Monthly highlights: March 2020

Monthly highlights: March 2020

Welcome to this month’s highlights from the Lexis®PSL Banking & Finance team which cover the key news updates from March 2020.


Brexit Bulletin—EU reviews draft treaty text as coronavirus (COVID-19) halts talks on UK-EU future relationship

The UK and EU have confirmed that round two of the negotiations on the future UK-EU relationship will not go ahead in London , due to the latest coronavirus (COVID-19) developments. The negotiating teams are looking at alternatives for continuing the talks remotely. Meanwhile, the European Commission has prepared a draft of its proposed future partnership agreement and shared it with the European Parliament and Council for discussion.

Source: Joint statement by EU and UK negotiators on next week's round of negotiations.

Brexit Bulletin—UK priorities for its future relationship with the EU

On 27 February 2020, the UK government published a position paper outlining its priorities and approach for negotiations on its future relationship with the EU. The UK is looking to finalise a Comprehensive Free Trade Agreement with zero tariffs and quotas on goods, based on existing EU models such as Canada, Japan and South Korea. This would be supplemented by a range of other international agreements eg on fisheries, nuclear cooperation, law enforcement and judicial cooperation. This would be supported by various technical and other processes for instance on data protection adequacy, financial services equivalence and civil judicial cooperation. Central to the UK position is the rejection of the EU’s proposals on level playing field, centralised governance and enforced dynamic alignment with EU rules, regulations and institutions, including the Court of Justice. Richard Eccles, Partner at Bird & Bird, and Professor Adam Cygan of the University of Leicester consider some of the potential flashpoints ahead.

Sources: HM Government—The Future Relationship with the EU The UK’s Approach to Negotiations.

Brexit Bulletin—EU underlines its position in draft treaty text for the future UK-EU relationship

On 12 March 2020, the European Commission’s UK Task Force shared its draft text for an ‘ambitious and comprehensive’ future partnership agreement between the EU and the UK. The draft adheres to the EU’s proposals for a tariff free and quota free trade area for goods, prioritising level playing field protections and implementing an overarching governance framework, which includes continued commitment to the European Convention on Human Rights, alignment with EU competition rules and interpretation of relevant EU law in accordance with EU case law. Richard Eccles, partner at Bird & Bird comments on the draft.

Source: Hansard, House of Lords, 16 March 2020.

Brexit Bulletin—European Scrutiny Committee publishes correspondence with government departments on a range of Brexit queries

In correspondence published by the European Scrutiny Committee, government departments have been asked to provide an update on aspects of the UK position post-Brexit and the future UK–EU relationship. Issues covered include EU funding programmes, data protection and privacy, agriculture, organic production, regulation of international trade, EU VAT threshold, and scrutiny of EU documents.

Brexit Bulletin—Withdrawal Agreement Joint Committee aligns priorities, focussing on the Northern Ireland Protocol

On 30 March 2020, the Withdrawal Agreement Joint Committee held its first meeting on the implementation and application of the Withdrawal Agreement, with UK and EU delegations meeting via teleconference. The meeting was co-chaired by the UK Chancellor of the Duchy of Lancaster, Michael Gove, and EU Commission Vice President, Maroš Šefčovič. The discussion was described as collaborative and constructive, with delegations launching the work of the Specialised Committees and agreeing that the UK must focus on providing detailed plans for implementation of the Northern Ireland Protocol.

Sources: Statement by the European Commission following the first meeting of the EU-UK Joint Committee.

Brexit Bulletin—key updates, research tips and resources (February 2020 edition)

We have published an update to our Brexit Bulletin—key updates, research tips and resources. This edition includes further Brexit Q&As answering your recent questions on the latest Brexit developments. Subjects covered in this edition include Brexit SIs which are no longer in force and key milestones in the implementation period and future relationship negotiations.

Brexit Bulletin—key updates, research tips and resources (March 2020)

We have published an update to our Brexit Bulletin—key updates, research tips and resources. The latest edition includes further Brexit Q&As answering your recent questions on the latest Brexit developments. Subjects covered in this edition include the status of EU case law and role of the Court of Justice during transition, updates on the EU's draft treaty text for the future relationship and the impact of coronavirus (COVID-19) in the context of Brexit.

Brexit bulletin—Council decision on opening negotiations with UK published in Official Journal

The Council decision on opening EU negotiations with the UK on the future relationship has been published in the Official Journal of the European Union (OJEU).

Source: Official Journal of the European Union, L 058, 27 February 2020.

Coronavirus (COVID-19)—UK should extend Brexit transition due to coronavirus (COVID-19), lead EU lawmaker says

The UK ‘should carefully re-examine a prolongation’ of the Brexit transition period in light of the coronavirus (COVID-19) crisis, the chair of the European Parliament’s UK Coordination Group has said. The statement from David McAllister, a German EU lawmaker, came ahead of the EU-UK Joint Committee meeting under the Withdrawal Agreement on 30 March 2020.

FOS makes Exiting the European Union: Deferral of Commencement Instrument 2020

The Financial Ombudsman Service Limited (FOS) has made the Exiting the European Union: Deferral of Commencement Instrument 2020. It has made the instrument in the exercise of paragraph 8 (Information, advice and guidance) and related provisions of Schedule 17 to the Financial Services and Markets Act 2000 (FSMA 2000).

Source: Exiting the European Union: Deferral of Commencement Instrument 2020.

Government publishes letter from chancellor to Valdis Dombrovskis on financial services equivalence 

The government has published a letter from the chancellor of the exchequer, Rishi Sunak, to executive vice president Valdis Dombrovskis on the UK’s preparations for assessments of financial services equivalence. In the letter, the chancellor notes that the UK and the EU have agreed to start assessing equivalence with respect to each other under their respective frameworks as soon as possible after the UK’s withdrawal from the Union, endeavouring to conclude these assessments before the end of June 2020 (though the chancellor notes that the date has not been included in the EU’s mandate agreed on 25 February 2020).

Source: Chancellor letter to Valdis Dombrovskis on financial services equivalence.

Phase 1 firms reporting obligations under the Securities Financing Transactions Regulation

The Financial Conduct Authority (FCA) has produced an overview of the Securities Financing Transactions Regulation (SFTR). The SFTR applies directly to the UK for the duration of the transition period and trade repositories will remain regulated by the European Securities and Markets Association. At the end of the transition period, the regulations will be onshored by the European Union (Withdrawal) Act 2018. As of 11 April 2020, reporting obligations will be applicable to phase 1 firms.

Source: Securities Financing Transactions Regulation (SFTR).

UK priorities for its future relationship with the EU—financial services

The UK government’s position paper outlining its priorities and approach for negotiations on its future relationship with the EU, published on 27 February 2020, included a proposal in general terms on how financial services should be covered in the Comprehensive Free Trade Agreement (CFTA) to be negotiated with the EU, using the EU-Canada Comprehensive Economic and Trade Agreement (CETA) and the EU-Japan Economic Partnership Agreement (EPA) as models. Equivalence in financial services was covered separately in a section on technical and other processes beyond the scope of the future relationship negotiations.

Source: The future relationship with the EU: The UK’s approach to negotiations.

UK to retain the financial regulators’ ‘Temporary Transitional Power’ for two years from the end of the Transition Period

The economic secretary to the Treasury, John Glen, has made a written ministerial statement on Brexit, saying HM Treasury will retain the financial regulators’ ‘Temporary Transitional Power’ (TTP), which was introduced via the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019, and shift its application so that it is available for use by the UK regulators for a period of two years from the end of the Transition Period.

Source: Financial services update: Written statement—HLWS183.


BCBS urges banks to prepare for benchmark rate reforms

The Basel Committee on Banking Supervision (BCBS) has published a newsletter on the global efforts to strengthen the robustness and reliability of existing inter-bank offered rates (IBORs) and promote the development of alternative reference rates. The Committee says it is ‘critically important’ that banks consider the effects of benchmark rate reform on their businesses and make the necessary preparations for the transition to the alternative rates. In doing so, they should maintain a close dialogue with their supervisory authorities regarding their plans and transition progress, including impediments that may be identified.

Source: Benchmark rate reforms.

