European Central Bank ECB to publish new unsecured overnight interest rate. The ECB announced that it has decided to develop a euro unsecured overnight interest rate based on data already available to the Eurosystem. The interest rate, which would be produced before 2020, would complement existing benchmark rates produced by the private sector and serve as a backstop reference rate. (9/21/2017)
New working group on a risk-free reference rate for the euro area. In a joint press release, the FSMA, ESMA, the ECB and the EC announced the launch of a new working group tasked with the identification and adoption of a “risk-free overnight rate,” which can serve as a basis for an alternative to current benchmarks used in a variety of financial instruments and contracts in the euro area. The working group, chaired by a private sector representative and with the Secretariat to be provided by the ECB, will regularly consult market participants and end-users, as well as gather feedback from other public authorities. (9/21/2017)
Final migration wave of T2S successfully completed. The ECB announced that the single European securities settlement platform TARGET2-Securities (T2S) is now fully operational. The final migration wave, with Iberclear from Spain and Nasdaq CSD from Estonia, Latvia and Lithuania, successfully implemented all migration-related tasks over the weekend of September 15-17, 2017. Having completed their first operational day on Monday, September 18, the two central securities depositories can now settle all their securities transactions in euro via T2S. (9/19/2017)
EBA and ESMA publish guidelines on suitability assessment for management body members and key function holders. The EBA and ESMA announced that they have published their joint Guidelines to assess the suitability of members of management bodies and key function holders. (9/26/2017)
ESMA publishes the responses to its CP on CSDR guidelines on internalized settlement reporting. ESMA announced that it has published the responses received to its Consultation on guidelines on internalized settlement reporting under Article 9 of CSDR. (9/20/2017)
ESMA lays out procedure for ETDs access to CCPs under MiFID II. ESMA announced that it has issued a procedure under Markets in Financial Instruments Regulation (MiFIR) laying out the steps for trading venues to temporarily opt-out from access provisions for exchange-traded derivatives. (9/15/2017)
ESMA warns against unauthorized use of its identity and logo. ESMA announced that it has been informed that its identity and logo have been used by individuals in scam emails targeting investors. These individuals attempted to steal personal data and convince the potential victims to transfer money to them, for example by fraudulently presenting themselves as employees of ESMA conducting ESMA investigations. (9/13/2017)
European Banking Authority
EBA publishes guidance to further harmonize EU banks’ internal governance. The EBA announced that it has published its revised Guidelines on Internal Governance. (9/26/2017)
ESAs provide guidance to prevent terrorist financing and money laundering in electronic fund transfers. The Joint Committee of the three European Supervisory Authorities announced that they have published guidelines to prevent the abuse of funds transfers for terrorist financing and money laundering purposes. (9/22/2017)
EBA consults on amendments to technical standards on supervisory disclosure. The EBA announced that it has launched a consultation to amend the Implementing Technical Standards on supervisory disclosure, which specify the format, structure, contents list and annual publication date of the supervisory information to be disclosed by competent authorities. The revised draft ITS will incorporate the changes to the EU legal framework and the establishment of the Single Supervisory Mechanism. The consultation runs until December 22, 2017. (9/22/2017)
EBA welcomes European Commission proposal to strengthen the framework for its operation. The EBA welcomed the EC’s proposal to adjust and upgrade its current framework to ensure the Authority is adequately equipped in terms of powers, governance and funding. In particular, the EBA welcomed its strengthened competencies in the areas of supervisory convergence and mediation, supporting the EBA’s enhanced focus on more integrated and consistent supervisory processes and outcomes in the Single Market. (9/20/.2017)
EBA launches consultation on significant risk transfer in securitization. The EBA announced that it has launched a public consultation on its discussion paper on significant risk transfer in securitization. The consultation runs until December 19, 2017. (9/19/2017)
PRA urges firms to adopt transitional arrangements for capital impact of IFRS 9 accounting standard. In a letter to CEOs, the Prudential Regulation Authority encouraged firms to use transitional arrangements to address the anticipated impact of the IFRS 9 expected credit loss accounting on regulatory capital when the standard becomes effective, beginning in January 2018. The PRA emphasized that it would be unlikely to give credit in stress testing for a subsequent adoption of IFRS 9 transitional arrangements. (9/25/2017) PRA letter.
