FINANCIAL REGULATORY This document contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate. 1 | ARTHUR COX RegBrief, SeptemberNovember 2015 Group Briefing IRELAND AIFMD Updated Q&A: on 5 October 2015, the Central Bank published the 16th Edition of its AIFMD Q&A, adding responses dealing with the provision of directed brokerage services, whether existing authorised alternative investment fund managers are required to insert a board composition rationale into their programmes of operations and whether unitholder approval is required in respect of certain nonmaterial changes to a trust deed of a unit trust or a deed of constitution of a common contractual fund. Proposed changes to Central Bank AIF Rulebook: the Central Bank is consulting on proposed changes to its AIF Rulebook. Proposed policy changes include extending the categories of investors who are exempt from the eligibility criteria and the minimum subscription amount required to invest in a qualifying investor alternative investment fund (QIAIF), amending the reporting requirement applicable to alternative investment fund (AIF) depositaries where they provide services to a non-Irish AIF, amending the capital and reporting requirements applicable to alternative investment fund managers (AIFMs), extending the list of requirements from the 2013 Irish AIFMD Regulations applicable to QIAIFs with registered AIFMs and aligning the rules applicable to collateral received by retail investor AIFs under an overthe-counter (OTC) derivative, (reverse) repurchase agreement or securities lending agreement with the new Central Bank UCITS Regulations. AML Central Bank report: the Central Bank published a Report on Anti-Money Laundering, Countering the Financing of Terrorism and Financial Sanctions Compliance in the Irish Funds Sector. See the recent Briefing by our Asset Management and Investment Funds Group for further details. BANKING UNION: BRRD Central Bank FAQ: the Central Bank published FAQs on the payment of levies to the Bank and Investment Firm Resolution Fund set up under the 2015 Irish Regulations that transposed the Bank Recovery and Resolution Directive (BRRD). Further information: for further information on BRRD in Ireland, read our recent Client Briefing. KEY CONTACTS For further information please speak to your usual Arthur Cox contact or one of the following lawyers: ORLA O’CONNOR PARTNER +353 1 618 0521 [email protected] ROBERT CAIN PARTNER +353 1 618 1146 [email protected] 2 | ARTHUR COX FINANCIAL REGULATORY REGBRIEF, SEPTEMBER-NOVEMBER 2015 CAPTIVE INSURERS AND REINSURERS Governance: the Central Bank published its Corporate Governance Requirements for Captive Insurance and Captive Reinsurance Undertakings 2015. Further detail is set out in our Insurance Group’s November 2015 Insurance Regulatory Update. CENTRAL BANK INDUSTRY FUNDING 2015 guide:the Central Bank published its Guide to the 2015 Industry Funding Regulations. Among other matters, it confirms that credit servicing firms and ICAVs are now in scope. CENTRAL BANK’S STRATEGIC PLAN Key focus areas:the Central Bank has published its Strategic Plan 2016-2018 which confirm key focus areas as including the delivery of the new Central Credit Register, the implementation of Solvency II and cooperation with the Single Resolution Board (SRB) once the Single Resolution Mechanism (SRM) goes live on 1 January 2016. CONTRACTS FOR DIFFERENCE Results of themed inspection: the Central Bank recently published the results of its themed inspection into retail clients who invested in contracts for difference in 2013 and 2014, finding that 75% made a loss and noting that issues had been identified in relation to execution-only sales. All MiFID firms were written to in relation to the results of the inspection, and the letter also set out recommendations for improving compliance arrangements. COUNTERCYCLICAL CAPITAL BUFFER Central Bank FAQ and identification: the Central Bank published an FAQ - Countercyclical Capital Buffers and Other Systemically Important Institutions Buffers, and has identified both Bank of Ireland and AIB as domestically systemically important for the purposes of the 2014 Irish CRD IV Regulations. The countercyclical capital buffer means that banks need to hold additional capital when there is strong credit growth in the economy. The buffer can then be released, partially or fully, either in the case of a crisis or when credit growth and associated risks recede. CREDIT GUARANTEE SCHEME Amendments proposed: the Government proposed changes to the existing Credit Guarantee Scheme including an increase in the amount of the guarantee that the Minister for Jobs, Enterprise and Innovation can provide (from 75% to 80%) of the credit amount for which the enterprise is liable and which remains unpaid. The draft Bill (as amended at Dáil Select Committee stage) is available here. CREDIT RATING AGENCIES Irish regulations: The European Communities (Credit Rating Agencies) (Civil Liability) Regulations 2015 were signed on 18 September 2015. Among other matters, they clarify what, from an Irish perspective, will constitute “intention” and “gross negligence” for the purposes of establishing civil liability for credit rating agencies. CREDIT SERVICING New requirements for firms: the Central Bank published Authorisation Requirements and