Coronavirus (COVID-19)—BoE launches Contingent Term Repo Facility in response to coronavirus COVID-19 outbreak

The Bank of England (BoE) has launched the Contingent Term Repo Facility (CTRF)—a temporary enhancement to its sterling liquidity insurance facilities—in response to current financial market conditions. The measure aims to help alleviate frictions observed in money markets in recent weeks, both globally and domestically, as a result of the economic shock caused by the coronavirus (COVID-19) outbreak.

Sources: Bank of England launches Contingent Term Repo Facility and Activation of the Contingent Term Repo Facility—Market Notice 24 March 2020.

Consultation on swaptions impacted by CCP discounting transition from EONIA to the €STR

The working group on euro risk-free rates has launched a public consultation on whether to issue recommendations to address specific issues for swaption products as a result of the proposed transition from EONIA to the euro short-term rate (€STR).

Source: Working group on euro risk-free rates seeks feedback on swaptions impacted by transition from EONIA to the €STR.

Consultation on the taxation impacts of the withdrawal of LIBOR launched

HM Revenue and Customs (HMRC) has launched an open consultation on the tax issues arising from the reform of London Inter-bank Offered Rate (LIBOR) and other benchmark rates. Following the withdrawal of LIBOR after the end of 2021, parties to financial instruments will need alternative reference rates. Several statutory references to LIBOR will also have to be amended. HMRC is seeking views on how it should be done. The consultation closes on 28 May 2020.

Source: Consultation on the taxation impacts arising from the withdrawal of LIBOR.

ESMA consults on draft RTS under the Benchmarks Regulation

The European Securities and Markets Authority (ESMA) has launched a consultation on draft regulatory technical standards (RTS) under the Benchmarks Regulation (Regulation (EU) 2016/1011) (BMR), covering governance, methodology, infringements reporting and critical benchmarks. ESMA will consider the responses to this consultation when developing the draft RTS for submission to the European Commission for adoption in the final legal text. The closing date for responses from stakeholders is 9 May 2020.

Source: ESMA consults on draft technical standards for benchmarks.

European Commission publishes inception impact assessment and other information on the Benchmarks Regulation

The European Commission has published provisional data in connection with its review of the BMR. Feedback was sought by 15 April 2020 and the Commission’s adoption is planned for Q3 2020. An inception impact assessment (IIA) has also been published.

Source: Review of the Benchmarks Regulation.

FCA statement on LIBOR contractual triggers

The FCA has published a webpage on how it would announce the LIBOR contractual triggers.

Source: LIBOR contractual triggers.

FCA/BoE joint letter to trade associations on discontinuation of LIBOR

The FCA and the BoE have issued a joint letter to trade associations on how the discontinuation of LIBOR may affect their members and stakeholders, and offering practical help with raising awareness among their networks. The regulators also remind trade association members and stakeholders of their obligations to treat their customers fairly during the transition to alterative ‘risk-free’ rates (RFRs).

Source: Next steps on LIBOR transition: letter to trade associations.

ICMA guide to IBORs transition in the bond market

The International Capital Market Association (ICMA) has published a guide to the transition from IBORs (including LIBOR) to alternative near RFRs in the bond market. It covers, amongst other things, the impact of IBOR transition on ICMA documentation, the EU BMR and regulatory issues in the UK. It also highlights progress to date and contains links to relevant resources. A podcast is also available.

Source: ICMA publishes Quick Guide to the transition to risk-free rates in the bond market.

Latest Working Group on Sterling Risk-Free Reference Rates updates published

The Working Group on Sterling RFRs has published its February 2020 newsletter. It highlights key dates for March and April 2020, including deadlines for various consultations and the BoE and FCA’s milestone for market makers to switch convention in GBP interest rate swaps from LIBOR to SONIA on 2 March 2020. It also contains the minutes of the December 2019 and January 2020 Working Group meetings, the BoE’s discussion paper on their plans to publish daily SONIA compounded index as well as their new restrictions on the use of LIBOR-linked collateral in its market operations and the FCA’s letter to all UK-regulated asset management firms.

Source: The Working Group on Sterling Risk-Free Reference Rates - Newsletter February 2020.

Legacy contracts complicate LIBOR transition

The FCA and the BoE have signalled that the next 12 months are critical for LIBOR transition to ensure that firms are prepared for LIBOR cessation by the end of 2021.

Minutes of the Working Group on Sterling Risk-Free Reference Rates published

The BoE has published the minutes of the meetings of the Working Group on Sterling RFRs held on 5 December 2019 and 28 January 2020.

Sources: 5 December 2019 minutes and 28 January 2020 minutes and 28 January 2020 minutes.

Proposal for New York State US Dollar LIBOR contracts legislation released

The Alternative Reference Rates Committee (ARRC) has released a proposal for legislation to minimise legal uncertainty associated with LIBOR transitions, for the State of New York. The proposed legislation aims to solve situations where US Dollar LIBOR contracts did not foresee a permanent cessation of LIBOR, and what could happen in instances where amendments to the product contract are not possible.

Source: ARRC Releases a Proposal for New York State Legislation for U.S. Dollar LIBOR Contracts.

RFRs Working Group publishes statement on SONIA in bond markets and roadmap on discontinuation of new GBP LIBOR lending

The Working Group on Sterling RFRs has published a statement on bond market conventions: ‘Use of the SONIA Index and weighting approaches for observation periods’, and a roadmap: ‘Path to discontinuation of new GBP LIBOR lending by end-Q3 2020’.

Sources: Statement on bond market conventions: Use of the SONIA Index and weighting approaches for observation periods and Path for discontinuation of new sterling LIBOR-linked lending by end-Q3 2020.

Spread adjustment methodology consultation deadline extended

The ARRC has also announced that it is extending the deadline by which public responses to the Spread Adjustment Methodologies for Fallbacks in Cash Products Referencing USD LIBOR consultation, which is proposing a static spread adjustment, must be submitted. The new deadline was 25 March 2020.

Source: ARRC Extends Comment Period for Feedback on Consultation about Potential Spread Adjustment Methodologies until March 25.

Summary of responses to consultation on credit adjustment spread methodologies for fallbacks in cash products referencing GBP LIBOR

The BoE’s Working Group on Sterling RFRs has published a summary of responses received to its consultation on credit adjustment spread methodologies for fallbacks in cash products referencing GBP LIBOR. This paper considered four methodologies that could be used to calculate the credit adjustment spread for fallback language in sterling cash instruments. The consultation identified a strong consensus in favour of the historical five-year median approach, in line with the approach adopted by the International Swaps and Derivatives Association (ISDA), as the most appropriate methodology for credit adjustment spreads in both cessation and pre-cessation fallbacks for sterling LIBOR linked cash products maturing beyond end-2021.

Sources: Summary of responses—Consultation on credit adjustment spread methodologies for fallbacks in cash products referencing GBP LIBOR and Transition to sterling risk-free rates from LIBOR.

Working Group on Sterling Risk-Free Reference Rates to set up three task forces

The Working Group on Sterling RFRs has announced that three new task forces will be set up. These are the Loan Flow Enablers Task Force, which will focus on moving new loans issuance away from GBP LIBOR, the Cash Market Legacy Task Force, which will set up frameworks to support the transition of legacy cash products and the Tough Legacy Task Force, which will provide market input on products that may not be converted or amended to include robust fallbacks.

Source: Transition to sterling risk-free rates from LIBOR.


Coronavirus (COVID-19)—triggering force majeure: what, when, how—and what are the alternative options?

Corporations around the world are feeling the impact of coronavirus (COVID-19) to varying degrees. Supply chain disruption is being felt worldwide, as are workforce constraints due to sickness and self-isolation measures, governmental restrictions on people movement, and lockdowns. In the face of severe economic disruption, the length and degree of which is difficult to predict at this time, businesses are striving to keep going as best they can. However, the reality is that it may not be possible to meet certain contractual obligations and deadlines because of coronavirus-related issues. Under English law, once you have contracted to do something, there are very few ways in which you can escape those obligations without having to compensate your counterpart for your failure to perform. Emma Schaafsma and Michelle Li, partners at Herbert Smith Freehills, look at the most likely forms of relief and how they might operate in the circumstances.

Coronavirus (COVID-19)—Force majeure clause in subscription agreements

The International Capital Market Association (ICMA) has released a statement regarding its standard force majeure clause for the use in subscription agreements for syndicated offers of international bonds in the primary market. The effectiveness of the clause in the light of the coronavirus (COVID-19) pandemic has been considered by the ICMA Legal & Documentation Committee, as well as major international capital markets law firms, and it was found that no changes should be made to the wording of the clause.

