FCA releases third Annual Report and first Competition Report. The UK Financial Conduct Authority published its third Annual Report, which provides an overview of the agency’s work over the past year and examines how its work has fulfilled the key priorities described in its Business Plan. The FCA also published a separate Competition Report, which summarizes the agency’s activities to promote competition in financial services in its first three years. (7/12/2016) FCA press release.
FCA issues guidance following property fund suspensions. The FCA announcedthat it has issued guidance after the decision by several funds to temporarily suspend trading in their property portfolios and feeder funds. The guidance reminds fund managers of their obligations to investors and outlines the FCA’s expectations in relation to the suspension of dealings in their funds.
FCA requests input on crowdfunding rules. The FCA announced its call for inputon which areas should be considered as part of its upcoming review of the rules surrounding both investment-based and loan-based crowdfunding. Comments are due to the FCA by September 8, 2016. See also the FCA’s paper, in which it sets out recent developments across the crowdfunding sector as well as some concerns it has identified in response. (7/8/2016)
BOE, PRA, FCA, PSR review MOU related to payment systems in the UK. The Bank of England, the Prudential Regulation Authority, the FCA and the Payment Systems Regulator have reviewed the Memorandum of Understanding that sets out the high-level framework that they use to cooperate with each other regarding payment systems in the UK. (7/7/2016)
FCA issues guidance for firms outsourcing to the cloud and other IT services.The FCA announced issuance of its finalized guidance for firms outsourcing to the cloud and other third-party IT services. (7/7/2016)
PRA releases policy statement, consultation paper and supervisory statement on ring-fencing. The PRA announced the release of a policy statement on the implementation of ring-fencing: prudential requirements, intragroup arrangements and use of financial market infrastructures. The PRA also announced the release of a consultation paper on the implementation of ring fencing: reporting and residual matters. Finally, the PRA announced the issuance of a supervisory statement onring-fenced bodies. (7/7/2016)
PRA updates supervisory statement on market risk. The PRA announced an update to its supervisory statement on market risk to amend the expectations on the validation of firms’ risks not In VaR (RNIV) frameworks and reporting of extensions and changes to firms’ RNIV frameworks. The update also provides clarification on the PRA’s reporting requirements around Internal Model Approach model changes and extensions. In addition, the process for informing the PRA with regard to non-compliance was clarified. Amendments were also made to bring attention to the PRA’s expectations for firms applying for the use of own estimates of delta in the standardized approach for options; the use of sensitivity models under Article 331 of the Capital Requirements Regulation (CRR); and the exclusion of positions from the calculation of net open currency positions under Article 352(2) of the CRR. (7/7/2016)
PRA finalizes rules to ensure operational continuity in resolution. The PRA published a policy statement that contains final rules designed to ensure that firms’ operational arrangements are designed to support the continuity of services supporting functions critical to the economy in resolution. The policy statement also details a change to the financial resilience expectations set out in the draft supervisory statement that will allow the BOE to consider whether a loss absorbing capacity should be allocated within groups to ensure operational continuity, as part of the minimum requirement for own funds and eligible liabilities regime. The PRA published the final supervisory statement alongside the policy statement. (7/7/2016) PRA press release.
PRA publishes updated supervisory statement on counterparty credit risk. The PRA updated its supervisory statement on counterparty credit risk to provide clarifications to the reporting requirements for model changes, to make amendments regarding qualifying central counterparties, and to adjust the notification arrangements when a CCP no longer reports its hypothetical capital. (7/7/2016) PRA press release.
FCA re-appoints Sue Lewis as Chair of the Financial Services Consumer Panel.The FCA has re-appointed Sue Lewis Chair of the Financial Services Consumer Panel for an additional two and a half years, beginning on July 1, 2016. (7/6/2016)
BOE releases July 2016 Financial Stability Report. The BOE’s Financial Policy Committee published its Financial Stability Report, which assesses the outlook for financial stability in the UK by identifying the risks faced by the UK financial system and weighs them against the resilience of the system. The report concludes that the outlook for UK financial stability is challenging in the wake of the UK referendum vote on EU membership. (7/5/2016) BOE press release.
PRA consults on credit union regulatory reporting changes. The PRA requested comments on a consultation paper that contains proposals for changes to the reporting requirements that apply to credit unions. Comments are due on or before September 5, 2016. (7/4/2016) PRA press release.
PRA proposes to clarify duty of auditors in proposed rules on external audit of the Solvency II public disclosure. The PRA published a consultation paper that seeks comments on a proposed clarification of the duty of auditors to the PRA in its proposal for the external audit of the public disclosure requirement under Solvency II. Comments are due on or before August 4, 2016. (7/4/2016) PRA press release.