BOE releases Financial Policy Committee statement. The Bank of England issued a statement from its Financial Policy Committee following its meeting on September 20, 2017, in which the Committee concluded that the current outlook for UK financial stability is largely unchanged. The Committee also recommended that the PRA set the minimum leverage requirement at 3.25 percent. (9/25/2017) Financial Policy Committee statement.
FCA policy statement and consultation on IDD implementation. The UK Financial Conduct Authority published a policy statement that contains near final rules on the implementation of several aspects of the Insurance Distribution Directive, including, among other things, the application of the IDD; professional and organizational requirements; and the FCA’s approach to complaints and out-of-court redress. The FCA also requested comments on a new consultation paper that sets out the FCA’s remaining proposals on IDD implementation, including those related to product oversight and governance for insurance undertakings and insurance distributors as well as enhanced conduct rules for insurance-based investment products. Comments are due on or before November 25, 2017. (9/25/2017) FCA press release.
May proposes two-year Brexit transitional period. Bloomberg reported that UK Prime Minister Theresa May, in a highly-anticipated speech, indicated that the UK will honor its financial obligations to the EU as part of its plan to exit and called for a two-year implementation period during which the UK would contribute to the EU budget and abide by EU regulations. (9/22/2017)
FCA signs Fintech cooperation agreement with Hong Kong Insurance Authority. The FCA announced that it has signed a cooperation agreement with the Hong Kong Insurance Authority that will allow the regulators to share information on innovation and referrals of innovative firms seeking to enter each other’s market in an effort to support Fintech development. (9/21/2017) FCA press release.
FCA releases findings from the Ageing Population Project. The FCA published an Occasional Paper that details the findings of its Ageing Population Project, which explores how older people use financial products and examines the impact of the ageing population on financial services. (9/21/2017) FCA press release.
Regulation round-up. The FCA published the September 2017 edition of its Regulation round-up. (9/21/2017)
FCA, PRA statement on compliance with ESA Guidelines on changes in controls. The FCA and the PRA have notified the Joint European Supervisory Authorities that they will comply with the Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector except for provisions relating to the identification of acquirers of indirect qualifying holdings. The Guidelines become effective on October 1, 2017. (9/20/2017) FCA statement.
FCA sets out approach to PSD2 implementation. The FCA published a policy statement that finalizes proposed Handbook changes in an effort to implement the revised Payment Services Directive, which will become effective on January 13, 2018. Alongside the policy statement, the FCA published its revised Approach Document, which is designed to help firms navigate the payment services and emoney regulatory requirements. (9/19/2017) FCA press release.
PRA updates supervisory statement on depositor protection rules. The PRA updated its supervisory statement on the Depositor Protection and Dormant Account Scheme rules to clarify the use of the Financial Services Compensation Scheme protected badge on the information sheet provided to depositors. (9/19/2017) FCA press release.
BOE seeks comments on ring-fencing taxonomy. The BOE published a public working draft of the standalone ring-fencing taxonomy that will be included in v3.0 of the BOE Banking XBRL Taxonomy and will be among the requirements for reporting of ring-fencing data. Comments are due on or before October 6, 2017. (9/18/2017) BOE XBRL Taxonomy webpage.
FCA urges firms to obtain MiFID II authorizations and variation of permissions. The FCA reminded firms that they must apply for new authorizations or a Variation of Permission ahead of MiFID II’s application date of January 3, 2018. The FCA noted that unregulated proprietary traders that use a form of direct electronic access provided by a regulated firm to access trading venues may require authorization under MiFID II. (9/18/2017) FCA notice.
FCA refers investment consultancy services for investigation by CMA. The FCA announced its final decision to make a Market Investigation Reference to the Competition and Markets Authority in relation to investment consultancy and fiduciary management services. The FCA based its decision on the findings of its asset management market study, which identified a weak demand side; high levels of concentration and relatively stable market shares for the largest three firms; barriers to expansion for newer and smaller consultants; and conflicts of interest. (9/14/2017) FCA press release.