Standards for credit servicing firms together with an FAQ. Further details are set out in our recent Briefing. CREDIT UNIONS ReBo Review: on 21 October 2015, the Department of Finance published a Review of the Credit Union Restructuring Board and announced that 31 March 2016 is the final date for acceptance of any further restructuring proposals. CYBER SECURITY Results of Central Bank inspection: on 23 September 2015, the Central Bank published an industry letter setting out the findings of its thematic inspection regarding cyber security and operational risk for investment firms, funds, fund service providers and stockbrokers. For further information, see the Briefing by our Cyber-Security Group. DEPOSIT GUARANTEE SCHEMES New Directive transposed: the recast Deposit Guarantee Schemes Directive has been transposed into Irish law. We will shortly be issuing a Briefing summarising the new regime and the Central Bank’s dedicated website (www. depositguarantee.ie) is also live. ELECTRONIC MONEY INSTITUTIONS Updated process: the Central Bank has updated its authorisation process for electronic money institutions. INTERCHANGE FEES Irish regulations published: from 9 December 2015, interchange fees charged by banks to retailers for accepting debit and credit cards are capped. These fees do not impact customers directly, but could be reflected indirectly in higher prices. This is connected with the coming into force of the European Interchange Fees Regulation on 8 June 2015, and the publication of the related Irish Regulations. The Department of Finance’s press release is here. INVESTMENT FIRMS Proposed rulebook:the Central Bank is consulting on a proposal to issue a rulebook for investment firms by way of a regulation which would consolidate its conditions and requirements for both MiFID investment firms and IIA investment firms. The consultation closes on 27 January 2016. INVESTOR MONEY REGULATIONS New Central Bank Q&A: in advance of the Central Bank’s Investor Money Regulations 2015 for Fund Service Providers coming into effect on 1 April 3 | ARTHUR COX FINANCIAL REGULATORY REGBRIEF, SEPTEMBER-NOVEMBER 2015 2016 (see our Asset Management and Investment Funds Group’s Briefing), the Central Bank has published the 1st Edition of its Investor Money Regulations Q&A, covering general matters and more specific issues relating to segregation, risk management and investor money examination. MARKETS SUPERVISION Central Bank Programme of Themed Inspections for 2016:the Central Bank has published its programme of themed-inspections for 2016. Further information will be set out in separate Briefings to be issued this week. PAYMENT INSTITUTIONS Updated process: the Central Bank has updated its authorisation process for payment institutions. PERSONAL INSOLVENCY Amendments commenced: all of the recent amendments to the personal insolvency regime have now taken effect. For further detail on those amendments, see our recent Briefing. A proposal to further reduce the bankruptcy term from 3 years to 1 year is currently before the Dáil. PROSPECTUS LAW Prospectus handbook: the November 2015 edition of the Central Bank’s Prospectus Handbook has been published. The key changes deleted a section dealing with payments by cheque, and amended sections dealing with Article 8 notifications (notifications of the final offer price and amount of securities). Irish regulations: The Prospectus (Directive 2003/71/EC) (Amendment) Regulations 2015 have been signed into law, clarifying that Article 24 of the Prospectus Directive (dealing with committee procedure) stands alone, and transposing Article 1(1) of the Omnibus II Directive by requiring the Central Bank, as national competent authority (NCA), to notify the NCA of each host Member State, and the European Securities and Markets Authority (ESMA), of the final terms of an offer where these are not available in the base prospectus or in a supplement. SHORT SELLING Irish regulations: The European Union (Short Selling) (Amendment) Regulations 2015 have been published, and give the Central Bank an option (rather than an obligation) to serve notice of a failure to comply with the EU Short Selling Regulation. SOLVENCY II Transposed into Irish law: Solvency II has been transposed into Irish law. For further information, see our Insurance Group’s Regulatory Updates from September 2015, October 2015 and November 2015. STRESS TESTS Two Irish banks: AIB and Bank of Ireland have both been included on the provisional list of 53 banks that will be subject to the 2016 stress test run by the European Banking Authority (EBA). The European Central Bank (ECB) will carry out a parallel stress test for the remaining ‘significant’ banks that are not subject to the EBA stress test. TRACKER MORTGAGES Central Bank examination: on 2 October 2015, the Central Bank announced that it had started a broad examination of tracker mortgage-related issues covering, among other matters, transparency of communications with and contractual rights of tracker mortgage borrowers. It highlighted its current engagement with a number of lenders on issues relating to their ability to demonstrate that they have acted in the best interests of their tracker mortgage customers, with a number of lenders currently undertaking their own internal reviews. The Central Bank is