European Union

ESMA publishes selected enforcement decisions on financial statements. The European Securities and Markets Authority published an extract from its confidential database of enforcement decisions on financial statements, which includes a selection of 14 decisions from March 2014 to June 2016. ESMA published the extract to inform market participants about which accounting treatments European national enforcers may consider as complying with International Financial Reporting Standards. (1/5/2017) ESMA press release.

European Supervisory Authorities raise concerns about proposed amendments to PRIIPs rules. In response the European Commission’s proposed amendments to draft Regulatory Technical Standards on key information documents for packaged retail and insurance-based investment products, ESMA, the European Banking Authority, and the European Insurance and Occupational Pensions Authority raised concerns that the proposed performance scenarios introduced comprehension issues and may be misleading. (12/23/2016) ESMA press release. 

EBA report supports retaining risk-sensitive framework for banks regulatory capital. The EBA published its report on cyclicality of banks’ capital requirements, which seeks to determine whether risk-sensitive bank capital requirements as laid down in the Capital Requirements Regulation and Capital Requirements Directive create unintended pro-cyclical effects. The report recommends that the EU retain its current risk-sensitive framework for bank regulatory capital.  (12/22/2016) EBA press release. 

European Commission announces enhanced rules on money laundering and counter terrorism financing. The European Commission proposed new rules to enhance the EU’s legal framework in the areas of money laundering, illicit cash flows and the freezing and confiscation of assets. Among other things, the proposed rules will establish minimum rules on the definition of criminal offenses and sanctions related to money laundering; tighten cash controls and allow authorities to act on amounts lower than the customs declaration threshold when criminal activity is suspected; and provide one single legal instrument for the recognition of both freezing and confiscation orders in other EU countries.  (12/21/2016) EC press release. 

EBA plans next EU-wide stress test for 2018. The EBA announced that intends to conduct its next EU-wide stress test of financial institutions in 2018. The EBA plans to incorporate an assessment of the impact of IFRS 9 into its methodology for the 2018 stress test exercise. (12/21/2016) EBA press release.

EBA announces data collection for commodity derivatives firms to review the prudential framework for investment firms. The EBA announced a new initiative to collect data from commodity derivatives firms in an effort to support the European Commission in the calibration of the new prudential regime for investment firms. The data collection, which will run until February 20, 2017, focuses on gathering general and financial information as well as information on regulatory capital, liquidity and large exposures. (12/20/2016) EBA press release. 

EBA proposes harmonized EU-wide framework for covered bonds. In a report on EU covered bonds, the EBA proposed a harmonized framework for covered bonds in the EU, which would provide special regulatory and capital treatment to financial instruments that comply with the harmonized structural, credit risk and prudential standards. (12/20/2016) EBA press release.

EBA launches consultation on supervision of significant branches. The EBA requested comments on draft Guidelines on the supervision of significant branches, which proposes a framework for the identification of “significant-plus” branches requiring intensified supervision and outlines a coordinated approach to their supervision and the assessment of recovery planning facilitated through the framework of colleges of supervisors. Comments are due on or before March 20, 2017. (12/20/2016) EBA press release. 

ESMA adds new Q&A to guidance on Prospectus Directive. ESMA updated its questions-and-answers document on the application of the Prospectus Directive to include new information regarding the application of the ESMA guidelines on Alternative Performance Measures to prospectuses. (12/20/2016) ESMA press release. 

ESMA updates MAR Q&A. ESMA revised its Q&A document on the implementation of the Market Abuse Regulation to include new answers on the notification of managers’ transactions and how to handle investment recommendations.  (12/20/2016) ESMA press release. 

ESMA issues new Q&As on data reporting under MiFIR. ESMA published a new Q&A document on the application of the Market in Financial Instruments Directive and Regulation in relation to regulatory data reporting topics. (12/20/2016) ESMA press release. 

ESAs seek comments on regulation of Big Data. ESMA, the EBA, and EIOPA announced a public consultation on the potential benefits and risks of Big Data for consumers and financial firms to determine whether the existing regulatory framework is sufficiently flexible to cover Big Data, has gaps which need to be filled and how it impacts the use of Big Data technologies. Comments are due on or before March 17, 2017. (12/19/2016) ESMA press release. 

ESMA addresses MiFID II transparency regime waivers and market structure topics in updated Q&As. ESMA updated two Q&A documents regarding implementation issues relating to transparency topics and market structure topics under MiFID II and MiFIR. The updated Q&As establish the waiver application schedule for 2017 for those seeking waivers from the transparency regime and provide new information about algorithmic trading and the mandatory tick size regime. (12/19/2016) ESMA press release.

ESMA publishes new guidance on MiFID II commodity derivatives regime. ESMA issued a new Q&A document on commodity derivatives topics under MiFID II and MiFIR, which addresses several questions on position limits and ancillary activities requirements. (12/19/2016) ESMA press release. 

European Commission grants equivalence to regulatory regimes for CCPs and trading venues in ten non-EU jurisdictions. The European Commission announced that it has adopted equivalence decisions for the regulatory regimes for central counterparties and trading venue in several jurisdictions outside the EU. The Commission determined that the regulatory regimes for CCPs in India, Brazil, New Zealand, Japan Commodities, United Arab Emirates, and Dubai International Financial Centre were equivalent to EU rules. In addition, the Commission determined that Australia, Canada, Japan and Singapore have rules governing trading venues that meet the EU’s regulatory standards. (12/16/2016) EC press release. 

ESMA publishes revised Q&A on investor protection under MiFID II. ESMA revised its Q&A on the implementation of investor protection topics under MiFID II and MiFIR to clarify information regarding best execution; suitability; post-sale reporting; inducements (research); information on charges and costs; and underwriting and placement of a financial instrument. (12/16/2016) ESMA press release. 

