Risks to EU financial system have intensified. The Joint Committee of the European Supervisory Authorities published its fifth report on risks and vulnerabilities in the EU financial system. The report found that in the past six months, risks affecting the EU financial system have not changed in substance but have intensified. The major risks include low growth, low inflation, and volatile asset prices; search for yield behavior exacerbated by potential rebounds; deterioration in the conduct of business; and increased concern about cyber-attacks. (5/5/2015) ESMA notice.
EBA updates report on Additional Tier 1 capital instruments. The European Banking Authority (EBA) updated its October 7, 2014 report on the monitoring of Additional Tier 1 (AT1) capital instruments issued by EU institutions. The report illustrates the EBA’s views on clauses that it recommends be avoided in the terms and conditions of AT1 instruments. In particular, the report clarifies the EBA’s position on acceptable triggers for regulatory calls and on the conditions for the inclusion of tax gross-up provisions in the terms and conditions of AT1 instruments. (5/4/2015) EBA press release.
PRA policy statement regarding international banks. The UK Prudential Regulation Authority (PRA) issued a policy statement on the Branch Return rule and the final form of the Branch Return as they apply to firms operating in the United Kingdom which are not UK-headquartered firms. It follows up on the proposal to introduce a twice-yearly Branch Return, which would provide information about the UK activities of these firms. (4/30/2015) PRA press release.
PRA consults on Handbook revisions. The PRA published a consultation paper which would redraft certain modules of the PRA Handbook. It is the third in a planned series of consultations aimed at reshaping Handbook material inherited from the Financial Services Authority. Among other things, this consultation addresses passporting, regulatory reporting, internal governance, and the internal capital adequacy assessment process. Comments should be submitted by June 30, 2015. (4/30/2015) PRA press release.
ESMA recognizes third-country CCPs. ESMA recognized ten third-country central counter-parties (CCPs) established in Australia, Hong Kong, Japan and Singapore. The recognition by ESMA allows third country CCPs to provide clearing services to clearing members or trading venues established in the EU. (4/29/2015) ESMA notice.
EBA consults on data template for identifying global systemically relevant institutions. The EBA launched a consultation to update its data template for the identification of global systemically relevant institutions. The need for this revision was prompted by the new data template and some minor revisions introduced by the Basel Committee on Banking Supervision. Comments should be submitted by May 20, 2015. (4/29/2015) EBA press release.
FCA guidance on financial crime systems and controls. The UK Financial Conduct Authority (FCA) published finalized guidance on financial crime systems and controls. The guidance is effective immediately. (4/27/2015) FCA press release.
ESMA updates EMIR reporting guidance. ESMA issued the 13th update of its Q&A document on the implementation of the European Markets Infrastructure Regulation (EMIR). This update relates to the second level of the EMIR validation specifications to be commonly applied by the Trade Repositories (TRs) to ensure that reporting is performed according to the EMIR regime. ESMA expects the TRs to be able to implement the validation by the end October 2015. (4/27/2015) ESMA notice.
ESMA consults on draft guidelines for the assessment of competence to provide financial advice. ESMA launched a consultation on draft guidelines specifying criteria for the assessment of knowledge and competence of natural persons in investment firms that provide investment advice or information about financial instruments, investment services or ancillary services to clients. Comments should be submitted by July 10, 2015. (4/23/2015) ESMA notice.
Bank of England supervisory statement on Solvency II. The Bank of England published a supervisory statement on applying the European Insurance and Occupational Pensions Authority’s Set 1 Guidelines to PRA authorized firms. (4/22/2015) Bank of England press release.
ESMA seeks information on virtual currencies. ESMA issued a call for evidence on investments using virtual currency or distributed ledger technology. ESMA seeks information and views from stakeholders on new developments in how virtual currency technology is used to issue, buy and sell and record ownership of securities. Comments should be submitted by July 21, 2015. (4/22/2015) ESMA notice.
EBA workshop on proportionality measures for regulatory purposes. On July 3,2015, the EBA will host its second workshop on the application of the proportionality principle in the EU banking supervisory framework, covering the latest institutional and regulatory reforms. Experts from the supervisory community, the financial industry, EU institutions and academia will gather to discuss and assess progress made since the last workshop on the application of the proportionality principle. Issues will include financial regulatory complexity and the role of industry. (4/20/2015) EBA press release.
European regulators to hold third consumer protection day. The Joint Committee of the European Supervisory Authorities, which consists of ESMA, the EBA and the EIOPA, announced that the third joint ESA consumer protection day will focus on conduct risk, the next decade in finance, and the growing digitalization of financial services. Consumer Protection Day will be held on June 3, 2015 in Frankfurt am Main, Germany, and will bring together consumer/investor organizations, national regulators, EU institutions, academics and key market participants. (4/20/2015) ESMA notice.
EBA assessment of cross-border supervision. The EBA published its annual assessment of EU colleges of supervisors, responsible for the oversight of cross border banks. The report assesses how colleges have functioned during 2014 and identifies key activities for the effective oversight of EU cross border banking groups in 2015. The report introduces items for supervisory attention in 2015, including conduct risk, information technology risks and the need for effective decisions on recovery plans. (4/16/2015) EBA press release.
ESMA updates data on credit rating agency performance. ESMA published its latest set of semi-annual statistical data on the performance of credit ratings, including transition matrices and default rates. The dataset covers the period from July 1, 2014 to December 31, 2014. (4/15/2015) ESMA notice.
FCA guidance for multilateral trading facilities. The FCA published finalized guidance for multilateral trading facilities (MTF). The finalized guidance sets out the key requirements and the FCA’s Good Practice Observations relating to MTF operator rulebooks. In particular a firm operating an MTF must have transparent and non-discretionary rules and procedures for fair and orderly trading. (4/15/2015) FCA press release.