FCA approach to individual responsibility. The FCA confirmed its approach to individual responsibility and accountability in the banking sector. It published feedback which sets out how the Senior Managers Regime (SMR) will be implemented and provided further information on the FCA’s plans for the Certification Regime and new Conduct Rules. The SMR will not apply to non-executive directors who do not perform delegated responsibilities. Under the Certification Regime, relevant firms will be required to assess and certify at least annually the fitness and propriety of employees deemed capable of causing significant harm to the firm or any of its customers or those that could risk the integrity of financial markets. The FCA also announced a consultation on further, more detailed guidance on how the FCA will apply the Presumption of Responsibility. Comments should be submitted by June 16, 2015. (3/16/2015) FCA press release.
UK regulators consult on Senior Managers Regime. The UK Prudential Regulation Authority (PRA) and FCA requested comment on a proposal that would extend and in certain circumstances tailor the Senior Managers Regime, Certification Regime and Conduct Rules to UK branches of overseas banks and PRA designated investment firms. The consultation is in anticipation of secondary legislation which will extend the statutory elements of the above regimes to incoming branches. Comments should be submitted by May 25, 2015. (3/16/2015) Bank of England press release.
FCA consults on performance management. The FCA published proposed guidance concerning the risks to customers posed by inappropriate performance management at firms. Comments should be submitted by May 15, 2015. (3/16/2015) FCA press release.
EBA risk dashboard. The European Banking Authority (EBA) published an update to its periodic risk dashboard summarizing the main risks and vulnerabilities in the EU banking sector. (3/16/2015) EBA press release.
FCA guidance on use of social media. The FCA published guidance on financial promotions in social media. The guidance reminds firms that any form of communication, including through social media, is capable of being a financial promotion if it includes an invitation or inducement to engage in financial activity. All communications, including financial promotions, must be fair, clear and not misleading. (3/13/2015) FCA press release.
ESMA reports on securities market trends. ESMA published a report on the trends, risks and vulnerabilities in the European Union securities markets for the period July to December 2014. (3/11/2015) ESMA notice.
Bank of England annual report on financial market infrastructures. The Bank of England published its annual report on its supervision of financial market infrastructures (FMI). The report highlights significant developments, such as the implementation of EMIR; the adoption of recovery plans by FMIs to ensure the ongoing provision of their critical services should they or their operating companies suffer financial distress; and the reduction in counterparty credit risk by moving trades to settlement after two rather than three days. The report concludes by setting out the Bank of England’s current priorities for supervised UK FMIs in 2015. (3/11/2015) Bank of England press release.
UK supervision of markets and market infrastructures. The FCA and the Bank of England, including the PRA, signed a Memorandum of Understanding that sets out how they cooperate with one another in relation to the supervision of markets and market infrastructure. (3/11/2015) FCA press release.
FCA occasional paper on consumer assistance efforts. The FCA published an occasional paper on the impact of previous initiatives aimed at helping customers manage their accounts. The paper found that annual summaries have no effect on consumer behavior in terms of incurring overdraft charges, altering balance levels or switching to other current account providers. In contrast, signing up to text alerts or mobile banking apps reduces the amount of unarranged overdraft charges and signing up to both services has an additional effect. This research reinforces the importance of testing disclosures beforehand to help ensure that they effectively achieve their intended outcomes. The paper discusses wider implications for the role of regulation, how to design effective disclosure rules, and incentives for innovation. (3/11/2015) FCA press release.
EBA publishes revised list of validation rules. The EBA issued a revised list of validation rules in its Implementing Technical Standards on supervisory reporting, highlighting those which have been deactivated either for incorrectness or for triggering information technology problems. (3/10/2015) EBA press release.
MiFID II/MIFR comments. ESMA published the comments it received in response to its consultation on MiFID II/MIFR. (3/10/2015) ESMA notice.
PRA proposes administrative corrections. The PRA is consulting on non-substantive corrections to the PRA Handbook and Rulebook. Comments should be submitted by March 24, 2015. (3/10/2015) PRA press release.
European long-term investment funds. The European Parliament endorsed long-term investment funds which would invest in illiquid assets. The new funds will be available to all types of investors across Europe, subject to certain requirements, including investor protection measures. (3/10/2015) EC press release.
EBA proposes requirements for business reorganization plans. The EBA launched a public consultation on draft Regulatory Technical Standards (RTS) for business reorganization plans and guidelines on the assessment of these plans. Comments should be submitted by June 9, 2015. (3/9/2015) EBA press release.
ESMA revised opinion on IRS clearing. ESMA published a revised opinion on its draft RTS on the clearing obligation for Interest Rate Swaps. The revised opinion does not introduce material changes. (3/9/2015) ESMA notice.