also developing a methodology for a broader examination of tracker-related issues and has written to all lenders notifying them of its intention to conduct this examination. TRANSPARENCY REGIME Amending Directive transposed: the Irish transparency regime changed on 26 November 2015 when European legislation amending the Transparency Directive was transposed into Irish law. The most notable change was the widening of the existing disclosure obligation to capture a broader range of financial instruments including cashsettled derivatives. Our recent Briefing summarises the key changes and their practical impact. UCITS New Central Bank Regulations: in October, the Central Bank published the Central Bank UCITS Regulations 2015 which came into effect on 1 November 2015. These new Regulations, known as the UCITS Rulebook, set out in one place all of the requirements which the Central Bank imposes on UCITS investment funds, UCITS management companies and UCITS depositaries. For further detail, see our Asset Management and Investment Fund’s Briefing. Several updates have been made to the Central Bank’s UCITS Q&A to cover related matters. VARIABLE RATE MORTGAGES Central Bank consultation: the Central Bank is consulting on further protections for variable rate mortgage holders. Proposals on which industry views have been sought include a requirement that lenders prepare and publish a variable rate policy statement and a requirement that lenders give information on alternative product options. The Central Bank is also seeking views on whether the notice period given to a borrower before a variable rate change should be increased, and whether lenders must give reasons for such a change. The consultation closes on 12 February 2016. 4 | ARTHUR COX FINANCIAL REGULATORY REGBRIEF, SEPTEMBER-NOVEMBER 2015 EUROPE AIFMD Updated Q&A: ESMA’s AIFMD Q&A has been the subject of a number of recent updates (confirming that when a depositary of an AIF sub-delegates custody of its assets to either an EU or third-country central securities depositary (CSD), that CSD must comply with the delegation provisions under Article 21(11) of AIFMD, clarifying various issues on reporting, and confirming that a depositary’s liability regime applies to those assets for which a depositary has safe-keeping duties on a look-through basis according to the first sub-paragraphs of Articles 89(3) and 90(5) of the AIFMD Level 2 Regulation). AML Risk-based supervision: the European Supervisory Authorities are consulting on draft Risk Factors Guidelines and draft Risk-Based Supervision Guidelines in connection with the Fourth Money Laundering Directive (MLD4), with each consultation closing on 22 January 2016. For further information on MLD4, read our recent Briefing. BANK TRANSPARENCY Results of EBA exercise: the EBA has published the results of its 2015 EU-wide transparency exercise covering 105 banking groups in 21 countries (AIB, Bank of Ireland and permanent TSB were included in the exercise). BANKING UNION: BRRD EBA guidelines will shortly apply:the EBA’s Guidelines on the application of simplified obligations under Article 4(5) BRRD will apply from 23 December 2015. BRRD allows competent authorities and resolution authorities to apply simplified obligations concerning recovery and resolution plans to certain non-systemically important firms. Its Guidelines specifying conditions for group financial support under BRRD will apply from 9 February 2016. Collection of confidential information under BRRD: the EBA is consulting on draft guidelines on how confidential information collected under BRRD should be disclosed without identifying individual institutions or relevant entities. One of the key principles set out in the consultation is that confidential information should relate to a minimum of three institutions/ entities. The consultation will close on 27 January 2016. BANKING UNION: SRM Application date: the Single Resolution Mechanism (SRM) is scheduled to come into force on 1 January 2016. Over 90% ratification (based on weighted votes given to each Member State) was required and has now been obtained. Bridge financing from Member States: the EU Council has confirmed that bridge financing arrangements for the single resolution fund (SRF) have been approved. Each participating Member State, including Ireland, will enter into a separate (harmonised) loan facility with the SRB under which it will provide a national credit line to the SRB to back that Member State’s ‘compartment’ in the SRF in case a national bank needs to be resolved. This is part of the shortterm financing of the SRF pending it becoming fully operational. CAPITAL MARKETS UNION Action Plan published: on 30 September 2015, the European Commission (the Commission) published its Action Plan on Building a Capital Markets Union. Further detail is set out under the headings “Retail Financial Services” and “Prospectus Law” below. CET1 INSTRUMENTS Updated EBA list: the EBA has published an updated list of capital instruments that competent supervisory authorities across the EU have classified as Common Equity Tier 1 (CET1) instruments. CREDIT RATING AGENCIES ESMA technical advices and report: in connection with the provision of stronger controls around credit ratings for structured finance instruments and the reduction of reliance