ESMA establishes MOU with South Korean regulators under EMIR. The European Securities and Markets Authority announced it has signed a Memorandum of Understanding with the South Korean Financial Services Commission and the Financial Supervisory Service to facilitate cooperation and the exchange of information concerning South Korean Central Counterparties that have applied for recognition in the EU. The MOU became effective on March 15, 2016. (3/22/2016) ESMA press release.
FCA finalizes changes to client money rules and new rules for advising on peer-to-peer agreements. The UK Financial Conduct Authority published a policy statement containing the final rules that amend the FCA’s rules on the segregation of client money to permit firms to hold money for peer-to-peer agreements together with money for business-to-business agreements. The rules became effective on March 21, 2016. The policy statement also sets out the final rules for the new regulated activity of advising on peer-to-peer agreements and other Handbook changes related to the introduction of the Innovative Finance ISA. These final rules will become effective on April 6, 2016. (3/21/2016) FCA press release.
ESMA publishes responses to discussion paper on validation and review of CRA’s methodologies. ESMA published the feedback it received to its discussion paper on validation and review of Credit Rating Agencies’ methodologies. (3/21/2016) ESMA press release.
EBA response to EC’s Green Paper on Retail Financial Services. The European Banking Authority published its responses to relevant questions posed by the European Commission in its Green Paper on Retail Financial Services—Better products, greater choice, and greater opportunities for businesses and consumers, including questions concerning the approach to consumer protection risks created by the growth of digital technologies, the quality of enforcement of EU retail financial services legislation, the best approach to raise awareness about the variety of available retail financial services and insurance products, and the approach to facilitating cross-border distribution of financial products through intermediaries. (3/21/2016) EBA press release.
FCA seeks comments on miscellaneous Handbook changes. The FCA published its quarterly consultation paper, which contains minor and miscellaneous proposed amendments to its Handbook. Comments on the proposed changes to Chapter 2 of the Handbook are due on or before April 18, 2016. Comments on all other proposed changes are due on or before May 18, 2016. (3/18/2016) FCA press release.
Market risks remain high, according to ESMA risk report. In its latest Report on Trends, Risks and Vulnerabilities, ESMA found that overall market risks for European securities markets as well as the liquidity and contagion risk remained high with a stable outlook. ESMA’s market risk indicator remained very high, which is the highest level. (3/17/2016) ESMA press release.
FCA paper finds that corporate bond market has become more liquid. The FCA published an occasional paper that examines transaction-level data in the corporate bond market to analyze the evolution of liquidity in the corporate bond market during 2008 to 2014. The paper concludes that, despite a reduction in inventory, there is no evidence that liquidity outcomes have deteriorated. (3/17/2016) FCA press release.
Regulation round-up. The FCA published the March edition of its Regulation round-up. (3/17/2016)
EBA will hold hearing on its upcoming report on the calibration of the leverage ratio. The EBA announced that it will conduct a public hearing in an effort to gather views to inform its work on a draft report on the calibration of the leverage ratio. The hearing will take place on April 15, 2016. (3/16/2016) EBA press release.
EC grants equivalence to US CCPs. The European Commission has determined that the US’ regulatory regime for central counterparties is equivalent to the regulations in the EU. CCPs registered with the CFTC may apply to ESMA for recognition. (3/15/2016) EC press release.
PRA consults on amendments to contractual recognition of bail-in requirements. The Prudential Regulation Authority requested comments on a consultation paper that would amend the Contractual Recognition of Bail-In section of its Rulebook to no longer apply the contractual recognition requirement for all liabilities aside from unsecured debt liabilities, or “phase 2” liabilities, where the inclusion of such language is impracticable. Comments are due on or before July 1, 2016. (3/15/2016) PRA press release.
FAMR suggests reforms to the delivery of financial advice and guidance. The FCA published the results of the Financial Advice Market Review, which includes recommendations to make financial advice more affordable and accessible for consumers. Among other things, the FAMR recommends that the UK government create a single, narrower definition of regulated financial advice and the FCA take additional measures to assist firms in developing their automated advice models and guidance services to support consumers in making their own investment decisions. (3/14/2016) FCA press release.
PRA updates approach documents for banking, insurance supervision. The PRA published an updated version of a document that describes its approach to banking supervision. The revised document implements several changes that reflect amendments to legislation and its supervisory approach since June 2014, including changes resulting from The Bank of England and Financial Services Bill, the Senior Manager Regime, and the Leverage Ratio Framework. The PRA also revised a companion document regarding its approach to insurance supervision to reflect legislative and regulatory changes, including the implementation of Solvency II and the Senior Insurance Managers Regime. (3/11/2016)
ESMA seeks comments on proposed reporting framework for SFTR. ESMA published a discussion paper that contains proposals for implementing the reporting framework under the Securities Financing Transaction Regulation. Comments are due on or before April 22, 2016. (3/11/2016) ESMA press release.
FCA paper describes how regulators can use market-based approach to inform decisions. The FCA published Occasional Paper No. 13: Economics for Effective Regulation, which sets out a framework for regulators to use a market-focused, holistic economic analysis to inform their regulatory activities. (3/10/2016) FCA press release.
ECB announces new corporate sector purchase program. The European Central Bank announced that it has established a program to purchase investment-grade euro-denominated bonds issued by non-bank corporations established in the euro area in an effort to strengthen the pass-through of the Eurosystem’s asset purchases to the financing conditions of the real economy. Purchases under the program will begin towards the end of the second quarter of 2016. (3/10/2016) ECB press release.
EBA revises list of ITS validation rules. The EBA released a revised list of validation rules in its Implementing Technical Standards on supervisory reporting to flags rules that have been deactivated due to incorrectness or that have triggered technical problems. (3/10/2016) EBA press release.
European regulators release draft RTS on margin requirements for non-centrally cleared derivatives. The EBA, ESMA, and the European Insurance and Occupational Pensions Authority issued the final draft Regulatory Technical Standards establishing the framework of the European Market Infrastructure Regulation. The RTS set out requirements for the exchange of collateral to cover exposures arising from non-centrally cleared over-the-counter derivatives, including the list of eligible collateral, criteria to ensure sufficiently diversified collateral, and operational procedures regarding documentation and timing of the collateral exchange. (3/9/2016) Joint agency press release.
FCA discussion paper on client money distribution rules and the SAR. The FCA requested comments on a discussion paper that addresses issues raised in the Bloxham Final Report concerning the FCA’s client money distribution rules and their relation to the Special Administration Regime. The discussion paper considers the method of valuing transactions to determine client money entitlement, the transfer of the client money pool to another firm, and the treatment of allocated but unclaimed and de minimis client money, among other topics. Comments are due on or before May 9, 2016. FCA press release.
FCA responds to feedback on regulatory barriers to the development of digital and mobile solutions. The FCA published a feedback statement that contains the responses it received to its Call for Input concerning regulatory barriers to innovation in digital and mobile solutions. (3/9/2016) FCA press release.