FCA policy statement on benchmarks. The FCA published a Policy Statement for regulating and supervising seven additional benchmarks. Those benchmarks are: Sterling Overnight Index Average; Repurchase Overnight Index Average; ISDAFIX (soon to be replaced by the ICE Swap Rate); WM/Reuters London 4pm Closing Spot Rate; London Gold Fixing (soon to be replaced by the LBMA Gold Price); LBMA Silver Price; and ICE Brent Index. The provisions are effective April 1, 2015. (3/9/2015) FCA press release.
European regulators consult on credit assessments. The Joint Committee of the three European Supervisory Authorities (EBA, European Insurance and Occupational Pensions Authority and ESMA) launched a consultation on draft ITS on the allocation of External Credit Assessment Institution to an objective scale of credit quality steps under Solvency II. Comments should be submitted by April 10, 2015. (3/6/2015) ESMA notice.
EBA consults on records of financial contracts. The EBA launched a public consultation on draft RTS on detailed records of financial contracts of institutions or relevant entities. Under the Bank Recovery and Resolution Directive, Resolution Authorities may temporarily suspend the termination rights of any party to a contract with an institution under resolution. In order to ensure the successful application of this power, the EBA may specify the information on financial contracts that should be kept. Comments should be submitted by June 6, 2015. (3/6/2015) EBA press release.
EBA advises on bank resolution procedures. The EBA issued advice to the European Commission on the resolution framework for EU banks. The advice covers the definition of critical functions and core business lines, as well as rules for the exclusion of liabilities from the application of the bail-in tool. (3/6/2015) EBA press release.
FCA Quarterly Consultation. The FCA launched its Quarterly Consultation on proposed miscellaneous amendments to its Handbook that would make minor amendments to CASS and CONC; make changes to the remuneration reporting submission method; and make changes that impact AIFMs and AIF depositaries. Comments should be submitted by April 6, 2015. (3/6/2015) FCA press release.
Bank of England working paper on Value-at-Risk models. The Bank of England published a working paper which explores the properties of various historical Value-at-Risk (VaR) simulation models. The paper explains how these models are constructed and illustrate their performance, examining in particular how filtering transforms various properties of return distribution. (3/6/2015) Bank of England press release.
ESMA signs MoU with Reserve Bank of Australia. ESMA and the Reserve Bank of Australia (RBA) signed a Memorandum of Understanding that will allow RBA to have access to data held in European Trade repositories. (3/5/2015) ESMA notice.
FCA studies structured deposits. The FCA published an occasional paper concerning consumer confusion over structured deposits. (3/5/2015) FCA press release.
EBA consults on remuneration policies. The EBA launched a consultation on guidelines for remuneration policies. The draft guidelines set out the governance process for implementing sound remuneration policies across the EU, as well as the specific criteria for mapping all remuneration components into either fixed or variable pay. Guidance is also provided on the application of deferral arrangements and the pay-out instruments ensuring that variable remuneration is aligned with an institution’s long-term risks and that any ex-post risk adjustments can be applied as appropriate. The Guidelines also clarify the process for identifying those categories of staff whose professional activities have a material impact on an institution’s risk profile. (3/4/2015) EBA press release. See also FCA statement (encouraging public comment).
FCA consults on pension transfer rules. The FCA opened a consultation on proposed changes to implement a proposed amendment to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 that will make advising on the conversion or transfer of safeguarded pension benefits into flexible benefits a regulated activity. The FCA is also consulting on related changes to the Conduct of Business Sourcebook rules to require that all pension transfers advice be provided or checked by a Pension Transfer Specialist, regardless of when the transferred benefits are being accessed. Comments should be submitted by April 15, 2015. (3/4/2015) FCA press release.
EBA proposals for improving IRB models. The EBA launched a discussion paper on the regulatory measures needed to ensure a robust and clear framework for Internal Ratings Based models. The discussion paper seeks feedback on how to implement the necessary measures in a consistent way and how to bring forward future changes to the current approach. In addition, an overview of the regulatory measures that are under way is provided. Comments should be submitted by May 5, 2015. (3/4/2015) EBA press release.
Bank of England confirms SFO investigation. The Bank of England confirmed that it has commissioned Lord Grabiner QC to conduct an independent inquiry into liquidity auctions during the financial crisis in 2007 and 2008. Following the conclusion of that initial inquiry, the BoE referred the matter to the UK Serious Fraud Office on November 20, 2014. (3/4/3015) Bank of England press release.
ECJ limits ECB authority. The General Court of the European Union ruled that the European Central Bank lacks the authority to require central counterparties settling euro-denominated transactions be incorporated in the euro area. (3/4/2015) ECJ press release.