on credit ratings, ESMA has published Technical Advice on completion, choice and conflicts of interest in the CRA industry, Technical Advice on reducing sole and mechanistic reliance on credit ratings and a Report on the possibility of establishing one or more mappings of credit ratings published on the European Rating Platform. “DEFAULT” EBA Consultation: the EBA began a consultation on the definition of “default” for certain purposes under CRD IV with a view to harmonising that definition. The consultation closes on 22 January 2016. DEPOSIT GUARANTEE SCHEMES DGS insurance: while deposits up to €100,000 are protected under the recast Directive, the Commission has also announced its proposal for a European deposit insurance scheme with the aim of fully insuring national deposit guarantee schemes (DGS). Stress testing under the new Directive: the EBA is consulting on guidelines for stress testing DGS under the recast Directive. The proposal is that DGS across the EU must run a programme of tests over a 2-5 year period. The EBA has set out the types of scenario to be tested (including insolvency of a bank and resolution of a bank) and DGS must test the possible uses of funds provided for under the recast Directive. The consultation closes on 8 February 2016. Calculating contributions: the EBA has also published the translations of its May 2015 Guidelines on methods for calculating contributions to DGS. NCAs had until 22 November 2015 to ‘comply or explain’. 5 | ARTHUR COX FINANCIAL REGULATORY REGBRIEF, SEPTEMBER-NOVEMBER 2015 EMIR Clearing obligation and pension schemes: EMIR provided that the clearing obligation in Article 4 was not to apply to OTC derivative contracts objectively measurable as reducing investment risks directly relating to the financial solvency of pension scheme arrangements for the first 3 years of EMIR’s life. This 3 year period has now been extended by a further 2 years. Updated ESMA Q&A: ESMA’s EMIR Q&A was updated on 1 October to include guidance on procedures relating to a counterparty’s legal entity identifier. Central clearing of credit default swaps: ESMA has sent final draft Level 2 measures for the central clearing of credit default swaps to the Commission for approval. These Level 2 measures are intended to address the types of credit default swap contracts that will have to be centrally cleared, the types of counterparties covered by the clearing obligation and the dates by which central clearing will become mandatory. Indirect clearing: ESMA is consulting on indirect clearing of OTC derivatives under EMIR and exchange-traded derivatives under MiFIR, with a particular focus on accounts structure, segregation models, default management requirements and longer chains involving more than one indirect client. The consultation closes this week. Energy derivatives: ESMA announced that there will not be a further extension of the 3 year grace period for the use by non-financial firms of non-collateralised bank guarantees to cover transactions in energy derivatives that are cleared by EU central counterparties. As a result, those CCPs will need to fully collateralise commercial bank guarantees for derivative transactions relating to natural gas or electricity from 15 March 2016 onwards. Interest rate swaps: ESMA has confirmed (following the publication of a related Commission Delegated Regulation) that firms will have to centrally clear the following classes of interest rate swap from 21 June 2016: plain vanilla swaps, basis swaps, forward rate agreements and overnight index swaps denominated in euro, sterling, US dollars and Japanese yen from 21 June 2016. INTERCHANGE FEES EBA consultation: in a related development, the EBA is consulting on Level 2 measures on the separation of payment card schemes and payment processing entities under the Interchange Fees Regulation. It is proposed that payment card schemes and processing entities have accounting processes in place to produce annual audited information relating to separated balance sheets, and profit and loss accounts, have separate workspaces, and ensure the independence of senior management, management bodies and staff. MARKET ABUSE Draft Level 2 measures: on 28 September 2015, ESMA published its final draft Level 2 measures under the new Market Abuse Regulation (which will come into effect in mid- 2016). These deal with market soundings, the reporting of suspicious orders and transactions, public disclosure of insider information, the presentation of investment recommendations, insider lists and the notification and disclosure of mangers’ transactions. Updated Q&A: ESMA has also updated its Questions and Answers on the common operation of the Market Abuse Directive to consider, at Question 2, when a credit institution would be required to publish the results of the Supervisory Review and Evaluation Process under CRD IV. MIFID Commodity derivatives: ESMA has published its Guidelines on the application of C6 and C7 of Annex 1 of MiFID(dealing with the application of the definition of commodity derivatives) to ensure a common, uniform and consistent application of those definitions. New register: ESMA has launched a Register of financial instruments that have been suspended or removed from trading under Article 41 MiFID. Under Article 41, operators of regulated