Source: ICMA force majeure clause and the COVID-19 pandemic.

Coronavirus (COVID-19)—PRA Dear CEO letter on IFRS 9, capital requirements and loan covenants

The Prudential Regulation Authority (PRA) has published a Dear CEO letter on coronavirus (COVID-19) and International Financial Reporting Standard (IFRS) 9, capital requirements and loan covenants. The letter sets out the PRA’s guidance on consistent and robust IFRS 9 accounting and the regulatory definition of default; the treatment of borrowers who breach covenants due to coronavirus (COVID-19); and the regulatory capital treatment of IFRS 9.

Source: Letter from Sam Woods ‘COVID-19: IFRS 9, capital requirements and loan covenants’.

Coronavirus (COVID-19)—set to stress corporate finance arrangements

Max Millington, partner, and Sarah Jordan, Knowledge Lawyer Director, both at Osborne Clarke LLP, discuss how breaches might be avoided, cured or tolerated by lenders with market pressures likely to lead to some businesses triggering events of default and material adverse change clauses.

Coronavirus (COVID-19)—Covid Corporate Financing Facility to support business

The Bank of England (BoE) has published information for those interested in participating in the Covid Corporate Financing Facility (CCFF) scheme. The scheme, ran jointly by HM Treasury and the BoE lending facility, is designed to support businesses through the coronavirus (COVID-19) period of disruption. The CCFF supports liquidity among larger firms, helping bridge cash flow disruption through the purchase of short-term debt in the form of commercial paper.

Source: Covid Corporate Financing Facility (CCFF)—information for those seeking to participate in the scheme.

Coronavirus (COVID-19)—New guidance for mortgage providers and lenders taking part in the Coronavirus Business Interruption Loan Scheme

The Financial Conduct Authority (FCA) has published new guidance for mortgage lenders and administrators, and small business lenders taking part in the Coronavirus Business Interruption Loan Scheme (CBILS).

Source: FCA sets out new guidance for mortgage providers and for lenders taking part in the Coronavirus Business Interruption Loan Scheme.

Coronavirus (COVID-19)—ECB relaxes capital requirement rules in face of COVID-19 outbreak

The European Central Bank (ECB) has announced a number of measures to ensure that its directly supervised banks can ‘continue to fulfil their role in funding the real economy as the economic effects of the coronavirus (COVID-19) become apparent’. The ECB will allow banks to operate temporarily below the level of capital defined by the Pillar 2 Guidance (P2G), the capital conservation buffer (CCB) and the liquidity coverage ratio (LCR). The ECB considers that these temporary measures will be enhanced by the appropriate relaxation of the countercyclical capital buffer (CCyB) by the national macroprudential authorities.

Source: ECB Banking Supervision provides temporary capital and operational relief in reaction to coronavirus.

Coronavirus (COVID-19)—Financing in times of crisis

The banking and finance experts of Schoenherr Attorneys at Law have compiled a comprehensive Central and Eastern European overview of the practical legal implications to be considered in finance transactions in the context of the ongoing coronavirus (COVID-19) pandemic.

LMA to develop a documentation automated platform

The Loan Market Association (LMA) has announced that it has entered into a memorandum of understanding with Allen & Overy and Avvoka, explaining its intention to develop a documentation automation platform for certain LMA recommended form documents, in addition to other ancillary services. Further detail on the platform will be announced in the coming weeks.

Source: LMA announces plans to automate syndicated loan documentation.

Coronavirus (COVID-19)—Loan Market Association publishes briefing notes on coronavirus (COVID-19)

The LMA has published three new briefing notes which address issues arising out of the coronavirus (COVID-19) outbreak. The notes cover financing considerations for financial sponsors, underwriters and debt investors, e-signatures and financing considerations for borrowers, underwriters and lenders.

Source: New Legal & Regulatory Briefing Notes.

Loan Market Association updates its facility agreements and guidance

The LMA has updated a number of its facility agreements and related guidance documents.

Source: Further updates to LMA facility agreements.

Update to the LMA Facility Agreements

The LMA has published revised versions of its recommended forms of Investment Grade Facility Agreements, Users Guide, Real Estate Finance Investment Facility Agreements, RFR documentation and other associated documents. The main change that has been made to the facility agreements is the inclusion of the LMA recommended form of replacement of screen rate clause as part of the amendments and waivers clause. Until now, this clause had to be slotted into the facility agreements on a case by case basis. However, given the expected discontinuation of LIBOR at the end of 2021, uncertainty surrounding other benchmarks and the growing market practice to include these provisions in facility agreements, the LMA has now incorporated them into the recommended forms. The main purpose of the clause is to provide the parties with greater flexibility to include a replacement benchmark in the Facility Agreement if a Screen Rate Replacement Event occurs.

Source: Loan Market Association.

Coronavirus (COVID-19)—LSB updates product sale guidance in light of Coronavirus Business Interruption Loan Scheme

The Lending Standards Board (LSB) has updated its ‘Standards of Lending Practice for Business Customers, Product Sale’ guidance, to take account of short-term measures to support lending to small and medium-sized enterprises (SMEs)impacted by the coronavirus (COVID-19) pandemic.

Source: COVID-19: LSB Standards of Lending Practice for business customers.

Coronavirus (COVID-19)—UK banks ‘ready and willing’ to help businesses and households bridge through the coronavirus (COVID-19) pandemic

The BoE has issued a joint statement with major UK banks on measures to help businesses and households bridge through the coronavirus (COVID-19) pandemic. The statement says the UK’s banks are in a strong position to provide further support to the economy and are ‘ready and willing to do so’.

Source: A joint statement by UK banks and the Bank of England on COVID-19.


Companies House suspends same day service until further notice

Companies House has announced that it has suspended same day service with immediate effect until further notice. Orders which are currently being processed will be completed and sent out to customers. In addition, both the London and Edinburgh offices have closed to the public.

Source: Coronavirus (COVID-19) advice for Companies House customers.

Coronavirus (COVID-19)—European Commission sets out immediate response to mitigate the economic impact of coronavirus COVID-19

The UK Cabinet Office has published a communication from the European Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Investment Bank and the Eurogroup setting out an EU co-ordinated economic response to the coronavirus (COVID-19) outbreak. It calls on Member States to be vigilant and ‘use all tools available’ at EU and national level to avoid the current crisis leading to a loss of critical assets and technology. This includes tools like national security screening and other security related instruments.

Source: Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Investment Bank and the Eurogroup co-ordinated economic response to the COVID-19 outbreak.

HM Land Registry to halt requests for information following stakeholder feedback

HM Land Registry (HMLR) has announced that it will not send a request for information (requisition) from April 2020 if consents are to the disposition only. The announcement follows feedback received from customers and stakeholders in relation to its decision in March 2019, which notes that to comply with restrictions, HM Land Registry would only accept consents that state ‘consent is given to registration of the disposition’. HMLR will instead interpret consents to registrable dispositions as including consent to their registration in situations where consents are to the disposition. Additionally, it has also been confirmed that the best form of consent will be addressed to the registrar, specifically identify the dispositions, and identify the restriction.

Source: Update on complying with a restriction.

HM Land Registry updates four Practice Guides

The HMLR has updated four Practice Guides (PG): PG 29 on the registration of legal charges and deeds of variation of charge, PG 31 on the discharge of charges, PG 21 on using HMLR forms for complex and more unusual transactions and PG 40 on preparing plans for HMLR applications.

Sources: Registration of legal charges and deeds of variation of charge (PG 29), Discharge of charges (PG 31), Using our forms for complex and more unusual transactions (PG 21) and Preparing plans for HM Land Registry applications (PG 40s2).

Updated guidance on registration of legal charges and deeds of variation

The HMLR has amended section 4 of the Practice Guide 29 to clarify when HMLR will enter the note referred to in section 859H of the Companies Act 2006.​

Source: Registration of legal charges and deeds of variation of charge (PG29).

Updates to HM Land Registry Guides PG 31, 52 and 77

The HMLR has updated three of its Practice Guides (PG).

Sources: Discharge of charges (PG31), Easements claimed by prescription (PG52) and Altering the register by removing land from a title plan (PG77).

