ESMA stakeholder group advises on EuSEF and EuVECA measures: ESMA's securities and markets stakeholder group has responded to the ESMA consultation on implementing measures for the Regulations on EU Social Entrepreneurship and Venture Capital funds (EuSEF and EuVECA). The response notes many SMEs are dependent in their early stages of development on small private equity and venture capital fund managers as well as social impact investment funds. It notes many Member States have tightened their private placement rules following the Alternative Investment Fund Managers Directive (AIFMD) which means smaller managers can no longer market cross-border. The group notes it is not an option for many of these managers to opt fully into the AIFMD. Therefore it is important to apply a principles-based and proportionate approach that is supportive of the need for this channel of investment. ESMA has also published other responses it received to its consultation. (Source: ESMA Stakeholder Group Advises on EuSEF and EuVECA measures)

ESMA reviews investor information practices: ESMA has carried out a peer review on supervision of the rules in the current Markets in Financial Instruments Directive (MiFID) on providing fair, clear and not misleading information to clients. The review found:

  • regulators apply different strategies to review of marketing materials - some approving in advance, and others reviewing published materials. ESMA noted significant differences in timescales where regulators reviewed materials after the event, and in timescales for complaints handling;
  • some regulators directly supervise firms' compliance with their obligations, but others rely on annual checks by external auditors. ESMA says this type of reliance may make it difficult to find failings in a timely way;
  • an overall low level of complaints and sanctions relating to information and marketing to clients; and
  • the lack of definition of "marketing communication" makes it hard to build supervisory convergence.

ESMA made several suggestions as to how supervisory convergence could improve, including:

  • better cooperation agreements between national regulators;
  • clear definition of marketing material to be supervised and requiring firms to submit details of all information and marketing materials;
  • assessing how often to monitor investor information, marketing and use of distribution channels; 
  • considering whether to introduce integrated databases; and
  • looking at use of sanctions and how national regulators have implemented guidelines on complaints handling.

(Source: ESMA Reviews Investor Information Practices)

ESMA adds to CCP list: ESMA has updated the list of CCPs authorised to offer services and activities in the Union to reflect the authorisation of Holland Clearing House B.V. as of 12 December 2014. (Source:ESMA List of CCPs 

ESMA wants better structured finance ratings surveillance: ESMA says credit ratings agencies can make significant improvements in their surveillance of structured finance ratings. It also found failings in disclosure and transparency around these ratings. (Source: ESMA Wants Better Structured Finance Ratings Surveillance)

ESMA reports on HFT: ESMA has published an economic report looking at high frequency trading (HFT) activity; It plans now to carry out further research to look at the drivers of the activity, whether HFT contributes to liquidity in the markets and the potential risks and benefits connected to it. (Source ESMA Reports on HFT)

ESMA calls for EU-wide approach to investment-based crowdfunding: ESMA has published an opinion and advice to the EU authorities and to national supervisors highlighting the need for investment-based crowdfunding to be regulated at EU level. The documents show a number of gaps and issues where different regulators treat elements of crowdfunding in different manners. The documents set out those pieces of EU legislation that may apply (and highlight how Member States may use exemptions from that legislation) and suggest a framework for EU-wide consistency in regulatory approach. (Source: ESMA Calls for EU-wide Approach to Investment-Based Crowdfunding)

ESMA consults on CSDs Regulation: ESMA is consulting on implementing the Central Securities Depositories (CSDs) Regulation. The consultation comprises:

  • draft technical standards on settlement discipline, CSD requirements, and internalised settlement: this includes rules covering settlement discipline measures, the authorisation, recognition, supervision of CSDs, organisational and prudential requirements for CSDs, access requirements and internalised settlement reporting;
  • draft technical advice on penalties for settlement fails and on the substantial importance of a CSD: ESMA proposes to base penalties on average borrowing costs for the relevant securities and sets out indicators to assess the substantial importance of a CSD based on the core services it offers; and
  • draft guidelines on access to CCPs or trading venues by CSDs: this looks at the risks CCPs or trading venues should take into account in their comprehensive risk assessments following a request for access by a CSD, and factors regulators should consider when assessing a refusal of an access request.

ESMA will hold a public hearing on 13 January 2015 and asks for comments by 19 February 2015. (Source: ESMA Consults on CSD Regulation)