FCA publishes rules on its 2016/17 regulated fees and levies. The FCAannounced that it has published a Policy Statement on its 2016/17 regulatory fees and levies for the FCA, the pensions guidance levy, the Financial Ombudsman Service general levy, and the Money Advice Service. (6/30/2016)
FCA publishes Policy Statement on Changes to the Decision Procedure and Penalties manual and the Enforcement Guide for the implementation of the Market Abuse Regulation. The FCA announced that it has issued a Policy Statement entitled “Changes to the Decision Procedure and Penalties manual and the Enforcement Guide for the implementation of the Market Abuse Regulation,” in which the FCA sets out its changes to the Decision Procedures and Penalties manual (DEPP) and the Enforcement Guide (EG), as proposed in CP16/13, in light of the Statutory Instrument and the responses it received to CP16/13. (6/30/2016)
FCA publishes rules on its 2016/17 regulatory fees and levies. The FCAannounced the publication of its policy statement, FCA regulated fees and levies 2016/17 including feedback on CP16/9 and ‘made rules’. (6/30/2016)
PSR publishes PSR regulatory fees 2016/17. The PSR announced publication ofPSR regulatory fees 2016/17, which sets out its final policy decision on 2016/17 PSR regulatory fees for the funding of the PSR’s FSBRA and IFR functions. (6/30/2016)
FCA publishes policy statement on the implementation of the MAR. The FCAannounced publication of its Changes to the Decision Procedure and Penalties manual and the Enforcement Guide for the implementation of the Market Abuse Regulation, in which it summarized changes to the Decision Procedure and Penalties Manual and the Enforcement Guide for the implementation of the MAR. (6/30/2016)
PRA publishes consultation paper on regulated fees and levies 2016/17. The PRA announced publication of Regulated fees and levies: rates for 2016/17, which sets out the final fee rates and rules to recover the PRA’s AFR and ring-fencing implementation fee for the financial period March 1, 2016, to February 28, 2017. (6/30/2016)
PRA publishes policy statement on contractual recognition of bail-in. The PRAannounced publication of its policy statement on the contractual recognition of bail in: amendments to PRA rules. See here for the PRA’s related supervisory statement titled “The contractual recognition of bail-in: impracticability.” (6/29/2016)
ECB releases results of June 2016 survey on credit terms and conditions in SESFOD. The European Central Bank released results of its June 2016 survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets (SESFOD). According to the results, which cover a three-month period ending in May 2016, credit terms offered in both the provision of finance collateralized by euro-denominated securities and OTC derivatives markets became less favorable for all counterparty types. Also, credit terms are expected to tighten further over the next three-month reference period. As for the provision of finance that is collateralized by euro-denominated securities, banks offered more favorable financing rates. Finally, market liquidity for underlying collateral, as opposed to the securities financing market itself, deteriorated on balance. (7/11/2016)
EBA publishes update on monitoring of AT1 instruments. The European Banking Authority published a draft update of its report on the monitoring of Additional Tier 1 (AT1) instruments and proposed draft standardized templates for AT1 instruments. (7/11/2016)
EBA publishes report on the benchmarking of diversity practices at EU level.The EBA announced its issuance of a benchmarking analysis of diversity practices at EU level showing that only a small number of institutions have already adopted a diversity policy. The report is based on data from 873 institutions from 29 EU and EEA Member States, and covers credit institutions of different sizes as well as investment firms. (7/8/2016)
ESMA opinion on Swedish pension scheme’s request for exemption from central clearing under EMIR. The European Securities and Markets Authority issued an opinion on a request from a Swedish pension scheme for an exemption from the obligation to centrally clear OTC derivative contracts under European Market Infrastructure Regulation. ESMA agreed with Finansinspektionen that the exemption is justified because the pension scheme would encounter difficulties in meeting the variation margin requirements. (7/7/2016) ESMA press release.
ESMA releases responses to Consultation Paper on technical advice on Benchmarks Regulation. ESMA published the feedback it received to its consultation on draft technical advice under the Benchmarks Regulation. (7/7/2016) ESMA press release.
EBA releases updated Risk Dashboard. The EBA published an update to its Risk Dashboard and the results of a Risk Assessment Questionnaire, which it conducted with banks and market analysts earlier this year. The Risk Dashboard indicated a significantly heightened risk outlook for EU banks as a result of increased market volatility following the results of the UK referendum vote. (7/7/2016) EBA press release.
EBA offers details regarding its 2016 transparency exercise. The EBA announced that it will conduct an independent transparency exercise in 2016 on a sample of over 100 banks. The transparency exercise, which the EBA will conduct alongside the 2016 EU-wide stress test, will include data on capital, risk-weighted assets, profits and losses, market risk, securitizations, credit risk, exposures towards sovereigns, and non-performing exposures and forborne exposures for December 2015 and June 2016. (7/6/2016) EBA press release.
EBA analyzes governance arrangements and indicators for recovery plans.The EBA released a comparative report on governance arrangements and indicators for recovery plans. The report found that while many recovery plans comply with the requirements of the Bank Recovery and Resolution Directive, some plans require greater clarity regarding escalation procedures and decision making processes. (7/5/2016) EBA press release.