Lombard North Central plc v European Skyjets Ltd (in liquidation) and another

[2020] EWHC 679 (QB)

The judgment given in default would be set aside. In so deciding, the Queen's Bench Division held, amongst other things, that it was arguable that a notice of termination in respect of a long-term lending contract was invalid, and that, in any event, the delay of the defendant in seeking to set aside the default judgment had been explained. Further, the merits of the case were sufficiently substantial that the matter required a proper trial to get the bottom of what had occurred.


United Trust Bank Ltd v Diamantopoulous

[2020] EWHC 658 (Comm)

The claimant bank's application for summary judgment to enforce a personal guarantee succeeded. There was no defence with any prospect of success. The claimant would have summary judgment for the entire sum claimed.

Signature Living Hotel Ltd v Sulyok and another

[2020] EWHC 257 (Ch)

If an otherwise complete contract of guarantee was intended to be embodied in a deed, but the formalities had not been complied with, the creditor could still enforce the agreement. The Chancery Division, in dismissing the applicant company's application for injunctions, held that the deeds in issue were sufficiently supported by consideration and properly enforceable, such that there was no reason to restrain presentation of any winding-up petitions founded on statutory demands based on the deeds.

Yuanda (UK) Company Ltd v Brookfield Multiplex Construction Europe Ltd and another company

[2020] EWHC 468 (TCC)

The judgment in the case of Yuanda (UK) Company Ltd v Brookfield Multiplex Construction Europe Ltd and another company has been published to Lexis®Library. In this case, The Technology and Construction Court held that a bond, based on the ABI Model Form of Guarantee Bond, was a performance bond and not an on demand bond. It also held that an adjudicator’s decision (as to the sub-contractor’s liability to the contractor for delay damages) would be sufficient to establish liability to pay under the bond.

Structured finance

Madison Pacific Trust Ltd v Shakoor Capital Ltd and another

[2020] EWHC 610 (Ch)

On the application of the trustee of two series of notes, the Chancery Division held that the trustee would not be acting in breach of trust if it had accepted the payments from the second defendant bank under arbitration awards and made the payments to entitled ultimate account holders in accordance with the payment mechanism set out in the awards.

Real estate finance

Coronavirus (COVID-19)—Impact to the Real Estate Finance market

Richard Leeming of Burges Salmon LLP discusses the possible impacts to the real estate finance market, both investment and development.

RICS provides support as valuation practice is impacted by coronavirus (COVID-19)

The Royal Institution of Chartered Surveyors (RICS) has released new advice regarding the valuation practice during the coronavirus (COVID-19) outbreak. RICS reiterates the obligation to act in a transparent and professional manner regardless of the difficulties encountered. RICS members operating in valuation should still act within the requirements of RICS Valuation–Global Standards. If valuation assumptions are made as a consequence of restricted access or restricted valuation information, the valuers should clearly state it and agree with the client. The valuers should decline to provide an instruction if it believes that the valuation can’t be assessed on a restricted basis.

Source: Valuation Practice Alert–Coronavirus.

Leveraged finance

Coronavirus (COVID-19)—The impact of coronavirus (COVID-19) on leveraged finance

Martin Forbes, partner at White & Case, discusses the impact of coronavirus (COVID-19) on the leveraged finance market, and sets out the actions borrowers and lenders are taking to protect their positions and what they should consider.

Shipping finance

Qatar National Bank (QPSC) v Owners of the Yacht Force India

[2020] EWHC 719 (Admlty)

In unusual and rare circumstances, the Admiralty Court set aside an order for the sale of a vessel over which the claimant had obtained a judgment. Emphasising that the present case had been rare, it had been appropriate to set aside the order where the mortgage over the vessel had, in effect, been paid by a third party with the effect that the sale of the vessel had no longer been necessary.

Coronavirus (COVID-19)—The implications of coronavirus (COVID-19) on statutory ship certificates

The Baltic and International Maritime Council (BIMCO) has released guidance collected from flag states, port states and recognised organisations on the implications of coronavirus (COVID-19) on statutory ship certificates. The guidance includes information of the effect of failing to meet International Maritime Organisation (IMO) and International Labour Organisation instruments due dates on ship certificates, surveys, inspection or audits.

Source: BIMCO guidance on COVID-19 implications for ships’ certificates.

Aviation finance

Coronavirus (COVID-19)—The impact of coronavirus (COVID-19) on aviation finance

The coronavirus (COVID-19) pandemic will considerably impact the aviation finance sector. Experts from Reed Smith Asset Finance team in both London and Paris have analysed the current situation through this news analysis article. The participants are Richard Hakes, partner, Victoria Westcott, partner, Florent Rigaud, counsel, Spiros Zavitsas, senior counsel, Ashleigh Standen, associate, Rohan Soni, associate, and Deena Smith, trainee.

Emission units adopted by the International Civil Aviation Organization Council

The International Civil Aviation Organization (ICAO) Council has adopted emission units for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The set of eligible emissions units issued complies with offsetting requirements in the 2021–2023 pilot phase of CORSIA from the American Carbon Registry, China GHG Voluntary Emission Reduction Program, the Clean Development Mechanism, Climate Action Reserve, the Gold Standard and the Verified Carbon Standard. The ICAO Deputy Director of Environment, Jane Hupe, commented that the Council’s approval of eligible emissions units was the last element needed to implement CORSIA.

Source: ICAO Council adopts CORSIA emissions units.

Civil Aviation (Insurance) (Amendment) (EU Exit) Regulations 2020

This draft enactment is laid in exercise of legislative powers introduced under the European Union (Withdrawal) Act 2018 in preparation for Brexit. This enactment is proposed to amend UK subordinate legislation in relation to civil aviation in order to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It comes into force immediately before IP completion day.

Islamic finance

IFSB opens consultation on principles for investor protection in Islamic capital markets

The Islamic Financial Services Board (IFSB) has issued a new exposure draft (ED-24) for public consultation, setting out principles for investor protection in Islamic capital markets. The IFSB seeks comments from central banks, regulatory and supervisory authorities, international organisations, market players, academics and other interested parties. The consultation closes on 24 May 2020.

Source: IFSB exposure draft: Guiding principles for investor protection in Islamic capital markets (ED-24).

Sustainable finance

BIS paper explores reserve management and sustainability, and the case for green bonds

The Bank for International Settlements (BIS) has published a working paper which explores how central banks might expand the usual triad of objectives—liquidity, safety and return—to fit environmental sustainability considerations into their reserve management frameworks. This can be done either by explicitly articulating sustainability as a defined purpose of holding reserves, or implicitly as a supporting aspect of existing policy purposes. In each case, this will involve additional trade-offs. The paper assesses these, based on the example of green bonds.

Barclays reminded of legal obligations concerning climate change

ClientEarth has published a letter sent by ClientEarth's CEO James Thornton to each of the board members of Barclays Bank, reminding them of their legal obligations to address climate change. The letter also urges Barclays to support a major climate resolution tabled by key investors in January 2020, which asks the bank to phase out its financing of fossil fuel companies that are not aligned with the Paris climate goals. Barclays is the largest financer of fossil fuels in Europe and the sixth largest in the word, having invested $85bn into fossil fuel companies. ClientEarth lawyers have stated that if Barclays continue to promote these businesses, the bank is complicit in the environmental and economic damage the businesses create.

Source: Back climate resolution to fulfil legal duties, Barclays directors urged.

Chancery Lane Project publishes first climate contract playbook

The Chancery Lane Project (CLP) has published their first ever climate contract playbook aimed at mobilising the legal profession to tackle climate change. The playbook contains model laws and precedents for lawyers and policymakers to consider in future policymaking.

Source: Climate Contract Playbook.

HoL Financial Affairs Sub-Committee to hear COP26 evidence from Mark Carney

The EU Financial Affairs Sub-Committee heard evidence from Mark Carney, the newly appointed finance adviser to the Prime Minister for COP26 and UN Special Envoy for Climate Action and Finance, on 18 March 2020m. This is part of the House of Lords cross-committee work on climate change ahead of COP26, the UN climate change conference to be hosted by the UK in November 2020.

Source: Mark Carney questioned on green finance and COP26.

European Commission opens feedback period for first delegated act under the Taxonomy Regulation

The European Commission opened the feedback period for an inception impact assessment of its delegated regulation on climate change mitigation and adaptation taxonomy under the Taxonomy Regulation. The delegated regulation establishes a classification of environmentally sustainable economic activities (referred to as a taxonomy) which aims to contribute substantially to the EU’s objectives on climate change adaptation and mitigation for investment purposes. The feedback period ran until 20 April 2020.

