FCA finalizes rules for new capital resource requirements for PIFs. The UK Financial Conduct Authority issued a policy statement that responds to the feedback it received on its proposal to introduce new capital resource requirements for personal investment firms (PIFs) and sets out the final rules and changes to the FCA Handbook. The majority of the Handbook changes will become effective on June 30, 2016, while additional changes to the requirements for PIFs to establish, operate or wind up a personal pension scheme will be implemented on September 1, 2016, to coincide with a new capital framework for self-invested personal pension operators. (12/8/2015) FCA press release.

FCA policy statement on new rules for cash savings accounts. The FCA published a policy statement containing the final rules for cash savings accounts, which seek to improve competition by providing consumers with more information and streamlining the process for switching accounts. The final rules will become effective on December 1, 2016. (12/8/2015) FCA press release.

EBA consults on changes to FINREP using IFRS 9. The European Banking Authority requested comment on a consultation paper that proposes amendments to the reporting of financial information for institutions using International Financial Reporting Standards (FINREP IFRS), which include changes for the measurement of financial instruments, a new impairment model, and changes in the accounting for hedging operations closer to risk management. Comments are due on or before March 8, 2016. (12/8/2015) EBA press release.

PRA implements UK leverage ratio framework. The Prudential Regulation Authority published a policy package that implements a UK leverage ratio framework for PRA-regulated banks and building societies with retail deposits equal to or greater than GB£50 billion. The framework seeks to address the risk of excessive leverage for the most systemically-important firms. (12/7/2015) The documents released by the PRA include:

  • PS27/15, the policy statement that sets out the final rules for the leverage ratio framework;
  • SS45/15, a supervisory statement that explains the PRA’s expectations on leverage ratio buffers and the reporting and disclosure requirements for an averaged leverage ratio for Capital Requirement Regulation (CRR) firms;
  • SS3/13, a supervisory statement that explains the PRA’s expectations in relation to capital requirements for major UK banks and building societies, which has been updated to remove elements superseded by the new policy on the UK leverage ratio framework; 
  • SS46/15, a supervisory statement that explains how CRR firms should complete required data items when reporting the leverage ratio; and
  • Reporting templates and instructions for completing the data items, which have been added to the list of Capital Requirements Directive (CRD) reporting requirements.

BOE approves Solvency II internal models. The Bank of England (BOE) published a list of 19 insurers whose full or partial internal models have been approved for use under Solvency II when the new regime takes effect on January 1, 2016. (12/5/2015) BOE press release.

FCA consults on new requirements for insurance renewals. The FCA published a consultation that seeks comment on a proposal that would implement rules and guidance regarding the treatment of consumers during the renewal process for general insurance policies. Comments are due on or before March 4, 2016. (12/3/2015) FCA press release.

European regulators request comment on use of robo-advisors. The EBA, the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) published a Discussion Paper that seeks input on the use of robo-advisors by financial institutions when providing advice or recommendations to consumers. Comments are due on or before March 4, 2016. (12/4/2015) Joint press release. 

ESMA updates guidance on AIFMD. ESMA published updated questions and answers on the application of the Alternative Investment Fund Managers Directive (AIFMD), including new responses on the reporting to national competent authorities. (12/2/2015) ESMA press release.

ESMA announces start of European swap clearing in June 2016. ESMA announced that, as of June 21, 2016, the European Union clearing obligation will come into effect. Firms will be required to clear the following classes of over-the-counter derivatives denominated in the G4 currencies through central clearing parties: fixed-to-float interest rate swaps; float-to-float swaps; forward rate agreements; and overnight index swaps. (12/2/2015) ESMA press release.

European regulators update list of identified Financial Conglomerates. The EBA, the EIOPA, and ESMA published an updated list of Identified Financial Conglomerates for 2015. (12/1/2015) Joint press release.

BOE releases Financial Stability Report. The BOE’s Financial Policy Committee (FPC) published the semi-annual Financial Stability Report, which assesses the outlook for financial stability in the UK by weighing the risks faced by the UK financial system against the system’s resilience. (12/1/2015) BOE press release.

European Commission proposes overhaul of prospectus rules. The European Commission proposed changes to rules governing the prospectuses issued by companies seeking to make public offerings to investors as part of its Capital Markets Union action plan. Among other things, the revised rules would exempt offerings below €500,000 from prospectus requirements, create a streamlined prospectus regime for smaller companies, and create a simplified prospectus for listed companies making a secondary issuance, including an annual Universal Registration Document for frequent issuers that can benefit from a five day fast-track approval process. Under the revised rules, ESMA will maintain an online, searchable database of all prospectuses approved in the European Economic Area (EEA). (11/30/2015) EC press release.

ESMA Final Report on Guidelines on complex debt instruments and structured deposits in MiFID II. ESMA released its Final Report on Guidelines on complex debt instruments and structured deposits. The Guidelines have been developed to assist in identifying and assessing complex financial instruments and structured deposits that are structured in a way that makes it difficult for investors to understand the risk involved. (11/30/2015) ESMA press release.

FCA consults on changes to Compensation sourcebook regarding Financial Services Compensation Scheme. The FCA published a consultation paper that proposes changes to the Financial Services Compensation Scheme (FSCS), including an increase in the non-investment insurance mediation compensation limit in relation to some types of insurance, changes to the eligibility of occupational pension schemes trustees to claim through FSCS, and clarifications to explain how the compensation rules apply where a successor firm is in default or to assist the FSCS in handling claims. Comments are due on or before February 29, 2016. (11/30/2015) FCA press release.

