ESMA issues final standards on sanctions and measures under MAR. The European Securities and Markets Authority published final implementing technical standards concerning sanctions and measures under the Market Abuse Regulation. The final ITS explain the submission types available for national competent authorities to use to notify ESMA of investigations they conduct and the sanctions and measures imposed in their Member States under MAR. (7/26/2016) ESMA press release.
FCA publishes final report on credit card market study. The UK Financial Conduct Authority released the findings of its study of the credit card market, which analyzes consumers who carry a significant level of credit card debt. The report contains several industryled proposals to help consumers take better control of their spending, including reminders to consumers prior to the end of promotional periods, information to help consumers consider how much they borrow and avoid over limit charges, and options for consumers to select their payment due date. (7/26/2016) FCA press release.
EBA proposes guidelines on the treatment of connected clients for large exposures. The European Banking Authority requested comments on draft guidelines on the treatment of connected clients for large exposures under the Capital Requirements Regulation. The guidelines reflect developments in the area of shadow banking and large exposures both within the EU and internationally and recommend that institutions use clients’ consolidated assets to assess connections based on controls. Comments are due on or before October 26, 2016. (7/26/2016) EBA press release.
EBA finalizes guidelines on effective communication between supervisors and statutory auditors. The EBA issued final guidelines on communication between competent authorities supervising credit institutions and the institutions’ statutory auditors. The guidelines provide a general framework for facilitating effective communication and identify specific elements of effective communication, including, among other things, the scope of information shared, the form of communication, and the participants in the exchange of information. (7/26/2016) EBA press release.
ESMA releases updated Q&A on CFDs and other speculative products. ESMA updated its question and answer document on the application of the Markets in Financial Instruments Directive to the marketing and sale of contracts for difference and other speculative products, including binary options and rolling spot forex, to retail clients. The revised Q&A contains nine new questions concerning, among other things, the information provided to clients about how these products work and the risks involved; the assessment of the suitability of these products for retail clients; and the factors supervisors should consider when firms offering speculative products enter into certain commercial arrangements with other firms. (7/25/2016) ESMA press release.
EBA proposes changes to reference point for the target level of resolution financing arrangements. The EBA requested comments on its report on the appropriate basis for the target level of national resolution financing arrangements, which recommends changing the basis from covered deposits to a total liabilities based measure. Comments are due on or before September 2, 2016. (7/25/2016) EBA press release.
FCA report finds failings by firms in managing risks of appointed representatives’ activities in the general insurance sector. The FCA published the findings of its thematic review of principal firms and their appointed representatives in the general insurance sector. The report identified significant deficiencies in the principal firms’ understanding of their regulatory obligations in their control and oversight of their appointed representatives’ activities. (7/22/2016) FCA press release.
BOE and PRA propose Enforcement Decision Making Committee to increase transparency of enforcement case decisions. The Bank of England and the Prudential Regulation Authority requested comments on a joint consultation paper that proposes the establishment of a unified Enforcement Decision Making Committee, which will serve as the decision maker in contested enforcement cases involving the PRA, Financial Market Infrastructure and Resolution Directorates. Comments are due on or before October 21, 2016. (7/22/2016) PRA press release.
PRA seeks comments on occasional consultation paper. The PRA published an occasional consultation paper that proposes changes to various PRA rulebook sections and supervisory statements, including, among other things, those relevant to supervising liquidity and funding risks, completing regulatory reports, and Internal Liquidity Adequacy Assessment. The consultation also proposes an administrative instrument to make minor corrections to PRA rulebook provisions. Comments on the administrative instrument are due on or before August 5, 2016. Comments on the other items in the consultation are due on or before October 21, 2016. (7/22/2016) PRA press release.
EBA report finds number of nonperforming loans still high in EU banking sector. The EBA released a report on recent trends in asset quality in the EU banking sector based on supervisory data on nonperforming loans and forbearance. The report found that nonperforming loans in the EU remain up to three times higher than other global jurisdictions, a trend which impacts banks’ profitability and the wider economy. (7/22/2016) EBA press release.
FCA finds improved management of conflicts of interest by dark pool operators. The FCA released the findings of its thematic review of equity market dark pools, which examined the promotional activity and the identification and management of conflicts of interest by dark pool operators. The report found that firms operating dark pools have made significant progress in addressing the promotion and the management of conflicts of interest. The report also identified areas for improvement for operators, including the need for clearer detail about dark pool design and operation, the need for additional monitoring of dark pool activity, and the need to strengthen policies and procedures to manage conflicts of interest. (7/21/2016) FCA press release.