Source: Climate change mitigation and adaptation taxonomy.

IAIS paper suggests ways to enhance climate-related financial disclosures

The International Association of Insurance Supervisors (IAIS) and the Sustainable Insurance Forum (SIF) have published a paper on the implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), in which they call for action on strengthening such disclosures. While acknowledging the diversity of supervisory frameworks across jurisdictions, the paper identifies a number of areas where supervisors can encourage strengthened disclosures through the application of existing supervisory tools.

Source: IAIS calls for action on strengthening climate related financial disclosure.

ISLA announces further details of its Principles for Sustainable Securities Lending

The International Securities Lending Association (ISLA) has announced further details of the ISLA Council for Sustainable Finance (ICSF), which it says will introduce wide-ranging solutions for sustainable securities lending through the launch of its Principles for Sustainable Securities Lending (PSSL). PSSL is a new voluntary sustainable finance mechanism for securities lending that has been developed by a high-level working group which first convened in September 2018.

Source: ISLA Council for Sustainable Finance & PSSL.

UN agreement to enhance climate and environmental actions

The United Nations Environment Programme (UNEP) and the European Investment Bank (EIB) have announced their intentions to enhance climate and environmental actions, as they deepen their co-operation. A Memorandum of Understanding was signed between Inger Andersen, Under-Secretary-General of the UN, and Emma Navarro, the EIB Vice President responsible for Climate Action and Environment. The UNEP has confirmed that the strategic co-operation will focus on climate change, conservation, protection and the support of nature and natural resources, including worldwide biological diversity. Additionally, the UNEP has stated that a priority will be establishing a new pipeline of investment projects in relation to climate change and the environment.

Source: The EIB and UNEP strengthen their co-operation to enhance climate and environmental actions.

UNEP FI says 171 banks globally have signed Principles for Responsible Banking

The UNEP Finance Initiative has published an update on its Principles for Responsible Banking, announcing that a total of 171 banks from around the world have now signed the principles and confirmed their commitment to aligning their business strategies with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals. The Principles were launched in September 2019 with 130 founding signatories.

Source: Principles for Responsible Banking update: 171 banks worldwide have now committed to align their business strategies with society’s goals.

European Commission launches Climate Law and Public Consultation

The European Commission has launched both the European Climate Law, which outlines the EU’s pledge to become climate neutral by 2050, and a public consultation on the upcoming European Climate Pact. The newly introduced legislation provides predictability for public authorities, businesses and citizens, while the consultation, which will be open for 12 weeks, aims to involve the public in co-designing the instrument. The European People’s Party has voiced its support for the new Climate Law but also warned that it has set a very ambitious and challenging target, which should be counterbalanced by prior impact assessments and international co-operation. The energy sector will also be impacted, as the Commission has officially announced its review of the Energy Taxation Directive, which forms important policy under the European Green Deal.

Source: Committing to climate-neutrality by 2050: Commission proposes European Climate Law and consults on the European Climate Pact.

European Commission welcomes report on sustainable finance taxonomy

The European Commission has welcomed the publication of reports by the Technical Expert Group (TEG) on sustainable finance relating to the EU’s taxonomy of green economic activities and the EU Green Bond Standard. The Commission will use the taxonomy report to develop rules setting out the EU’s taxonomy of activities for mitigating and adapting to climate change. A further report on Green Bonds will be used to explore a possible initiative for an EU Green Bond Standard, which will also include a public consultation. The TEG is made up of members from civil society, academia, business and finance, and will continue to assist the Commission in developing sustainable finance policies until September 2020.

Sources: Sustainable Finance—Commission welcomes expert group reports on EU taxonomy and the EU Green Bond Standard and Taxonomy: Final report of the Technical Expert Group on sustainable finance.

FCA proposes new climate-related disclosure rules for premium listed issuers

The Financial Conduct Authority (FCA) has published consultation paper CP20/3, Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations. The new rules would require all commercial companies with a premium listing to either make climate-related disclosures consistent with the approach set out by the Taskforce on Climate-related Financial Disclosures (TCFD), or explain why not. The FCA says it will consider consulting on extending this rule to a wider scope of issuers. The consultation closes on 5 June 2020.

Source: FCA announces proposals to improve climate-related disclosures by listed companies.

International Capital Markets Association's first review of 2020 published

The International Capital Markets Association’s (ICMA) Asset Management and Investors Council has published its first review of 2020. The review includes articles on fund liquidity, sustainable finance and primary markets.

Source: ICMA AMIC publishes its first Review of 2020.

Resolution of the European CoR on the Green Deal published in the Official Journal

Resolution of the European Committee of the Regions (CoR)—The Green Deal in partnership with local and regional authorities, has been published in the Official Journal.

Debt capital markets

Coronavirus (COVID-19)—FCA says UK markets continuing to operate in ‘orderly fashion’ despite COVID-19 impacts

The Financial Conduct Authority (FCA) has issued a statement on UK markets, in which it confirms that it is working with international counterparts in the US, the EU and elsewhere so that markets can remain open and orderly and continue to perform their ‘essential role’ in supporting businesses, governments, jobs and the broader economy. It says that, although the impacts of coronavirus (COVID-19) have caused significant volatility in market prices over the past weeks and this may continue for a period, markets have continued to operate in an ‘orderly fashion’ in the UK.

Source: Statement on UK markets.

Coronavirus (COVID-19)—FCA, FRC and PRA publish guidance on financial reporting during coronavirus (COVID-19) pandemic

In response to the current coronavirus (COVID-19) situation, the FCA, the Financial Reporting Council (FRC) and the Prudential Regulation Authority (PRA) have announced a series of actions to ensure information continues to flow to investors and support the continued functioning of the UK’s capital markets. The regulators note that companies and their auditors currently face unprecedented challenges in preparing and auditing financial information.

Source: Joint statement by the FCA, FRC and PRA.

Coronavirus (COVID-19)—ICMA makes its Euro commercial paper materials available to non-members

The International Capital Market Association (ICMA) has made generally available to non-ICMA members the Euro commercial paper (ECP) materials from its Primary Market Handbook, which were previously available only to ICMA members. ICMA says it has decided to do this ‘in the interest of supporting the overall market’, after the Bank of England (BoE) announced its new COVID Corporate Financing Facility (CCFF).

Source: ICMA Euro commercial paper (ECP) materials to be made available to the wider market.

Coronavirus (COVID-19)—Relevance of Social Bonds highlighted during coronavirus (COVID-19)

ICMA and the Executive Committee of the Green and Social Bond Principles have highlighted that Social Bonds can be used to address the coronavirus (COVID-19) pandemic. Examples of eligible social projects include medical research and the development of vaccines or investment into additional medical equipment. A Q&A for Social Bonds related to coronavirus has also been published to provide additional guidance.

Source: Green and Social Bond Principles with ICMA underline relevance of Social Bonds in addressing COVID-19 crisis and provide additional guidance.

Coronavirus (COVID-19)—The impact of coronavirus (COVID-19) on the debt capital markets

Becky Bradley, senior counsel in the Wells Fargo Legal Department, discusses the impact of coronavirus (COVID-19) on the debt capital markets and sets out what debt capital markets practitioners should be doing now to prepare for potential issues in the future.

Coronavirus (COVID-19)—ESMA requires net short position holders to report positions of 0.1% and above in light of coronavirus COVID-19 pandemic

The European Securities and Markets Authority (ESMA) has issued a decision temporarily requiring the holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority (NCA) if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision.

Source: ESMA requires net short position holders to report positions of 0.1% and above.

Update on proposal for a Regulation on assignments of claims

The Council of the EU has published an update on the progress of the European Commission’s proposal for a Regulation on assignments of claims, part of the capital markets union project.

Source: Proposal for a Regulation of the European Parliament and of the Council on the law applicable to the third-party effects of assignments of claims—Information from the Presidency.


ISDA developments

CFTC chair discusses coronavirus (COVID-19) pandemic and broader policy initiatives

The International Swaps and Derivatives Association (ISDA) has published an interview with Heath Tarbert, chair of the Commodity Futures Trading Commission (CFTC). Tarbert discusses the CFTC’s reaction to the pandemic and its broader policy initiatives, including cross-border rules, position limits and benchmark reform.

