The European Commission has launched its Capital Markets Union (CMU) Action Plan, which is intended to help build a true single market for capital across the 28 EU Member States, as part of its priority to boost investment funding and growth across Europe. The CMU encompasses many measures which the European Commission will take over the next five years to clear obstacles between companies and potential investors.

The CMU Action Plan sets out five priority areas:

  • providing more funding choices to EU businesses;
  • ensuring an appropriate regulatory framework for long- term investment and financing of Europe’s infrastructure;
  • increasing investment and choices for retail and institutional investors;
  • improving bank lending capacity; and
  • removing cross-border barriers and developing more harmonized capital markets for all Member States.

Alongside the CMU Action Plan, the European Commission has also unveiled a set of key early actions relating to the introduction of :

In addition, the Commission has issued a call for evidence (open until 6 January 2016) on the cumulative impact of financial legislation. The Commission’s aim is to make sure that regulation is working as intended without for example overlapping reporting requirements or inconsistencies between the various laws.

05.10.2015 ESAS’ 2016 WORK PROGRAMME

The Joint Committee of the European Supervisory Authorities (The European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA)) has published its Work Programme for 2016.

Among a variety of matters, the Programme includes proposals for:

  • Regulatory Technical Standards (RTS) for disclosure for Packaged Retail and Insurance-based Investment Products (PRIIPs) covering the content and presentation of the Key Information Document (KID), revision and review of the KID and timing of the delivery of the KID. A final draft RTS is expected in the first half of 2016; and
  • continued assessment of automation in financial advice. This initiative was launched in 2015 and assesses how the interaction between consumers and financial institutions is being increasingly replaced by algorithms that provide advice or other forms of recommendations. The work analyses the benefits and risks, and assesses what, if any, regulatory and/or supervisory measures need to be taken.  Based on the outcome of this analysis, including the responses to a Discussion Paper to be launched imminently, the Joint Committee will develop policy recommendations.


The European Securities and Markets Authority (ESMA) has published its 2016 Work Programme (dated 29 September but published 7 October) setting out its priorities and the activities  it will undertake in 2016 in pursuit of its statutory objectives of enhancing investor protection and promoting stable and orderly financial markets.

ESMA’s priorities for 2016 signal a shift from rulemaking towards implementation and promoting the convergence of supervisory practices.

The key priorities for 2016 focus on:

  • supervisory convergence – this will be a core focus  in ESMA’s activities in relation to the implementation, supervision and enforcement of common EU rules. In support of this work ESMA will produce a supervisory convergence work programme and continue its co- operation with national regulators and other institutions, including the Joint Committee of the European Supervisory Authorities (ESMA itself plus EBA and EIOPA) to ensure sectoral consistency;
  • MiFID II and MiFIR – this work will continue to dominate activity in 2016, but in line with the shift in priorities the focus will be particularly on developing guidelines and Q&As to help with the consistent implementation of MiFID II by national regulators. Single rulebook activity will also continue as ESMA still has a range of Technical Standards to draft; and
  • data collection and management – ESMA’s 2015-2017  IT work programme will be dominated by the requirements under MiFID II/MiFIR for data collection and reporting.


As part of its Action Plan for Capital Markets Union, the European Commission has launched a consultation on the review of the European Venture Capital Funds (EuVECA) Regulation and the European Social Entrepreneurship Funds (EuSEF) Regulation (together, the Regulations). The Regulations offer qualifying EU-domiciled fund managers, managing portfolios of under €500m, “passports” that enable them to market these funds throughout the EU.

The take-up of EuVECA and EuSEF has been lower than that originally envisaged by the Commission. Thirty four EuVECA funds have been registered with capital raising targets of €1.4bn in aggregate, against a Commission prediction of up to €4bn. Only six funds, with an aggregate capital raising target of €6m, have been registered under EuSEF. The stated objective of the Commission in launching the Consultation is to assess the performance of the Regulations and to identify measures that could increase take-up of these fundraising passports.

The Consultation seeks input on a number of issues, many of which were identified as relevant by respondents to the Commission’s Green Paper on Capital Markets Union, including:

  • whether AIFMD-authorised managers should be permitted to manage EuVECA and EuSEF funds;
  • how EuVECA and EuSEF-authorised managers should be treated when their assets under; management subsequently surpass the €500m threshold;
  • whether the current investment threshold of €100,000 is appropriate;
  • whether the costs and burdens involved in setting up EuVECA and EuSEF funds are proportionate;
  • whether the use of the Regulations should be extended to third-country fund managers;
  • whether the profile of assets in which EuVECA funds are permitted to invest is too restrictive; and
  • whether any further regulatory changes could make these funds more attractive, such as in relation to fiscal incentives and the tax treatment of cross-border investments.

The Consultation closes on 6 January 2016. Full details of the Consultation are available here.