Regulation roundup. The FCA published the July edition of its Regulation Round up. (7/21/2016)
EBA issues final draft RTS on assessment methodology. The EBA released the final draft Regulatory Technical Standards specifying the assessment methodology that regulators should follow in assessing an institution’s compliance with the requirements for the use of the Internal Ratings Based Approach. (7/21/2016) EBA press release.
FCA publishes feedback on its approach to RegTech. The FCA issued a feedback statement that contains a summary of the responses the agency received to its call for input on the FCA’s approach to RegTech, a subset of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements. (7/20/2016) FCA press release.
ISDA, Markit offer commitments to EC on credit default swaps. The European Commission announced that it has accepted commitments by the International Swaps and Derivatives Association and information service provider Markit to license inputs for credit default swaps, including the Final Price and certain CDS indices owned by Markit. The commitments respond to the EC’s concerns that ISDA, Markit and some of its member investment banks refused to license the Final Price and CDS indices for exchange trading and employed use agreements for the Final Price that restricted its use for exchangetraded products or transactions. (7/20/2016) EC press release.
ESMA statement on implementation of IFRS 15, Revenue from Contracts with Customers. ESMA released a public statement on the application of International Financial Reporting Standard 15, Revenue from Contracts with Customers, by issuers listed on regulated markets. In the statement, ESMA urged European issuers to make available relevant and transparent information about the expected impact of the standard on their IFRS financial statements. (7/20/2016) ESMA press release.
ECB releases findings of July 2016 euro area bank lending survey. The European Central Bank published the results of its July 2016 euro area bank lending survey, which found improvements in loan supply conditions for loans to enterprises, due in part to merger and acquisition activity. The report also found that euro area banks strengthened their capital positions and reduced their risk weighted assets. (7/19/2016) ECB press release.
ESMA offers advice on application of AIFMD passport to 12 nonEU countries. ESMA issued advice regarding the possible extension of the Alternative Investment Fund Managers Directive passport to nonEU Alternative Investment Fund Managers and Alternative Investment Funds in 12 countries. In general, ESMA found no significant obstacles impeding the application of the AIFMD passport to most of the countries and declined to give definitive advice with respect to three of the countries. However, ESMA noted that extending the passport to funds marketed by managers to professional investors which do involve a public offering in the US would risk an unlevel playing field between EU and nonEU AIFMs. (7/19/2016) ESMA press release.
ESMA revises Q&A on AIFMD. ESMA updated its questions and answers document on the AIFMD to include a new question on the valuation of centrally cleared OTC derivatives by AIF managers. (7/19/2016) ESMA press release.
EBA announces date for release of 2016 EUwide stress results. The EBA announced that individual results for banks participating in the 2016 EUwide stress test will be published on July 29, 2016. (7/19/2016) EBA press release.
EBA seeks input on recommendations for implementation of MREL. The EBA requested comments on its interim report on the implementation and design of the minimum requirement for own funds and eligible liabilities. The EBA’s report recommends, among other things, changing the reference base of the MREL requirement to riskweighted assets; preventing CET1 instruments from counting both towards capital buffers and MREL; and extending and enhancing the existing powers available to address breaches of MREL. Comments are due on or before August 30, 2016. (7/19/2016) EBA press release.
FCA proposes changes to disclosure rules to reflect application of the PRIIPs Regulation. The FCA published a consultation paper that proposes amendments to disclosure provisions in the FCA Handbook affected by the Packaged Retail and Insurancebased Investment Products Regulation to avoid duplication of or conflict with the requirement to produce a Key Information Document. Comments are due on or before September 19, 2016. (7/18/2016) FCA press release.
FCA publishes new data on cash savings remedies. As part of its “sunlight remedy” to increase the transparency of firms’ treatment of their longstanding customers, the FCA released its second set of data identifying the lowest interest rates offered by providers of easy access cash savings accounts and cash individual savings accounts. In addition to the report, the FCA published an occasional paper that contains the findings of the agency’s testing of new consumer disclosures designed to help consumers identify better cash savings products and stimulate competition between firms. (7/18/2016) FCA press release.
