UK Supreme Court ruling complicates May’s plans for a hard Brexit. The Wall Street Journal reported on a ruling by the UK’s Supreme Court in a challenge to Prime Minister Theresa May’s authority to initiate the UK’s withdrawal from the European Union, which held that the government must seek approval from Parliament before commencing negotiations. The ruling opens the door for the Labour Party to influence the form of the agreement with the EU, making it more difficult for May to deliver on her plan for a “hard Brexit,” which would prevent the UK from being subject to the EU’s immigration rules or the Court of Justice once it leaves the bloc. (1/24/2017)
FCA consults on proposed changes to the client assets regime. The UK Financial Conduct Authority published a consultation paper that seeks feedback on several aspects of the client assets regime, including the client money distribution rules and their interaction with the special administration regime for investment firms; proposed changes affecting the return of client assets; and changes to the client money rules to address the forthcoming indirect clearing requirements in the European Market Infrastructure Regulation and Markets in Financial Instruments Regulation Regulatory Technical Standards. Comments on the EMIR and MiFIR RTS proposals are due on or before February 23, 2017. Comments on all other proposals are due on or before April 24, 2017. (1/23/2017) FCA press release.
European Commission consults on mid-term review of Capital Markets Union. The European Commission requested comments on a public consultation that seeks feedback on how the current Capital Markets Union Action Plan can be updated and completed to provide a policy framework for the development of capital markets that builds on the initiatives already presented and that takes into account current market conditions. Comments are due on or before March 17, 2017. (1/20/2017) EC press release.
FCA finalizes guidance on default notice requirements for guarantor lending firms. The FCA published finalized guidance that establishes its interpretation of the notification requirements for guarantor lending firms seeking to take payment from a guarantor in respect of a borrower who is in default. (1/19/2017) FCA press release.
ECB offers details on purchases of assets with yields below the deposit facility rate under asset purchase programs. The European Central Bank published additional details concerning how the Eurosystem will buy assets with yields below the interest rate on the deposit facility under the asset purchase program. The ECB determined that purchases of assets with yields below the DFR will only occur under the public sector purchase program and priority will be given to purchases of assets with yields above the DFR for each jurisdiction. (1/19/2017) ECB press release.
EBA, ESMA joint report on requirements for CCPs under CRR and EMIR. The EBA and the European Securities and Markets Authority issued a joint report on the functioning of the Capital Requirements Regulation with obligations for central counterparties under EMIR. The report recommends clarification of the requirements for credit, market, and counterparty credit risk in the CCR to ensure that only risks not already covered by specific financial resources for activities not related to clearing are covered by CRR requirements. (1/18/2017) ESMA press release.
ECB publishes results of euro area bank lending survey for January 2017. The ECB released the results of its January 2017 euro area bank lending survey, which found increasing demand for loans across all categories; stable credit standards for loans to enterprises; and continued easing of credit terms and conditions across all loan categories. (1/17/2017) ECB press release.
ESMA issues official translations of MAR guidelines on commodity derivatives. ESMA announced that it has issued the official translations of the final guidelines on commodity derivatives under the Market Abuse Regulation, which clarify one aspect of the definition of inside information in relation to commodity derivatives under MAR. (1/17/2017) ESMA press release.
FCA, PRA consult on FSCS management expenses levy limit. The FCA and the PRA requested comments on a joint consultation concerning the management expenses levy limit for the Financial Services Compensation Scheme for 2017/18, which is proposed to be set at £74.54 million. Comments are due on or before February 13, 2017. (1/16/2017) FCA press release.
PRA finalizes rule changes to the deposit protection limit. The PRA published a policy statement that contains the final rules on the deposit protection limit, which reset the deposit protection limit to protect depositors up to £85,000 and provide a five month transitional period for firms to amend disclosure and advertising materials to reflect the new deposit protection limit. The PRA also issued an updated supervisory statement that establishes the PRA’s expectations in relation to the rule changes. (1/16/2017) PRA press release.
ESMA issues opinions on exemptions for Swedish pension schemes from central clearing obligations. ESMA issued two opinions on requests from Swedish pension schemes for exemptions from the obligation to centrally clear OTC derivative contracts under EMIR. ESMA agreed with Finansinspektionen that the exemptions are justified because the pension schemes would encounter difficulties in meeting the variation margin requirements. (1/16/2017) ESMA press release.
ESMA briefing on transaction reporting requirements under MiFID II. ESMA published a briefing note that provides additional information on the guidelines, technical requirements and templates for transaction reporting under the Markets in Financial Instruments Directive and Regulation. ESMA indicated that it will begin data collection under the new reporting regime in advance of the application date of MiFID II and MiFIR, which will apply as of January 3, 2018. (1/16/2017) ESMA press release.
EBA updates Risk Dashboard for EU banks. The EBA updated its Risk Dashboard on the main risks and vulnerabilities in the EU banking system to reflect information from the third quarter of 2016. The updated dashboard indicated that the high number of non-performing loans and high cost-to-income ratio remain concerns, but the NPL ratio has improved slightly. (1/13/2017) EBA press release.
ESMA calls for application of MiFIR product intervention powers to fund management companies. In an Opinion on the scope of the product intervention powers under MiFIR, ESMA maintained that fund management companies should be included in the scope of the powers, noting that excluding these firms could increase the risk of arbitrage where a type of fund that is restricted or banned under MiFIR could be distributed through fund management companies if they decided to market or distribute the funds themselves. (1/12/2017) ESMA press release.
ESMA updates review of regulators’ supervision of MiFID best execution requirements. In a follow-up report to its 2015 peer review of regulators’ supervision of best execution requirements under MiFID, ESMA found that regulators have improved in the amount of attention paid to the supervision of the best execution requirements and have adopted a more pro-active supervisory approach to monitoring compliance. (1/11/2017) ESMA press release.
EBA revises recommendation on the equivalence of supervisory regimes. The EBA amended its recommendation on the equivalence of confidentiality regimes to add several non-EU supervisory authorities to the list of non-EU or third country supervisory authorities whose confidentiality regimes can be regarded as equivalent, including the Australian Prudential Regulation Authority, the Reserve Bank of Australia, the Hong Kong Monetary Authority, the Bank of Japan, the Japan Financial Services Agency, and the Central Bank of the Republic of Kosovo. (1/11/2017) EBA press release.
EBA recommends equivalence finding for supervisory and regulatory requirements for Turkey and New Zealand. In an Opinion on non-EU countries’ equivalence with the EU prudential supervision and regulatory requirements, the EBA concluded that the supervisory and regulatory framework applicable to credit institutions in Turkey and New Zealand can be regarded as equivalent to that applied in the EU. (1/11/2017) EBA press release.