The European Securities and Markets Authority (ESMA) has published the following final draft regulatory technical standards (TS) and implementing technical standards (ITS) on:

  • the Markets in Financial Instruments Directive  II (MiFID II);
  • the Markets in Financial Instruments Regulation (MiFIR);
  • Market Abuse Regulation (MAR); and
  • Central Securities Depositaries Regulation (CSDR).


With respect to MiFID II and MiFIR, the final draft report (2015/1464 - Final report on MiFIDII / MiFIR) covers 28 final draft TS on the following areas:

  • pre- and post-trade transparency for trading venues;
  • market microstructural issues;
  • data publication access publication of transactions for data reporting service providers;
  • requirements on and applying to trading venues;
  • commodity derivative position limits;
  • transaction reporting under Article 26 of EMIR, including market data reporting relating to orders;
  • post-trading issues relating to derivatives traded on regulated markets and timing of acceptance for clearing; and
  • best execution.

It should be noted that the TS do not cover the issue of dealing commissions which falls within the scope of the European Commission’s delegated acts. The adoption of the delegated acts relating to dealing commissions is expected to be delayed until the end of October or early November 2015.

Feedback received to the previous consultations and the rationale behind ESMA’s final proposals are discussed in the final report.

Annexed to the final report are:


ESMA’s MAR TS and ITS are intended to increase market integrity, investor protection and strengthen the existing market abuse framework by extending its scope to new markets, platforms and behaviours. The TS and ITS deals with a number of prospectus related matters and also covers topics relating to notification, list of financial instruments, prohibitions for insider dealing and market manipulation, and provisions to prevent and detect these. The TS focus on:

  • the conditions under which transactions in buy-back programmes and stabilisation measures are not considered market abuse;
  • requirements for market participants conducting market soundings and for competent authorities establishing accepted market practices;
  • specific requirements to report suspicious orders and transactions;
  • rules for public disclosure of insider information and the delays in reporting such disclosures;
  • specific formats for establishing insider lists and for the notification and disclosure of managers’ transactions; and
  • specific arrangements on how to present investment recommendations or other information recommending or suggesting an investment strategy.

2015/1455 - Final Report MAR TS

Cost analysis for Final Report on MAR technical standards


The purpose behind the introduction of CSDR is to harmonise the authorisation and supervision of central securities depositories (CSDs) within the EU. Further, CSDR provides organisational, conduct of business and prudential requirements to ensure CSDs are safe, efficient and sound. CSDR encompasses a settlement discipline regime, including measures to prevent and address settlement fails such as a mandatory buy-in and cash penalties, as well as reporting requirements for internalised settlement.

ESMA’s final report covers draft TS and ITS on CSD requirements and internalised settlement reporting.

The CSD requirements in the draft TS and ITS deals with:

  • co-operation requirements among authorities;
  • requirements for the recognition of third-country CSDs, ensuring a level playing field;
  • requirements for EU CSDs covering risk monitoring tools, record keeping, investment policy, reconciliation measures;
  • requirements regarding non-discriminatory access to CSDs by participants, issuers, CCPs and trading venues, or between CSDs, as well as access by CSDs to CCPs and trading venues; and
  • the internalised settlement reporting deals with the requirements on how to report internalised settlements to national regulators to allow proper risk monitoring.

In August 2015 ESMA consulted on the buy-in process and has therefore decided to delay the delivery of the RTS on settlement discipline.

2015/1457 - Final Report CSDR TS on CSD Requirements and Internalised Settlement

2015/1457 - Annex II - CSDR TS on CSD Requirements and Internalised Settlement

2015/1457 - Annex III - CSDR TS on CSD Requirements and Internalised Settlement

Date in force

CSDR entered into force in 2014.  MAR and MiFID II will enter into force in 2016 and 2017 respectively.


The Consumer Rights Act 2015 (the Act) came into force on 1 October 2015. While the Act is generally an evolution of existing legislation in the area, it extends the scope of protection consumers are afforded from unfair terms in a number of important ways. For example, for the first time the fairness test applies not just to standard terms but also to negotiated terms, and the regime also applies to non-contractual notices as well as contractual terms.

The overarching fairness test established by earlier legislation remains unchanged. A term is considered unfair “if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”. The term need not have been actually invoked, it must simply be capable of being used unfairly.

Alongside the fairness test, the Act requires terms to be “transparent”, which is potentially broader than the “plain and intelligible” requirement of earlier legislation. Terms should make sense to the average consumer but also put the consumer into the position of being able to evaluate, on the basis of clear, intelligible criteria, the economic consequences for him which derive from [the term]”. Further, the reason for the term and its relationship with other terms should be transparently set out.

In Guidance issued by the Competition and Markets Authority, the point is made that particular care must be taken where complex and technical issues are covered. It states that accompanying literature should be used to explain the practical implications of any unavoidably difficult terms.

While the Act is not financial services legislation as such, financial services firms need to be aware of it and take it into account when product literature is drawn up or reviewed.