ESMA revises AIFMD Q&A. ESMA revised its Q&A document on the application of the Alternative Investment Fund Managers Directive to include new information on reporting obligations by non-EU AIFMs under Article 42 of the AIFMD. (12/16/2016) ESMA press release. 

ESAs conclude that regulatory action on automation in financial advice is not yet required. ESMA, the EBA, and EIOPA published a joint report that details the findings of their assessment of automation in financial advice. The report concludes that the proliferation of automated advice is still at an early stage and the phenomenon is not equally present across the insurance, banking and investment sectors. The ESAs declined to take any cross-sectoral regulatory or supervisory actions at this time, but indicated that they will monitor the evolution of the market. (12/16/2016) ESAs press release. 

ECB statement on macroprudential policies. The ECB issued a statement following the meeting of its Macroprudential Forum that provides an overview of the current status of macroprudential policies, including policies on cyclical systemic risks, real estate market risks, global systemically important banks and other systemically important institutions. (12/15/2016) ECB press release. 

EBA finalizes guidelines on revised Pillar 3 disclosure requirements. The EBA issued final Guidelines on regulatory disclosure requirements following an update of the Pillar 3 requirements by the Basel Committee, which provide additional guidance to G-SIIs and O-SIIs in complying with the Pillar 3 framework and the CRR. The Guidelines will apply from December 31, 2017. (12/14/2016) EBA press release. 

EBA issues final draft technical standards on cooperation and exchange of information for passporting under PSD2. The EBA published its final draft RTS specifying the framework for cooperation and exchange of information between Competent Authorities for passport notifications under the revised Payment Services Directive, which are intended to facilitate cross-border provision of payment services in the EU internal market. (12/14/2016) EBA press release.

ESMA recognizes ICE Clear US Inc. as third-country CCP under EMIR. ESMA announced that it has revised its list of recognized third-party central counterparties to include ICE Clear US Inc. (12/14/2016) ESMA press release. 

United Kingdom

PRA seeks comments on public working draft of XBRL taxonomy. The Prudential Regulation Authority requested feedback on a public working draft of the Bank of England Banking XBRL Taxonomy v0.9.1 and related technical artefacts. Comments are due on or before January 16, 2017. (1/9/2017) PRA press release. 

FCA highlights key themes from feedback on its future Mission. The UK Financial Conduct Authority published a summary of key themes from public feedback on the agency’s future Mission. The FCA noted that responses emphasized a desire for a clearer rationale for the FCA’s decisions; the need for clear definitions of vulnerable consumers; clarity on sets of principles for business and on existing rules; and more active engagement with firms. (1/3/2017) FCA press release. 

PRA policy statement on reporting format of NSTs and reporting clarifications under Solvency II. The PRA published a policy statement on the reporting format of National Specific Templates under Solvency II, which establishes final rules to incorporate NST information requirements within the Reporting Part of the PRA Rulebook; sets out the requirement for firms to report their NSTs in Excel templates designed using XBRL principles; and provides updated LOG files to accompany NSTs to reflect changes in cell references, reporting clarifications and technical corrections. (12/19/2016) PRA press release.

FCA consults on additional MiFID II implementation proposals. The FCA requested comments on a fourth set of implementation proposals for MiFID II, which include technical Handbook changes related to specialist conduct of business regimes, tied agents and SME growth markets as well as guidance on transaction reporting. Comments are the proposals related to Chapter 7 on Fees are due on or before January 16, 2017. Comments on all other proposals are due on or before February 17, 2017. (12/16/2016) FCA press release.

FCA examines use of incentives to encourage compliance with financial regulation. The FCA published an occasional paper that considers the basic economic theory of incentives and how they can be used to enhance compliance in financial regulation. (12/16/2016) FCA press release. 

FCA occasional paper discusses behavior and compliance in organizations. The FCA released an occasional paper that draws on insights from psychology to consider the factors that influence effective compliance and provides suggestions for how regulators and firms can improve levels of compliance. (12/16/2016) FCA press release.

PRA finalizes transitional approach for 2017/18 PRA fees and FSCS levies for insurers. The PRA issued a policy statement that establishes final rules for transitional arrangements that will be applied to the 2017/18 PRA fee and Financial Services Compensation Scheme levy years for all insurance firms subject to fee blocks for general insurance and life insurance, and FSCS levy classes for general insurance and life insurance. (12/16/2016) PRA press release. 

Regulation Round-up.

 The FCA published the December 2016 edition of its Regulation Round-up. (12/15/2016)

PRA consultation paper on investments in illiquid unrated assets and equity release mortgages under Solvency II. The PRA requested comments on a consultation paper that proposes its expectations of appropriate practice for firms investing in illiquid, unrated assets within their Solvency II matching adjustment portfolios. Comments are due on or before March 14, 2017. (12/15/2016) PRA press release. 

PRA seeks comments on proposals concerning maintenance of the TMTP under Solvency II. The PRA published a consultation paper that contains proposed updates to the PRA’s supervisory statement on the recalculation of the Transitional Measure on Technical Provisions under Solvency II, which clarify the PRA’s expectations for maintaining the calculation of the TMTP both at outset and over the transitional period. Comments are due on or before March 15, 2017. (12/15/2016) PRA press release.

FCA finds that pension providers are making good progress on reducing fees and charges. The FCA and the Department for Work and Pensions released the findings of their joint review of pension providers’ progress in implementing the recommendations of the Independent Project Board to reduce fees and charges. The review found that most providers have made significant progress in meeting the recommendations. (12/13/2016) FCA press release.