markets can suspend or remove a financial instrument from trading if it no longer complies with market rules. MIFID II Implementation delay likely: it is expected that MiFID II implementation will be delayed by up to 1 year. Our recent Briefing sets out further detail on this development. ESMA Level 2 measures: ESMA has issued a Consultation covering the suspension and removal of financial instruments from trading on a trading venue, the notification and provision of information for data reporting services providers and weekly aggregated position reports for commodity derivatives, emissions allowances and derivatives in respect of emissions allowances. This consultation closed on 31 October 2015. On 28 September 2015, ESMA sent 28 sets of final draft Level 2 measures to the Commission for approval, covering transparency, market microstructure, data publication and access, trading venues, commodity derivatives, market data reporting, posttrading and investor protection. Small amendment to MiFIR: a small corrigendum to MiFIR was published in the Official Journal on 15 October 2015, amending cross-references in Article 55 (Entry into force and application) to include a reference to Article 55 taking effect notwithstanding the requirement at Article 4(6) for ESMA to deliver regulatory technical standards in respect of waivers for equity instruments. MORTGAGE CREDIT DIRECTIVE Consultation on benchmark rate: the EBA recently consulted on the benchmark rate under the Mortgage Credit Directive (MCD) (which must be transposed into Irish law by 21 March 2016). The MCD sets out the information that creditors must provide 6 | ARTHUR COX FINANCIAL REGULATORY REGBRIEF, SEPTEMBER-NOVEMBER 2015 to consumers in good time prior to the conclusion of the credit agreement to enable the consumer to compare credit products. Creditors must provide this information to the consumer in the form of the European Standardised Information Sheet which must include an illustrative example of the APR and an illustration of the instalment amount. A benchmark rate can be used as part of these calculations where the creditor does not use an external reference rate and the consultation proposed a formula for this particular part of the calculation. Minor amendments: a corrigendum to the MCD was published in September 2015, correcting ‘obvious’ errors in the translations (the amendments were minor in nature). Passport notifications for mortgage credit intermediaries: the EBA has also published the translations of its Guidelines on Passport Notifications for Mortgage Credit Intermediaries under the MCD. These, for the most part, apply from 21 March 2016 but certain information requirements for NCAs came into force on 21 October 2015 and NCAs have until 20 December 2015 to ‘comply or explain’. MORTGAGE LENDING VALUE AND CRD IV EBA opinion: mortgage lending value is a prudent and long-term value of immovable property and defined in CRD IV. The EBA was required to prepare Level 2 measures specifying criteria for the assessment of mortgage lending value and issued an opinion in October warning that a harmonised concept could have a disruptive effect on the EU covered bonds market, seeking legislative clarification, and advising that the Level 2 measures should not apply to valuations of immovable property collateralising covered bonds, nor to covered bonds in general. Instead, the EBA’s view is that the Level 2 measures should be limited to credit risk mitigation and the large exposures regime. PAYMENT SERVICES PSD2 expected shortly: the revised Payment Services Directive (the most recent text is here) has been approved by the European Parliament and by the EU Council, and will be published in the Official Journal shortly. It is expected to apply from January 2018. We will be issuing a Briefing as soon as it is published, setting out the key changes and their expected operational impact. The Commission has also published a helpful FAQ on the revised Directive. Customer authentication and secure communication:the EBA has also published a Discussion Paper on Level 2 measures on strong customer authentication and secure communication under PSD2, seeking views on exemptions to the application of strong customer authentication, protection of payment service users’ personalised security credentials, and requirements for common and secure open standards of communication. The closing date is 8 February 2016. PRIIPS Consultation on form of KID:the European Supervisory Authorities are consulting on the presentation and content of the key information document (KID) that must be provided to retail investors across the EU in respect of packaged retail insurance and investment based products (PRIIPS). The consultation closes on 29 January 2016. PROSPECTUS LAW New regulation proposed: in its 30 September 2015 Capital Markets Union Action Plan, the Commission confirmed its intention to modernise the existing Prospectus Directive, having already consulted on a review in February 2015. It then published the draft of its proposed regulation and related draft annexes on 30 November 2015. Among other matters, the regulation as drafted will abolish the distinction between wholesale and retail debt securities, require shorter, specific and material risk factors only, require a shorter prospectus summary