Source: IQ Interview with CFTC chair Heath Tarbert.

Coronavirus (COVID-19)—ISDA and others request delayed phase-in of margin requirements for non-centrally cleared derivatives

ISDA has submitted a letter on behalf of 21 industry associations and their members to the Basel Committee on Bank Supervision (BCBS), and the International Organization of Securities Commissions (IOSCO). In the letter, the associations request that BCBS, IOSCO and global regulators suspend the current timeline for the margin requirements for non-centrally cleared derivatives to allow market participants to focus their resources on ensuring continued access to the derivatives market.

Source: Joint trade association letter on impact of COVID-19 on Initial Margin phase-in.

Coronavirus (COVID-19)—International Swaps and Derivatives Association welcomes postponement of Basel III

ISDA has published a statement thanking the Basel Committee for their quick response in postponing the implementation of Basel III due to the coronavirus (COVID-19) pandemic. Basel III will be postponed by one year to 1 January 2023. ISDA believe that the delay of Basel III provides much needed certainty for firms on how to manage scarce resources during the pandemic. ISDA however, urges regulators to go one step further and delay the next phases of the initial margin implementation due to become effective in September 2020 and September 2021 to allow small entities to focus resources on the coronavirus response.

Source: A Welcome Step from Basel.

ISDA Interest Rate Derivatives Definitions to be updated

ISDA has been working with its members to draft the 2020 ISDA Interest Rate Derivatives Definitions, an update of the 2006 definitions.

Source: 2020 ISDA Interest Rate Derivatives Definitions.

ISDA commends efforts to harmonise cross-border transactions

ISDA has released a letter which comments to the US CFTC regarding the Cross-Border Application of the Registration Thresholds and Certain Requirements Applicable to Swap Dealers and Major Swap Participants published in the Federal Register on January 2020. ISDA highlighted the Commission’s efforts ‘to recalibrate its cross-border regime through the rulemaking process to better reflect its authority over cross-border transactions and reverse certain negative consequences that resulted from the application of the 2013 Cross-Border Guidance’. It also mentioned the necessity to change the current cross-border regulatory framework, considering that it had created ‘regulatory barriers to access global liquidity, increased capital requirements and costs, added operational complexity and risk, and imposed burdensome duplicative compliance obligations’.

Source: ISDA Comment Letter to CFTC on Cross-Border Application of the Registration Thresholds and Certain Requirements Applicable to Swap Dealers and Major Swap Participants.

ISDA issues market closure announcement for Philippines equity, FX and interest rate markets

ISDA says it has been made aware of the closure of certain markets and systems in the Philippines, which are pertinent to the derivatives market. ISDA is collating further details on the closures, with a view to issuing guidance similar to that which has been produced for previous market closures.

Source: Market closure announcement: Closure of Philippines Equity, FX and Interest Rate Markets.

International Swaps and Derivatives Association releases March 2019 review

ISDA has released ISDA in Review—March 2020, which includes a compilation of documents, research papers, press releases and comment letters, as well as the Joint Trade Association letter on Impact of the coronavirus (COVID-19) on Initial Margin Phase-in and the Joint Market Trade Associations statement—keeping financial markets open amid coronavirus (COVID-19).

Source: ISDA In Review – March 2020.

ISDA updates OTC derivatives compliance calendar

ISDA has published an updated version of its global over-the-counter (OTC) derivatives compliance calendar. It has also published ISDA In Review—February 2020, a compendium of links to new documents, research papers, press releases and comment letters published by ISDA in February 2020.

Sources: Updated OTC derivatives compliance calendar and ISDA In Review—February 2020 and ISDA In Review—February 2020.

Market trade associations say US financial markets should be kept open during coronavirus (COVID-19) health crisis

Eighteen market trade associations, including ISDA and the Futures Industry Association (FIA), have written to the US Treasury, the Federal Reserve Board of Governors, the Securities and Exchange Commission and the Commodity Futures Trading Commission, to emphasise the importance of keeping US financial markets open during the coronavirus (COVID-19) health crisis.

Source: FIA joins trade associations and businesses to urge Trump Administration and Federal officials to keep markets open.

Swaptions—'agreed discount rate' supplement to the 2006 ISDA definitions published

Supplement 64 to the 2006 ISDA definitions has been published to allow parties to specify a discount rate in swaption confirmations for which ‘cleared physical settlement’ or ‘collateralised cash price cash settlement method’ is applicable. The ISDA collateral cash price matrix has also been updated to align the discount rates specified with expected changes in the discount rates used by clearinghouses for euro and US dollar.

Source: ISDA: swaptions: “Agreed Discount Rate” Supplement to the 2006 ISDA Definitions Published.

ESMA publishes draft RTS for CCP colleges

The European Securities and Markets Authority (ESMA) has published its Final Report containing draft regulatory technical standards (RTS) for central counterparty (CCP) colleges under the European Markets Infrastructure Regulation (Regulation (EU) No 2019/2099) (EMIR 2.2).

Source: ESMA publishes draft regulatory technical standards for CCP colleges.

ESMA report recommends extending temporary EMIR exemptions for C6 energy derivative contracts

ESMA has published a report on C6 energy derivative contracts and related obligations under the European Market Infrastructure Regulation (EU) 648/2012 (EMIR). The report focuses on the adequacy of requiring C6 energy derivative contracts to be subject to certain EMIR obligations—including the clearing obligation—for which they currently benefit from a temporary exemption, and recommends extending the temporary regime.

Source: EMIR: ESMA advises Commission on C6 energy derivatives.

Futures Industry Association releases report on trends in the derivatives market

The FIA has released a research report conducted by Greenwich Associates on trading and clearing trends in derivatives markets, assessing market sentiment towards major market structure trends. Trends assessed include the move away from the London Interbank Offered Rate (LIBOR), the implementation of margin requirements on uncleared derivatives and the adoption of central clearing.

Source: FIA, Greenwich Associates release new derivatives market research.

Coronavirus (COVID-19)—The impact of coronavirus (COVID-19) on OTC derivatives

Guy Dempsey, Of Counsel at Katten Muchin Rosenman LLP, and Carolyn Jackson, partner at Katten Muchin Rosenman UK LLP, and both P.R.I.M.E. Finance experts, discuss the impact of the coronavirus (COVID-19) on OTC derivatives, including which OTC derivatives are most affected by the pandemic, whether market disruption or other circumstances could become Force Majeure events, defensive measures market participants should be taking and how derivatives regulators are responding.

Alfred Street Properties Ltd v National Asset Management Agency

[2020] EWHC 397 (Comm)

The claimant company's claim for restitution of the sums it paid to the defendant failed. The Commercial Court held that the defendant had validly extended certain extendable interest rate swaps in a telephone conversation of April 2012. The claim had been highly opportunistic and meritless.

Securitisation and structured products

COVID-19—FCA updates statement on short selling

The Financial Conduct Authority (FCA) has updated its statement on short selling bans and reporting, as part of its response to the coronavirus (COVID-19) pandemic. The statement confirms that the FCA has now made the reporting system changes required in order to match the European Securities and Markets Authority (ESMA)’s temporary change to the threshold for notifying net short positions to competent authorities under the Short Selling Regulation (SSR). The threshold falls from 0.2% of issued share capital to 0.1%. 

Source: COVID-19: FCA updates statement on short selling bans and reporting.

Coronavirus (COVID-19)—ESMA extends consultations response dates

ESMA decided to extend the response date for all ongoing consultations with a closing date on or after 16 March by four weeks, in light of the coronavirus (COVID-19) pandemic.

Source: ESMA extends consultations response dates.

Coronavirus (COVID-19)—ESMA issues guidance on financial reporting deadlines during the coronavirus (COVID-19) epidemic

ESMA has issued a public statement on financial reporting deadlines applicable to listed issuers under the Transparency Directive due to the impact of the coronavirus (COVID-19). In the statement, ESMA acknowledges the difficulties issuers are facing in preparing financial reports, and those challenges auditors are facing in carrying out audits of accounts in the time required for the legislative deadlines. As a result, ESMA has recommended that National Competent Authorities (NCAs) apply forbearance powers toward issuers who require delays to the publication of their financial reports, while noting that issuers should keep investors informed of any expected delays in publication.

