCA press release.
PRA update on regulatory references under accountability framework. The Prudential Regulation Authority published an update regarding its proposed rules that establish requirements for the content and form of employment references under the Senior Managers and Certification regimes, and other related regimes under the accountability framework. The PRA indicated that due to concerns regarding the best method for obtaining references, particularly from overseas employers, and the implementation timeline for the regime, the PRA will issue interim rules in mid-February 2016 that will become effective on March 7, 2016, and issue additional rules to address the areas of concern raised during the consultation. (2/4/2016) PRA note.
ESMA publishes responses to consultation on liquidation period for client accounts. ESMA published the feedback it received in response to its consultation on proposed draft RTS amending Article 26 of the Commission Delegated Regulation No 153/2013 on requirements for central counterparties on the time horizons for the liquidation period under the European Market Infrastructure Regulation (EMIR). (2/4/2016) ESMA press release.
ESMA revises EMIR Q&A. ESMA published an updated list of Q&As on EMIR, which includes new information regarding central counterparties’ default management, competent authorities’ access to trade reporting data and reporting of notional in position reports. (2/4/2016) ESMA press release.
EBA Opinion on implementation of the regulatory review of the internal ratings-based approach. The European Banking Authority released an Opinion on the general principles and implementation timelines for the regulatory review of the internal ratings-based approach. It recommended the continued use of the approach in conjunction with some changes to the underlying framework to reconcile definitions and supervisory practices regarding the definition of default, the estimation of risk parameters, and the treatment of defaulted assets, among other things. The Opinion recommends a flexible approach to implementation, with all changes to the regulatory review finalized by 2020. (2/4/2016) EBA press release.
European Action Plan on terrorism financing. The European Commission announced the details of its Action Plan to address terrorism financing by amending the Fourth Anti-Money Laundering Directive. The amendments, which should be in place by the end of 2017, focus on identifying terrorists through financial movement, preventing terrorists from moving funds and other assets, and disrupting the ability of terrorists to raise funds. (2/2/2016) EC press release.
ESMA reports findings of supervisory work on closet indexing. ESMA released the findings of its examination of closet indexing, a practice in which fund managers claim to manage portfolios actively but the fund actually remains close to a benchmark. ESMA concluded that between five and 15 percent of Undertakings for the Collective Investment in Transferable Securities Directive (UCITS) funds reflected signs of closet indexing and indicated that it will assist in coordinating additional analysis at the national level and by national competent authorities. (2/2/2016) ESMA press release.
ESMA opinions on central clearing exemptions for 16 UK pension schemes.ESMA issued opinions to the FCA regarding applications from 16 UK pension schemes for exemptions from the obligation to centrally clear OTC derivatives contracts under EMIR. (2/2/2016) ESMA press release.
FCA consults on proposals to regulate advising on peer-to-peer agreements.The FCA published a Consultation Paper containing proposed changes to its rules and guidance on disclosure and advice relating to loan-based crowdfunding investments, or peer-to-peer agreements, which will be included in Individual Savings Accounts under the Innovative Finance ISA. Comments are due on or before February 15, 2016. (2/2/2016) FCA press release.
FCA policy statement on implementation of the UCITS V Directive. The FCA published a policy statement that explains the final Handbook changes implementing the requirements for management companies and depositaries under the UCITS V requirements, the final rules for managers of non-UCITS retail schemes, and the final guidance for depositaries of alternative investment funds. (2/2/2016) FCA press release.
ESMA publishes RTS on settlement discipline under CSDR. ESMA released draft regulatory technical standards relating to the implementation of the Central Securities Depository Regulation that establishes measures for preventing, monitoring, and addressing settlement fails. (2/1/2016) ESMA press release.
ESMA offers feedback on the IASB’s Exposure Draft. In comment letters to the International Accounting Standards Board (IASB) and the European Financial Reporting Advisory Group on the IASB’s Exposure Draft Applying International Financial Reporting Standards 9 Financial Instruments with IFRS 4 Insurance Contracts, ESMA indicated that the use of the overlay approach and temporary exemption from applying IFRS 9, while necessary, should be temporary and limited in scope. (2/1/2016) ESMA press release.
ESMA produces comprehensive Q&A on UCITS. ESMA issued a consolidated Q&A on the application of the UCITS, which combines four existing ESMA Q&As on UCITS and includes additional information on documents that funds need to provide for UCITS V. (2/1/2016) ESMA press release.
ESMA relocates MIFID and Short Selling Regulation lists to new web portal.ESMA announced that it transferred the registers under the Markets in Financial Instruments Directive and Short Selling Regulation to the global ESMA Registers web portal. The data will be available in both portals until March 31, 2016. (2/1/2016) ESMA press release.
