ESMA reports findings of review of regulators’ compliance with market maker exemption under Short-Selling Regulation. The European Securities and Markets Authority (ESMA) released the results of a review it conducted of five national competent authorities (NCAs) regarding their application of the exemption for market making activities under the Short-Selling Regulation. The review found that some authorities are applying the exemption on a per firm basis rather than on an instrument by instrument basis as required by ESMA Guidelines and are relying on trading venues to monitor market makers’ compliance with trading venue rules and procedures. (1/5/2016) ESMA press release.
SRM for the Banking Union in the EU is now fully operational. The European Commission announced that the Single Resolution Mechanism, which implements the EU-wide Bank Recovery and Resolution Directive in the Euro area, became fully operation on January 1, 2016. (12/31/2015) EC press release.
ESMA consults on MiFIR guidelines for transaction reporting, reference data, recordkeeping, and clock synchronization. ESMA published a consultation paper that seeks comments on proposed guidance under the Markets in Financial Instruments Regulation regarding transaction reporting, reference data, order recordkeeping, and clock synchronization. Comments are due on or before March 23, 2016. (12/23/2015) ESMA press release.
ESMA peer review of NCAs’ Market Abuse Directive supervisory practices.ESMA released the results of its second Market Abuse Directive peer review, which examined the supervisory practices of seven NCAs related to specific areas found to have shortcomings in ESMA’s previous peer review, including the monitoring of market abuse investigation capabilities, the monitoring of compliance with provisions related to insider lists, and the ability to deal with rumors. (12/22/2015) ESMA press release.
ESMA publishes guidelines on cross-selling practices under MiFID II. ESMA issued guidelines on cross-selling practices under the Markets in Financial Instruments Directive II. The guidelines, which will become effective on January 3, 2017, seek to improve disclosures in the cross-selling of different financial products, to address conflicts of interest arising from remuneration models, and to improve client understanding of whether products offered in a package can be purchased individually. (12/22/2015) ESMA press release.
EBA publishes final guidelines and Opinion on sound remuneration policies.The European Banking Authority (EBA) released its final guidelines on sound remuneration policies, which establish the process for implementing the sound remuneration policies in the EU and identifying the categories of staff at financial institutions subject to the specific remuneration provisions of the Capital Requirements Directive (CRD). Alongside the final guidelines, the EBA also published its Opinion on proportionality, in which it recommended exemptions from the CRD remuneration principles for small and non-complex institutions and for staff that receives only a small amount of variable remuneration. (12/21/2015) EBA press release.
PRA seeks comments on changes to Pillar 2 data items and reporting instructions. The Prudential Regulation Authority (PRA) published a consultation paper that proposes changes to Pillar 2 data items and reporting instructions. Comments are due on or before January 18, 2016. (12/21/2015) PRA press release.
EBA consults on guidelines for stress testing. The EBA requested comment on draft guidelines that establish expectations for stress testing programs at financial institutions, provide guidance to institutions on designing and conducting stress tests, and provide guidance to supervisory authorities in assessing stress test programs. Comments are due on or before March 18, 2016. (12/18/2015) EBA press release.
EBA releases Opinion on MDA trigger, calculation, and transparency. The EBA published an Opinion on the trigger, calculation and transparency of the Maximum Distributable Amount (MDA) in which it explained that the MDA should be calculated taking into account both minimum (Pillar 1) and additional (Pillar 2) capital requirements in addition to the combined buffer requirement. The Opinion seeks to support the consistent application of CRD distribution restrictions, to provide greater certainty for banks in their capital planning, and to introduce greater transparency in Pillar 2 outcomes for banks. (12/18/2015) EBA press release.
EBA recommends extending STS prudential treatment to SME synthetic securitizations. The EBA released a report outlining the findings of its analysis and market practice assessment of the securitization market. Based on the findings in the report, the EBA recommended that the capital requirements for simple, standardized and transparent (STS) securitizations should be extended to banks that originate and retain certain small and medium-sized enterprise (SME) balance sheet synthetic securitization positions. (12/18/2015) EBA press release.
EBA publishes final draft RTS on detailed records of financial contracts. The EBA released final draft Regulatory Technical Standards that establish the minimum set of information on financial contracts that should be contained in detailed records and the circumstances under which requirements to maintain detailed records should be imposed. (12/17/2015) EBA press release.
FCA issues final rules applying accountability framework to UK branches of overseas banks. The FCA published a policy statement containing the final rules for the new accountability framework for individuals working in UK branches of overseas banks (incoming branches). The final rules, which will become effective on March 7, 2016, include changes to clarify the territorial scope of the Certification Regime (CR) and Conduct Rules in an effort to prevent the rules from applying to those based overseas who do not engage in activities clearly linked to an incoming branch. (12/16/2015) FCA press release.
FCA consults on UK implementation of MiFID. The FCA requested comment on its first consultation paper regarding the implementation of the new MiFID, which makes proposals related to the FCA’s regulation of the secondary trading of financial instruments. Comments are due on or before March 8, 2016. (12/15/2015) FCA press release.
EBA report on a sound prudential regime for investment firms. The EBA released a report that presents findings and recommendations in response to the European Commission’s request for advice on the suitability of certain aspects of the prudential regime for investment firms. The report found a lack of risk sensitivity in the CRD regime for investment firms and recommended creating a new category of investment firms to distinguish between systemic firms subject to CRD requirements and non-systemic firms, among other things. (12/14/2015) EBA press release.
ESMA Open Hearing on validation and review of CRA methodologies. ESMA will hold an Open hearing on January 25, 2016, to discuss issues raised in its November 2015 Discussion Paper on the Validation and Review of Credit Rating Agencies’ methodologies. Attendees must register for the hearing on or before January 18, 2016. (12/11/2015) ESMA press release.