EBA publishes report on asset encumbrance. The EBA issued an analysis of the level of asset encumbrance across banking institutions. The report found that the level of asset encumbrance increased only slightly during 2015 and the main sources of encumbrance continue to be repos, covered bonds and central bank funding. (7/4/2016) EBA press release.
ESMA prepares issuers for Alternative Performance Measures Guidelines.ESMA released a one-page summary of the Alternative Performance Guidelines, which became effective on July 3, 2016. (7/1/2016) ESMA press release.
ESMA proposes two amendments to natural person identifiers under MiFID II.ESMA published two proposed amendments to its draft regulatory technical standards on reporting obligations under MiFID II. The amendments propose corrections to the identifiers for natural persons that must be used in transaction reports to reflect preferred identifiers of the national regulators of Germany and Iceland for their citizens. (7/1/2016) ESMA press release.
European regulators will issue Q&As on PRIIPS. In a joint letter to the European Parliament and European Council, the EBA, ESMA and the European Insurance and Occupational Pensions Authority indicated that they will release supporting material in the form of “questions and answers” to assist in the implementation of the draft regulatory technical standards on Key Information Documents for Packaged Retail and Insurance-based Investment Products. (7/1/2016) ESMA press release.
European Regulators urge European Commission to keep delay of bilateral margin rules for derivatives brief. In a joint letter to the European Commissioner for Financial Stability, the EBA, ESMA and EIOPA expressed concerns about the delay in the adoption of the Joint draft RTS on risk mitigation techniques for non-centrally cleared OTC derivatives. Among other things, the regulators argued that the delay could create uncertainty within the EU and raise several cross-border issues. (7/1/2016) ESMA press release.
ESMA publishes responses to its consultation on CSDR guidelines. ESMA has published the responses received to the consultation paper on guidelines on participant default rules and procedures under CSDR. (7/1/2016)
ESMA appoints new Securities and Markets Stakeholder Group. ESMAannounced publication of the new list of members of its Securities and Markets Stakeholder Group (SMSG) following approval by the Board of Supervisors. The selected individuals began a two and one-half year term on July 1, 2016, and replace the group whose mandate expired on June 30, 2016. (7/1/2016)
New EU rules to fight insider dealing, market manipulation in Europe’s financial markets. The European Commission announced that a new EU rulebook, applicable as of July 3, 2016, will increase investor protection and confidence by allowing deeper and more integrated financial markets, and contribute to the creation of the Capital Markets Union. The updated rulebook replaces the existing EU rules on market integrity and investor protection, first adopted in 2003. It consists of the Market Abuse Regulation and the Directive on Criminal Sanctions for Market Abuse. (7/1/2016)
EBA clarifies use of 2016 EU-wide stress test results in the SREP process. The EBA published additional information on how the results of the EU-wide stress test will inform the Supervisory Review and Evaluation Process. The focus of this update is to explain how additional “capital guidance” can be used as a tool to address the quantitative outcomes of the stress test. (7/1/2016)
European Commission welcomes deal to improve rules for occupational pensions. The EU agreed to new rules for work pension funds to improve the way they are governed and enhance the clarity of information provided to pension savers. (6/30/2016)
ESMA identifies scope for greater EU harmonization in prospectus approval.ESMA announced publication of a peer review on the efficiency and effectiveness of EU national securities markets regulators’ approval of prospectuses, the disclosure documents prepared by issuers when they want to market their securities to EU investors. Overall, ESMA found that, while national regulators were in general sufficiently resourced and approved prospectuses within legal deadlines, there were differences in national practices that would benefit from greater convergence. (6/30/2016)
South African regulatory framework for CRAs is as stringent as the EU rules.ESMA announced that it considers the regulatory framework for credit rating agencies of South Africa to be as stringent as EU rules. ESMA also entered into a cooperation agreement for the supervision of CRAs with the competent South African authority, the Financial Services Board. The cooperation agreement recognizes the cross-border activities of certain CRAs and the global nature of ratings generally and the importance of ongoing supervisory and enforcement-related cooperation in this area. The MoU is effective from 30 June 2016. (6/30/2016)
ESMA issues opinions on Danish pension scheme to be exempt from central clearing under EMIR. ESMA announced its issuance of an opinion on the exemption of a Danish pension scheme from the obligation to centrally clear OTC derivative contracts under the European Market Infrastructure Regulation. (6/30/2016)
EBA launches consultation on Guidelines on disclosure requirements for the EU banking sector. The EBA launched a consultation on a set of Guidelines on regulatory disclosure requirements following an update of the Pillar 3 requirements by the Basel Committee in January 2015. The consultation runs until September 29, 2016. (6/29/2016)
ESMA publishes responses to discussion paper on UCITS share classes.ESMA has published the responses received to the discussion paper on UCITS share classes. (6/23/2016)