ESMA updates main indices and recognized exchanges under the CRR. ESMA proposed changes to its Implementing Regulatory Standard on main indices and recognized exchanges under the Captial Requirements Regulation, which would update the list of main equity indices by adding new indices, replacing some, and recommending the exclusion of others. (1/29/2016) ESMA press release.
BOE proposes framework for the systemic risk buffer. The Bank of England’s (BOE) Financial Policy committee published a consultation paper that proposes a framework for a systemic risk buffer for ring-fenced banks and large building societies. The proposed framework would apply to institutions with total assets above £175 million, with the largest ring-fenced bank required to have a systemic risk buffer of 2.5 percent by 2019. Comments are due on or before April 22, 2016. (1/29/2016) BOE press release.
PRA policy statement on the Pre-Issuance Notification regime for CRR firms.The PRA published a policy statement that explains the final rules requiring CRR firms to provide the PRA with one month’s advance notice prior to every issuance of a CET1 instrument. The policy statement also contains forms and templates relevant to the final rules. The final rules will be effective beginning March 1, 2016. (1/29/2016) PRA press release.
ESMA launches consultation on market soundings and delayed disclosure of inside information under MAR. ESMA published a consultation paper containing draft guidelines that would clarify the Market Abuse Regulation with respect to persons receiving market soundings and the legitimate interests of issuers to delay disclosure of inside information. Comments are due on or before March 31, 2016. (1/28/2016) ESMA press release.
European regulators see inconsistencies in EU laws impacting the cross-selling of financial products. The EBA, the European Insurance and Occupational Pensions Authority (EIOPA), and ESMA issued a joint letter to the European Commission in which they expressed concern regarding the inconsistencies in European legislation that affects the regulation of the cross-selling of financial products in the banking, insurance, and investment sectors. (1/27/2016) Joint agency press release.
EBA will assess the impact of IFRS 9 on EU banks. The EBA announced that it will conduct an impact assessment of the IFRS 9 Finanical Instruments standard on EU banks to determine the standard’s effect on regulatory own funds and its impact on other prudential requirements. (1/27/2016) EBA press release.
FCA will clarify application of Senior Managers regime to legal function. The FCA indicated that it will launch a consultation to clarify firms’ obligation to obtain pre-approval under the Senior Managers regime for the individual responsible for the legal function in response to confusion regarding the application of the rules. The FCA noted that, in the interim, firms that make a good faith effort to follow the FCA’s rules when determining if pre-approval is required for individuals occupying the legal function do not need to alter their approach. (1/27/2016) FCA press release.
ESMA enters into MOUs with Mexican and South African Regulators regarding CCPs. ESMA has signed MOUs under EMIR with the Mexican Comisión Nacional Bancaria y de Valores and the South African Financial Services Board to facilitate cooperation and the exchange of information relating to Central Counterparties that have applied for EU recognition. (1/26/2016) ESMA press release.
FCA consults on peer-to-peer agreements and the segregation of client money.The FCA requested comments on a Consultation Paper that proposes to permit firms that hold money in relation to both regulated peer-to-peer agreements and unregulated business to business lending to hold both kinds together under the FCA’s client money rules and segregate them together from the firms’ other money. Comments are due on or before February 11, 2016. (1/21/2016) FCA press release.
FCA Regulation round-up. The FCA published the January 2016 edition of its Regulation round-up. (1/21/2016) FCA press release.
PRA issues final rules requiring auditors of large deposit-taking institutions to provide annual reports. The PRA released a policy statement explaining the final rules that will require external auditors of the largest UK-headquartered deposit-taking institutions that are not subsidiaries of non-UK firms to provide annual written reports to the PRA. The final rules will be effective for audits conducted during the audit cycle for financial reporting periods ending on or after November 1, 2016. In addition, the PRA released a supervisory statement that explains the PRA’s expectations for auditors in complying with the new requirement to provide the PRA with annual written reports. The PRA also updated its Statement of Policy on statutory notices and decision making to reflect the PRA’s ability to impose financial penalties on auditors and actuaries under the final rules. (1/21/2016) PRA press release.
EBA consultation on guidelines on implicit support for securitization transactions. The EBA requested comments on draft guidelines regarding the implicit support of securitization transactions that would provide guidance on the elements that should be considered when assessing whether a transaction is structured to provide support as well as establish an objective test for the definition of arm’s length conditions and for assessing when a transaction is not structured to provide support. Comments are due on or before February 18, 2016. (1/20/2016) EBA press release.
UK regulators provide resources to new banks through New Bank Start-up Unit. The FCA and the PRA have launched a joint initiative to assist new banks through the authorization process as they enter the market. The New Bank Start-up Unit will provide new banks with relevant information and materials as well as a dedicated case officer to serve as a resource during the early years of authorization. (1/20/2016) Joint agency press release.