ESAs remind firms on self-placement: The European Supervisory Authorities (ESAs) have reminded financial institutions of the consumer protection measures they must remember if placing their own, or affiliates', financial instruments with their own customers who are consumers. The ESAs are worried the products often lack structure and are often loss-bearing which will not be appropriate for many consumers. They remind firms specifically of the rules on inducements, conflicts, and suitability and investment advice. ESMA issued a separate additional statement on potential risks associated with contingent convertible instruments (CoCos), a specific category of instrument that firms issue to comply with their prudential requirements. It said these instruments are complex and bespoke and it doubts consumers understand them. (Source: ESAs Remind Firms on Self-Placement)

ESMA updates UCITS ETF Guidelines: ESMA has issued an update of its 2012 Guidelines on Exchange Traded Funds (ETF) and other UCITS issues. The main change modifies the original provision on diversification of collateral received by UCITS in the context of efficient portfolio management techniques and over-the-counter financial derivative transactions. Member State supervisors now have two months to tell ESMA what they have done to comply with the new Guidelines. (Source: ESMA Updates UCITS ETF Guidelines)

ESMA makes guidelines on PFMIs compliance: ESMA has issued a guideline requiring competent authorities to ensure that the central counterparties (CCPs) they regulate comply with EMIR in accordance with IOSCO's Principles for Financial Markets Infrastructure (PFMIs). ESMA says it wants to avoid a situation where European clearing members are imposed higher capital requirements or CCPs are not deemed subject to appropriate regulatory standards due to the fact that EMIR uses a different operative language to that used in the PFMIs. (Source: Guidelines on PFMIs Implementation

CME Clearing receives EMIR authorisation: ESMA has announced that CME Clearing Europe Ltd received authorisation as an EMIR-compliant CCP with effect from 4 August. (Source: List of EMIR-compliant CCPs)

ESMA publishes MiFID 2 responses: ESMA has published the responses it received to its consultation and discussion papers on implementing measures for the revised Markets in Financial Instruments Directive and Regulation (MiFID 2 and MiFIR). Among the respondents were all the major securities and funds markets industry associations. Responses focused on aspects of interest or concern to the particular bodies, but some common points included:

  • significant concern from the funds sector about the proposals relating to research and bundling;
  • objections to applying standards and requirements more appropriate for the retail market to professionals;
  • concerns about how ESMA has understood the distribution chain and sales models;
  • market regulation - in particular ESMA's proposal to define certain terms and regulate markets prescriptively; and
  • the need for consistency with other EU legislation.

(Source: ESMA Publishes MiFID 2 Responses)