ESMA authorizes Ice Clear Europe as CCP under EMIR. The European Securities and Markets Authority announced that it has added ICE Clear Europe Ltd. to its list of authorized central counterparties under the European Markets Infrastructure Regulation. (9/19/2016) ESMA press release.
BOE consults on redesigned Real-Time Gross Settlement service. The Bank of England requested comments on a consultation paper that contains proposals for a new Real-Time Gross Settlement service, the payment system that provides the platform for sterling central bank reserves. Among other things, the consultation paper proposes to expand access to RTGS to non-bank Payment Service Providers, to design the new RTGS to interoperate directly with a wider range of payments systems, and to base the new RTGS on an explicit resilience framework that stresses the primacy of data integrity to address a range of threats to continuity of service. Comments are due on or before November 7, 2016. (9/16/2016) BOE press release.
FCA reveals plans to address financial needs of ageing population. The UK Financial Conduct Authority provided an update on its work addressing how financial services should meet the needs of older consumers. The FCA reported that it will undertake work in six specific areas to supplement its current initiatives on the ageing population, which will include pensions, mortgages, scams, smarter consumer communications, and advice and guidance. (9/15/2016) FCA press release.
Regulation round-up. The FCA published the September edition of its Regulation round-up. (9/15/2016)
FCA occasional paper analyzes dark pool reference prices. The FCA issued an occasional paper entitled Asymmetries in Dark Pool Reference Prices. The paper examines the prevalence of reference price latency and primary market choice in reference prices in dark pools, finding asymmetric outcomes across participants when the reference price is stale. The paper concludes that while the costs are substantially borne by less-sophisticated participants, they are likely the result of individual participant decisions rather than conflicts of interest and have small economic impact. (9/15/2016) FCA press release.
EC reveals plans to move forward with Capital Markets Union Action Plan. The European Commission published a statement that sets out its plans to accelerate the reforms proposed under the Capital Markets Union. The EC called on the European Parliament to complete the first measures proposed under the Action Plan, including the modernization of prospectus rules, the strengthening of venture capital markets, and the development of national and regional capital markets. The EC also indicated it would move forward with the next phase of the Action Plan by proposing business restructuring and insolvency reforms, changes to increase equity financing over debt, and amendments to insurance and banking legislation to encourage private investment in infrastructure. (9/14/2016) EC press release.
Results of EBA’s CRDIV-CRR/Basel III monitoring exercise. The European Banking Authority released the results of its CRDIV-CRR/Basel III monitoring exercise on the European banking system, which presents aggregate data on capital ratios for European Union banks using data as of December 31, 2015. The results of the exercise show improvement in European banks’ capital positions and an increase of the leverage ratio and liquidity coverage ratio. (9/13/2016) EBA press release.
FCA consults on revisions to appropriate qualification exam standards. The FCA requested comments on proposed amendments to the appropriate qualification exam standards for appropriate qualifications listed in the FCA’s Training and Competence Sourcebook. Comments are due on or before December 13, 2016. (9/13/2016) FCA press release.
BOE offers details on eligibility and sectors under Corporate Bond Purchase Scheme. The BOE issued a notice that provides additional detail about eligibility determinations for its Corporate Bond Purchase Scheme, a program in which the BOE will purchase a portfolio of up to £10 billion of sterling investment grade bonds by firms making a material contribution to the UK economy to impart broad economic stimulus. The notice explains how the BOE will determine whether a company makes a material contribution to the UK and the sector classification it will use to ensure purchases are representative of the set of eligible bonds. (9/12/2016)BOE press release.
FCA consults on transitional provision on calculation of insurers’ regulated fees and levies. In an effort to accommodate Solvency II changes to insurers’ regulatory returns, the FCA published a consultation paper that proposes to use insurers’ tariff data from 2016/17 to calculate their FCA periodic fees and the Financial Ombudsman Service annual levies for 2017/18. Comments are due on or before November 9, 2016. (9/9/2016) FCA press release.
PRA proposes transitional approach to calculation of PRA fees and FSCS levies for insurers. The Prudential Regulation Authority requested comments on proposals for a transitional approach in the calculation of insurance firms’ PRA fees and Financial Services Compensation Scheme levies for 2017/18. The PRA proposes to base calculations for the 2017/18 fees on the last set of Solvency I data received, which would consist of the returns received for a relevant insurance firm’s financial year ending during 2015. Comments are due on or before November 9, 2016. (9/9/2016) PRA press release.
PRA finalizes rules on the external audit of Solvency II public disclosure. The PRA published a policy statement that contains the final rules on the external audit of the public disclosure requirement under Solvency II and responds to the public feedback it received on its July 2016 consultation paper, which amended its proposed rules to clarify the duty of care of auditors to the PRA and to defer the requirement for external audit of the public disclosure by applying the requirement initially to firms with years ending on or after November 15, 2016. The PRA also published a supervisory statement that sets out its expectations of insurers and audit firms regarding the appropriateness of the information disclosed, the level of assurance with respect to the external audit requirement, and the audit guidance that should be followed during the audit of a firm’s Solvency II public disclosure. (9/9/2016) PRA press release.
European regulators reject EC’s proposed amendments to RTS on non-centrally cleared OTC derivatives. The EBA, ESMA, and the European Insurance and Occupational Pensions Authority issued an Opinion in which they disagreed with the EC’s proposed amendments to final draft Regulatory Technical Standards on risk mitigation techniques for OTC derivatives by a central counterparty. The regulators maintained that the EC’s proposal to remove concentration limits on initial margins for pension schemes would eliminate a crucial measure to mitigate the exposure of pension funds and their counterparties to potential risks. (9/9/2016)EBA 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. The revised list flags the rules that have been deactivated due to errors or associated IT problems. (9/9/2016) EBA press release.
EBA revises list of CET1 capital instruments. The EBA published an updated list of capital instruments that have been classified as Common Equity Tier 1 by EU Competent Supervisory Authorities. (9/8/2016) EBA press release.
EBA analyzes core funding ratio as alternative to NSFR for assessing funding risk. The EBA published a report that examines the core funding ratio across the EU to evaluate the ratio as an alternative metric for assessing EU banks’ funding risk. The report concluded that the core funding ratio cannot fully assess a potential funding gap and would not serve as an appropriate alternative to the Net Stable Funding Ratio. (9/8/2016) EBA press release.
European regulators identify main risks for the EU financial system. The EBA, ESMA, and EIOPA released its September 2016 Report on Risks and Vulnerabilities in the EU Financial System, which highlighted the low growth and low yield environment and its potential effects on financial institutions’ profitability and asset quality as well as concerns related to the interconnectedness in the EU financial system as the primary risks for the EU financial system. (9/7/2016) EBA press release.