ESMA revises Q&A on prospectusrelated issues. ESMA published an updated version of its Q&A document on prospectusrelated issues to include two new questions on advertisements and Alternative Performance Measures. (7/15/2016) ESMA press release.
ESMA seeks comments on asset segregation and custody services under AIFMD and UCITS. ESMA published a call for evidence on asset segregation and custody services under the AIFMD and the Directive on Undertakings for Collective Investment in Transferable Securities in an effort to gather information on any asset segregation regime that ensures assets are clearly identifiable as belonging to the AIF or UCITS and avoids disputes regarding asset ownership in the event of insolvency. Comments are due on or before September 23, 2016. (7/15/2016) ESMA press release.
EBA announces data collection to support new prudential framework for MiFID investment firms. The EBA announced that it will collect data to support the response to the EC’s consultation on a new prudential framework for MiFID investment firms. To support its data collection efforts, the EBA published templates and instructions for use by MiFID investment firms and UCITS/AIFMD firms that conduct MiFID activities. The completed templates should be submitted to supervisors on or before October 7, 2016. (7/15/2016) EBA press release.
EBA publishes progress report on convergence of supervisory practices across the EU. In its second annual report on the convergence of supervisory practices across the EU, the EBA noted that supervisory authorities have made additional progress on supervisory convergence practices, but important differences remain, especially in determining the amount of additional capital requirements and the legal nature of these requirements. (7/14/2016) EBA press release.
FCA offers update on status of its work on pensions and retirement income. The FCA provided an update on its regulatory approach to pensions and retirement income following the introduction of pension reforms in April 2015. The FCA also published the findings of its research into two areas: the effectiveness of the annuity comparator proposed as part of the Retirement Income Market Study and the compliance of firms with Conduct of Business rules to provide consumers with information about the availability of pensions guidance. In addition, the FCA published the Terms of Reference for its Retirement Outcomes Review, which will examine the impact of the pensions reforms on competition in the retirement income market. Comments on questions posed in the Terms of Reference are due on or before August 31, 2016. (7/14/2016) FCA press release.
EC proposes new rules to support investment in venture capital and social enterprises. The EC proposed amendments to the European Venture Capital Funds (EuVECA) and the European Social Entrepreneurship Funds (EuSEF) regulations to support the creation of the Capital Markets Union. The proposal would make the EuVECA and EuSEF fund labels available to fund managers of all sizes; permit investment in small midcaps and small and mediumsized enterprises listed on SME growth markets; and prohibit fees imposed by member states in an effort to encourage crossborder marketing of EuVECA and EuSEF funds. The EC also published a Q&A document to address questions about the proposed amendments. (7/14/2016) EC press release.
ESMA proposes delay of central clearing requirements for small financial counterparties. ESMA requested comments on a consultation paper that proposes to extend by two years the phasein period for central clearing of OTC derivatives applicable to financial counterparties with a limited volume of derivatives activity under the European Market Infrastructure Regulation. Comments are due on or before September 5, 2016. (7/13/2016) ESMA press release.
ESMA revises risk dashboard to reflect uncertain risk outlook following Brexit. Following the UK referendum vote on EU membership, ESMA updated its risk dashboard to reflect uncertainty in the risk outlook for the current and next quarters due to increased market, liquidity and contagion risks. (7/13/2016) ESMA press release.
ESMA consultation on guidelines for the validation and review of CRAs’ methodologies. ESMA requested comments on a consultation paper that contains proposed guidelines on the validation and review of Credit Rating Agencies’ methodologies. The draft guidelines clarify ESMA’s expectations regarding how CRAs should validate and review their methodologies and identify measures CRAs should take when validating and reviewing methodologies with limited quantitative evidence. Comments are due on or before August 22, 2016. (7/13/2016) ESMA press release.
ESMA revises Q&As on MAR. ESMA published updates to its Q&A on the implementation of MAR to address new questions regarding managers’ transactions. (7/13/2016) ESMA press release.
ESMA issues guidelines on market soundings and delayed disclosure of inside information under MAR. ESMA released final guidelines under MAR for persons receiving market soundings and on the delayed disclosure of inside information. The guidelines offer guidance on the factors that should be considered when assessing whether market sounding information qualifies as inside information, the steps required if inside information has been disclosed, and the records required to demonstrate compliance with MAR. The guidelines also offer guidance on the legitimate interests of issuers to delay disclosure of inside information and situations in which delayed disclosure would likely mislead the public. (7/13/2016) ESMA press release.