and apply a lighter disclosure regime to SMEs and secondary issuances. Our Briefing on the draft regulation, also issuing this week, will set out further detail on these, and other, proposed changes. ESMA Q&A: ESMA has also updated its Q&A on prospectus-related issues. QUALIFYING HOLDINGS IN CREDIT INSTITUTIONS Consultation between NCAs: the EBA is consulting on the procedures, forms and templates that NCAs must use when consulting with one another in connection with the carrying out prudential assessments of proposed acquisitions of, and increases in, qualifying holdings in credit institutions under CRD IV. The consultation closes on 10 February 2016. REMUNERATION OF ‘IDENTIFIED STAFF’ EBA benchmarking report: in September 2015, the EBA published a Report on Benchmarking of Remuneration and on High Earners together with data on the remuneration of staff in EU institutions who received (in total) more than €1,000,000 in 2013. The EBA’s key findings were that the percentage of high earners who are identified staff increased slightly over time and that remuneration practices within institutions are not adequately harmonised. The EBA is in the process of updating its guidelines on sound remuneration policies. Commission consultation: the Commission is consulting on the impact of the maximum remuneration ratio under CRD IV which provides that the variable remuneration of firms’ staff whose professional activities have a material impact on risk profile of their employer cannot exceed 100% of the fixed remuneration (or 200% with the approval of shareholders). The consultation closes on 14 January 2016. The Commission is also seeking views on the CRD IV requirements on the assessment of performance, deferral of variable remuneration, the instruments that can be used for variable remuneration and disclosures on remuneration policy and practices. EBA report: the EBA has published a report noting that nearly all Member States, including Ireland, give an option to CRD IV institutions to increase the maximum ratio between variable and Dublin +353 1 618 0000 [email protected] Belfast +44 28 9023 0007 [email protected] London +44 207 823 0200 [email protected] New York +1 212 782 3294 [email protected] Silicon Valley +1 650 943 2330 [email protected] arthurcox.com 7 | ARTHUR COX FINANCIAL REGULATORY REGBRIEF, SEPTEMBER-NOVEMBER 2015 fixed remuneration from 100% to 200% with shareholder approval. Only 15 Member States (including Ireland) have institutions that have actually made use of this option. ECB procedure: the ECB has published, in the Official Journal, the procedure that supervised credit institutions must follow when seeking to exclude staff members from being ‘identified staff’ who would then be subject to the bonus cap. RETAIL FINANCIAL SERVICES Commission consultation: as part of its Capital Markets Union initiative, the Commission indicated that it wished to examine any unintended consequences of EU financial services legislation, in particular any constraints placed on financing, liquidity, investor protection or consumer protection, whether those rules are proportionate and suitable, whether any of those rules are outdated and whether there are gaps or inconsistencies. It has now published its Consultation on Retail Financial Services (Green Paper) together with a set of FAQs. The consultation closes on 18 March 2016 and the Commission is expected to publish an action plan in mid-2016. SECURITIES FINANCING TRANSACTIONS European Regulation expected to come into force shortly: the proposed Securities Financing Regulation (SFT Regulation) is designed to improve transparency and reporting around securities lending and repurchase transactions by requiring that those transactions be reported to a central database, requiring detailed reporting from investment funds engaged in these types of transaction (and engaged in total return swaps) and imposing minimum conditions that the parties must meet in respect of the reuse of financial instruments. The SFT Regulation is expected to be published in the Official Journal shortly (at which time we will also be publishing a client briefing summarising its key impacts). It will come into force 20 days later, and will also apply from that date (subject to certain exceptions). SECURITIES LAW Alternative performance measures: ESMA has published its Final Guidelines on Alternative Performance Measures, applicable to all NCAs under the transparency, market abuse and prospectus regimes. The guidelines apply to alternative performance measures disclosed by issuers or persons responsible for the prospectus when publishing regulated information, prospectuses and supplements. Examples include management reports disclosed to the market in accordance with the Transparency Directive and disclosures issued under Article 17 of the Market Abuse Regulation. SINGLE SUPERVISORY MECHANISM Inconsistent exercise of options and discretions: the ECB is concerned that certain national options and discretions are being exercised inconsistently across the SSM Member States without an appropriate Member State-specific reason for doing so. As a result, it has consulted on proposals to standardise the exercise of those options and discretions. That consultation recently closed, and a further draft regulation and guide are expected.