EBA assesses banks’ compliance with CRR disclosure requirements in Pillar 3 reports. The EBA published its assessment of the annual Pillar 3 reports from a sample of European banks submitted for the 2014 financial year, which marks the first reports submitted since the disclosure requirements under the CRR became effective. (11/27/2015) EBA press release. 

FCA Regulation round-up. The FCA published the November 2015 edition of its Regulation round-up. (11/26/2015) 

European Commission applauds agreement on new financial benchmarks rules. The European Commission issued a statement praising the agreement reached between the European Parliament and the Council of the EU regarding its proposed Regulation of financial benchmarks, which seeks to reduce the risk of manipulation of financial benchmarks by requiring that EU benchmark providers are subject to prior authorization and supervision, requiring greater transparency on how a benchmark is produced, and ensuring the appropriate supervision of critical benchmarks. (11/25/2015) EC press release. 

ECB Financial Stability Review. The ECB published its Financial Stability Review for the second half of 2015. The report identifies the major risks to financial system stability over the next two years. (11/25/2015) ECB press release.

ESMA releases accounting enforcement decisions on IFRS financial statements. ESMA published an extract from its confidential database of enforcement decisions on financial statements to provide issuers and users of financial statements with information regarding which accounting treatments European enforcers consider falling within the accepted range of those permitted by the IFRS. (11/25/2015) ESMA press release.

European Commission proposes new scheme for insuring European bank deposits. The European Commission proposed new measures to implement the European Deposit Insurance Scheme, a euro-wide insurance scheme for bank deposits in the EU. (11/24/2015) EC press release.

FCA consults on changes to rules regarding delayed disclosure of inside information. The FCA published a consultation paper that proposes to amend the guidance in its Disclosure and Transparency Rules concerning when it is appropriate for issuers with securities admitted to trading on a regulated market to legitimately delay disclosure of inside information. Comments should be submitted on or before February 20, 2016. (11/20/2015) FCA press release.

PRA consults on proposal to require external audit of Solvency II public disclosures. The PRA published a consultation paper that proposes a policy to require the external audit of the quantitative and qualitative information included in certain sections of the Solvency and Financial Condition Report, which firms subject to Solvency II are required to prepare and publicly disclose under Pillar 3. Comments are due on or before February 19, 2016. (11/20/2015) PRA press release.

EBA consults on criteria for preferential treatment in LCR calculations for cross-border intragroup liquidity flows. The EBA requested comment on a consultation paper that proposes draft Regulatory Technical Standards (RTS) specifying additional objective criteria for the application of a preferential treatment in the calculation of the liquidity coverage requirement (LCR) for cross-border intragroup liquidity flows. Comments are due on or before January 13, 2016. (11/18/2015) EBA press release.

FCA releases terms of reference for asset management market study. The FCA announced the areas it will assess in its market study into competition in the asset management industry, which includes the ways in which asset managers compete to deliver value; asset managers’ motivation and ability to control costs along the value chain; and the effect of investment consultants on competition for institutional asset management. Comments on these topics are due on or before December 18, 2015. (11/18/2015) FCA press release.

ESMA consultation on the validation and review of CRAs’ methodologies. ESMA requested comment on a Discussion Paper that seeks to assist ESMA in developing its views on the quantitative and qualitative techniques used as part of the validation of methodologies required under the Credit Rating Agency Regulation. Comments should be submitted on or before February 19, 2016. (11/17/2015) ESMA press release.

ESMA database makes available data on pan-EU trading suspensions and removals. ESMA announced the release of a new database that provides information on trading suspensions and removals of financial instruments admitted to trading in European regulated markets. The database also includes the restoration details that national supervisory authorities must notify under the Markets in Financial Instruments Directive (MiFID). (11/17/2015) ESMA press release. 

PRA issues final rules on contractual stays in third-country financial contracts.The PRA issued a policy statement that responds to the feedback it received to a consultation paper regarding contractual stays in financial contracts governed by third-country law and provides the final rules. Among other things, the final rules prevent firms from creating new obligations or materially amending existing obligations unless the counterparty agrees to be subject to similar stays on early termination and close-out to those that would apply under UK law to UK firms that enter into resolution. The rules will apply to financial arrangements with counterparties that are credit institutions or investment firms beginning June 1, 2016, and to financial arrangements with all other counterparties beginning January 1, 2017. The PRA also released a related supervisory statement. (11/13/2015)

ESMA updates EMIR data reporting technical standards. ESMA released updated technical standards regarding data reporting requirements under EMIR that incorporate ESMA questions and answers explaining EMIR reporting data fields along with improvements derived from existing EMIR technical standards. (11/13/2015) ESMA press release.

EU Commission adopts equivalence decisions for CCPs. The European Commission adopted equivalence decisions for CCP regulatory regimes in five countries. The European Commission has recognized the CCP regulatory regimes in Canada, Switzerland, South Africa, Mexico and the Republic of Korea as equivalent to the regulatory regimes governing EU CCPs. (11/13/2015) EC press release.

FCA discussion paper on proposal regarding Innovative Finance ISA and peer-to-peer agreements. The FCA solicited comments on a discussion paper that proposes guidance on the disclosure of information regarding peer-to-peer agreements included within the Innovative Finance ISA and rule amendments that would apply its rules on the suitability of advice to firms giving advice on peer-to-peer agreements. Comments should be on or before December 31, 2015. (11/12/2015) FCA press release.