BANKING

FIA opposes forced relocation of euro-denominated derivatives clearing

The Futures Industry Association (FIA) has published a letter setting out its concerns about the potential approach of forced relocation of euro-denominated derivatives clearing to the EU, which was outlined by the European Commission in its May 2017 Communication on certain challenges for critical financial market infrastructures and for further developing the Capital Markets Union (CMU). The FIA states that relocation would be the most disruptive and expensive approach to overseeing third-country central counter-parties (CCPs), without improving the oversight of this activity. FIA, 6 June 2017

 

INVESTMENTS AND FUNDS European Commission initiatives to tackle information barriers in SME funding market

The European Commission has published a staff working document addressing information barriers in the small and medium enterprise (SME) funding market in the context of the capital markets union (CMU). Key findings include the following:

  • The lack of financial knowledge by SMEs and the lack of a recognised source of business finance advice for SMEs, able to guide them through the complexities of bank and non-bank finance and help them secure access to the most appropriate form(s) of finance, hamper the use of financing options by SMEs. The Commission states, among other things, that as the leading funding provider for SMEs, banks are in a good position to improve the understanding of European SMEs of their financing opportunities (for example, through the provision of feedback on declined credit applications).
  • The lack of standardised, verifiable and accessible financial information about SMEs represents a significant barrier for alternative finance providers to invest into/lend to European SMEs.
  • Improving the availability of SME credit and financial information for (alternative) investors and lenders is essential to support their access to a broader range of funding options.
  • The alternative forms of finance are growing rapidly.
  • Addressing the information barriers in the SME funding market requires a mix of policy responses.

The staff working document provides examples of initiatives recently adopted by EU member states to improve the flow of information in the SME funding market.

To help address the limited understanding of SMEs with regard to their financing opportunities, the European Association of Co-operative Banks (EACB), together with four other European banking associations, has published a set of high-level principles regarding the communication between SMEs and banks around declined credit applications. The aim of the principles is to ensure that the feedback given by banks to their SME clients is sufficient for them to understand the reasons behind the bank's decision process regarding a credit application. European Commission, 6 June 2017 ESMA updates MiFID II Q&A on investor protection (June 2017)

ESMA has published an updated version of its questions and answers (Q&As) on investor protection topics under the MiFID II Directive and the Markets in Financial Instruments Regulation (MiFIR). ESMA has added 14 new Q&As covering:

  • Information on costs and charges.
  • Post-sale reporting.
  • Appropriateness.

ESMA, 6 June 2017