Source: ESMA issues guidance on financial reporting deadlines in light of COVID-19.

Coronavirus (COVID-19)—ESMA statement on SFTR implementation

ESMA has issued a public statement requesting a co-ordinated supervisory approach by NCAs to the application of the Securities Finance Transactions Regulation (EU) 2015/2365 (SFTR), including on reporting start date and registration of trade repositories (TRs). This request has been made in response to the coronavirus (COVID-19) pandemic.

Source: ESMA sets out approach to SFTR implementation.

Regulation of derivatives and structured products

EMIR RTS exempting STS securitisation hedging derivatives from margin requirements published in Official Journal

Two Commission Delegated Regulations amending European Market Infrastructure Regulation (EU) 648/2012 (EMIR) Level 2 measures have been published in the Official Journal of the EU—Commission Delegated Regulation (EU) 2020/447 of 16 December 2019 supplementing EMIR with regard to regulatory technical standards (RTS) on the specification of criteria for establishing the arrangements to adequately mitigate counterparty credit risk associated with covered bonds and securitisations and amending Commission Delegated Regulations (EU) 2015/2205 and (EU) 2016/1178—and Commission Delegated Regulation (EU) 2020/448 of 17 December 2019 amending Commission Delegated Regulation (EU) 2016/2251 as regards the specification of the treatment of over-the-counter (OTC) derivatives in connection with certain simple, transparent and standardised (STS) securitisations for hedging purposes.

ESMA consults on EMIR REFIT technical standards on trade repositories

The European Securities and Markets Authority (ESMA) has launched a consultation on draft regulatory and implementing technical standards (RTS and ITS) under Regulation (EU) 2019/834 (EMIR REFIT) covering reporting to and registration of trade repositories (TRs), data reconciliation and validation, and publication and provision of data by TRs to the relevant authorities.

Source: ESMA consults on technical standards on trade repositories under EMIR REFIT.

FIA responds to BCBS consultation on the CVA risk framework

The Futures Industry Association (FIA) has published its response to the Basel Committee on Banking Supervision (BCBS)’s consultation on credit valuation adjustment (CVA) risk: targeted final revisions. The FIA’s key point is that client cleared derivatives should be removed from the scope of CVA.

Source: FIA calls on Basel Committee to remove client clearing from credit valuation adjustment.

ISDA report on operational considerations for FCs under EMIR REFIT

The International Swaps and Derivatives Association (ISDA) has published a report on the operational challenges and points for consideration arising from the additional reporting requirements for financial counterparties (FCs) introduced by EMIR REFIT .

Source: EMIR REFIT: FCs reporting on behalf of both itself and NFC clients—operational considerations.

ISDA, GFMA and IIF respond to BCBS’s credit valuation adjustment consultation

ISDA, the Global Financial Markets Association (GFMA) and the Institute of International Finance (IIF) have written a joint response to the BCBS’ consultation on revisions to the CVA risk framework.

Source: ISDA/GFMA/IIF response to BCBS consultation on CVA.

Coronavirus (COVID-19)—ISDA publishes recording outlining the legal issues posed to members by coronavirus

ISDA has published a recording of a call held to discuss the potential legal and documentation issues arising from the coronavirus outbreak. When developing responses to the outbreak, ISDA members may wish to consider the issues highlighted in the call.

Source: Recording: ISDA Call: COVID-19 update and discussion.

Claims and remedies

*Aspen Underwriting Ltd and others v Credit Europe Bank Nv

[2020] UKSC 11

A jurisdiction agreement in an insurance contract did not bind a third party beneficiary of insurance who was domiciled in a different contracting state and who had not expressly subscribed to the clause. Accordingly, the Supreme Court ruled that the lower courts had not erred in ruling that the English court did not have jurisdiction pursuant to the exclusive English jurisdiction clause contained in the insurance policy concerning a vessel (the policy), in proceedings to recover sums paid by the insurers under a settlement agreement relating to the loss of the vessel, on the basis that it had been deliberately sunk. The court held that the bank, which was domiciled in the Netherlands and which was identified as the mortgagee, assignee and loss payee in the policy, was not a party to the contract (concerning jurisdiction) contained in that policy and that it was not bound by that contract to submit to the jurisdiction of the English courts if the insurers raised an action in England. Further, the court held that the bank, as the named loss payee under the policy, was the 'beneficiary' of the policy, and that it was entitled to benefit from the protections of s 3 of Regulation (EU) 1215/2012, including the requirement, under art 14 of that Regulation, that it had to be sued in the courts of the member state of its domicile. It followed that the insurers of the vessel could not assert jurisdiction under art 7(2) of the Regulation in respect of the claims for misrepresentation. Accordingly, the insurers failed, and the bank succeeded, in their respective appeals, because the courts of England and Wales had no jurisdiction in respect of the insurers' claims against the bank.


COVID-19 spurs countries around the world to expedite reform of restructuring laws

This article looks at how coronavirus (COVID-19) is causing countries around the world to try to expedite finalisation of new restructuring laws to assist struggling companies during this period of extreme volatility and uncertainty.

Coronavirus (COVID-19)—Czech Republic proposals to amend insolvency laws

In response to the economic impact of the current crisis resulting from Czech government measures related to the coronavirus (COVID-19) pandemic, amendments to Act No. 182/2006 on insolvency procedures (the Insolvency Act) are currently being prepared. A number of changes are currently being drafted by the Ministry of Justice in cooperation with the Ministry of Finance. A draft amendment to the Insolvency Act has also concurrently been submitted by judges from the Insolvency Section of the High Court in Prague. Written by Václav Kment, Advokát of Kinstellar, s.r.o.

Coronavirus (COVID-19) crisis—Is keeping calm & carrying on enough?

Peter JM Declercq of DCQ Legal looks at what the coronavirus (COVID-19) crisis means for those working in the restructuring & insolvency (R&I) sector.

Coronavirus (COVID-19)—Challenges for insolvency practitioners

There are, very likely, a huge number of cases of coronavirus (COVID-19) which have not yet been identified. Businesses have started to close and thousands are in isolation. On top of that, the cost to the global economy of the coronavirus pandemic is estimated in the trillions. Marco Piacquadio, director ​at BTG Global Advisory, considers what this means for insolvency practitioners (IPs).

Coronavirus (COVID-19)—proposal for temporary changes to UK insolvency law

The coronavirus (COVID-19) crisis has unsurprisingly had a significant impact on businesses around the world, putting many at real risk of insolvency. Some jurisdictions have made temporary changes to their insolvency laws to assist companies (and their directors) and individuals given the current uncertainty of how long the crisis will last, and therefore what its lasting effects will be. The Insolvency Committee of the City of London Law Society (CLLS) has submitted a paper to the Insolvency Service entitled ‘Proposals for mitigating the short term effects on viable businesses of covid-19’ suggesting a number of temporary changes to UK insolvency law.

Directors’ duties and coronavirus (COVID-19)—The risk of wrongful trading when you cannot trade

This analysis looks at directors’ duties, particularly concerning wrongful trading, in the context of companies facing financial difficulties as a result of coronavirus (COVID-19).

Coronavirus (COVID-19)—Government to amend insolvency laws to support businesses during coronavirus (COVID-19)

The government has announced that it will amend insolvency laws to allow companies to keep trading while they explore options for rescue during the coronavirus (COVID-19) pandemic. The announcement follows from the Insolvency Committee of the CLLS’ recent paper submitted to the Insolvency Service, entitled ‘Proposals for mitigating the short-term effects on viable businesses of COVID-19’, which suggested a number of temporary changes to UK insolvency laws.

Source: Government to amend insolvency laws.

Coronavirus (COVID-19)—The airlines’ battle for survival amid coronavirus (COVID-19)

Much has been written on the rights of air passengers resulting from coronavirus (COVID-19). But for many airlines, coronavirus poses a much more existential threat.  It threatens the survival of not just small airlines like Flybe. Michael McLaren QC, of Fountain Court Chambers considers the coronavirus from an airline perspective, and offers thoughts as to how airlines might seek to reduce their vulnerability to failure.

Coronavirus (COVID-19)—‘Rescue administration’ can help save British businesses

The Ashurst RSSG team is joining together with other insolvency professionals to help repurpose administration to save coronavirus (COVID–19) stricken businesses. Written by Giles Boothman, Olga Galazoula, Lynn Dunne, Drew Sainsbury, Ru-Woei Foong and Inga West of Ashurst LLP.

Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020

An amendment is made to Article 3(2) of the Insolvency Act 1986 (Prescribed Part) Order 2003, which apply when a company enters an insolvency process and prescribes the part of the company’s net assets (the ‘prescribed part’) that must, in certain circumstances, be distributed to the company’s unsecured creditors, up to a cap of £600,000, to increase the cap to £800,000 in line with inflation since 2003 in England, Scotland, and Wales. This Order came into force on 6 April 2020.


ICMA shares its views on an EU framework for markets in crypto-assets

The International Capital Market Association (ICMA) has released its response to the European Commission’s consultation on an EU framework for markets in crypto-assets. According to the ICMA, security tokens, which are defined by the Commission as ‘crypto-assets issued on a distributed ledger technology (DLT) and that qualify as transferable securities or other types of markets in financial instruments directive financial instruments', appear to be a potential alternative source of early-stage funding used by start-ups and SMEs. However, despite the growing number of DLT applications at different stages of the securities lifecycle in bond markets, the early stage of these applications in the Eurobond market makes it difficult to have a large scope for industry-wide views expressed or to reach a consensus.

Source: ICMA responds to the European Commission's consultation on an EU framework for markets in crypto-assets.

IOSCO publishes report on regulatory implications of global stablecoin initiatives

The International Organization of Securities Commissions (IOSCO) has published a report on global stablecoin initiatives, which identifies their possible implications for securities markets regulators. The report examines the regulatory issues arising from the use of global stablecoins and explores how existing IOSCO Principles and Standards could apply to these arrangements.

Source: IOSCO report examines how existing regulatory principles could apply to stablecoins.

Regulation for banking lawyers

Coronavirus (COVID-19)—Banks’ pandemic contingency plans being tested given coronavirus, BOE's Carney says

The effectiveness of UK banks’ contingency plans to prevent their operations being hit by a pandemic is being put to the test given the coronavirus (COVID-19) outbreak, Bank of England (BoE) Governor Mark Carney said on Tuesday 3 March 2020. The BoE is in ‘daily, hourly’ contact with banks and other major financial institutions as they bring in their contingency plans, Carney told lawmakers, which include requiring staff to work at second sites or remotely.

Coronavirus (COVID-19)—BoE extends its Contingent Term Repo Facility

The BoE announced that it will continue to offer its Contingent Term Repo Facility (CTRF) on a weekly basis through April 2020. The CTRF is a temporary enhancement to the BoE’s sterling liquidity insurance facilities to address the impact of the coronavirus (COVID-19) outbreak.

Source: Extension of the Contingent Term Repo Facility (CTRF)—Market Notice 30 March 2020.

Coronavirus (COVID-19)—Companies House extends accounts filing deadline

Companies House announced that it is now automatically granting a two month extension to file company accounts, but advises that companies should act before the filing deadline.

Source: Companies House extending filing deadlines.

Coronavirus (COVID-19)—What does it mean for financial services?

The outbreak of coronavirus (COVID-19) has been characterised as a pandemic by the World Health Organisation and has spread across the globe, with profound implications for financial markets and the world economy as a whole. This news analysis considers what the outbreak means for financial services in the UK and EU and surveys the regulatory response so far.

Coronavirus (COVID-19)—Delivery of FSA/FCA interest rate hedging products review delayed

John Swift QC, the independent reviewer examining the Financial Services Authority (FSA) and Financial Conduct Authority (FCA)'s supervisory intervention in relation to interest rate hedging products, has informed the FCA that the deadline for submission of his report must be extended until early 2021 as a result of necessary precautions to be taken in response to coronavirus (COVID-19).

Source: FSA/FCA Interest Rate Hedging Products Lessons Learned Review deadline extended until early 2021.

Coronavirus (COVID-19)—European Banking Authority delays EU-wide stress test until 2021

In response to the global spread of the Coronavirus (COVID-19), the European Banking Authority (EBA) announced that it has delayed the EU-wide stress test until 2021. This measure is intended to allow banks to address critical operational challenges and focus on supporting household and corporate sector customers. The EBA also recommended that national competent authorities (NCAs) take full advantage of the flexibility embedded in the banking sector regulatory framework.

Source: EBA statement on actions to mitigate the impact of COVID-19 on the EU banking sector.

Coronavirus (COVID-19)—LMA, ISDA and the IAIS publish responses to coronavirus COVID-19

The Lloyds Market Association (LMA), the International Swaps and Derivatives Association (ISDA) and the International Association of Insurance Supervisors (IAIS) have published their responses to the coronavirus COVID-19 pandemic.

Sources: LMA response to COVID-19, COVID-19: ISDA update and Statement from IAIS Jonathan Dixon about COVID-19.

Coronavirus (COVID-19)—London Stock Exchange sets out AIM temporary changes due to coronavirus (COVID-19)

The London Stock Exchange (LSE) has published new temporary measures regarding the publication of annual audited accounts during the coronavirus (COVID-19) outbreak. Under AIM Rules for Companies, AIM companies must publish annual audited accounts six months after the end of their financial year. Following the initiative of the Department of Business, Energy & Industrial Strategy and Companies House to offer an extension of the legal filing deadline, the LSE has decided to offer to AIM companies the chance to apply for a three-month extension if their financial year ends between 20 September 2019 and 30 June 2020. In order to be valid, the request for extension must be made prior to the AIM company’s current AIM Rule reporting deadlines and to the AIM Regulation by the nominated adviser.

Source: Coronavirus–Temporary measures for publication of annual audited accounts.

Coronavirus (COVID-19)—BoE announces coronavirus (COVID-19) supervisory and prudential policy measures, including cancelling the 2020 annual stress test

The BoE has announced supervisory and prudential policy measures to address the challenges of coronavirus (COVID-19), including cancellation of BoE’s 2020 annual stress test—the annual cyclical scenario; postponement of the joint BoE/FCA survey into open-ended funds; amendments to the biennial exploratory scenario (BES) timetable; a statement on the potential interaction of coronavirus (COVID-19) with IFRS9; and a number of other steps to reduce regulatory burdens involved during current events.

Sources: Bank of England announces supervisory and prudential policy measures to address the challenges of COVID-19 and UK Finance responds to Bank of England measures to address impact of COVID-19.

Coronavirus (COVID-19)—GFXC says the principles of the FX Global Code can help in time of ‘intense volatility’

The Global Foreign Exchange Committee (GFXC) is encouraging market participants to be aware of how their actions can ensure the FX market remains ‘robust, open, fair and appropriately transparent’ given the intense volatility caused by the coronavirus (COVID-19) pandemic. The GFXC says it is possible that FX market participants may execute larger than usual FX volumes during end-of-month benchmark fixings. In addition, FX market participants may face more operational constraints, reflecting lockdown in some financial centres.

Source: GFXC issues statement on FX market conditions.

A deal may be close to the line but still on the right side of it (R v Jenkins & Ors)

In 2008, at the heart of the banking crisis, Barclays Bank negotiated a £322m investment from Qatar Holding LLC, the money saved the bank from being nationalised. The terms under which the deal was done however landed the bank, its CEO and three of its senior personnel in court on fraud charges. Twelve years, two applications to dismiss, two trials, two appeals and a jury deliberation of under six hours later, everyone, including the bank, was acquitted. Should the bank have accepted the money? Should the SFO have prosecuted? This analysis focusses on the deal that was too close to the line for comfort and on a prosecution that failed to understand that a deal close to the line is still on the right side of it. News analysis written by Ian Winter QC, Cloth Fair Chambers, counsel for Thomas Kalaris.

FCA asks companies to delay announcement of preliminary financial accounts

The FCA asked listed companies to delay the forthcoming announcement of their preliminary financial accounts by at least two weeks. The request does not apply to AIM companies.

Source: FCA requests a delay to the forthcoming announcement of preliminary financial accounts.

FMLC welcomes Commission’s AML/CFT roadmap

The Financial Markets Law Committee (FMLC) has responded to the European Commission’s ‘Roadmap: Preventing and combating money laundering and terrorism financing’ (AML/CFT). The FMLC welcomes the Commission’s initiative and highlighted the importance of legal entity identifiers (LEIs)—which ‘unambiguously identify legal entities engaged in financial transactions’—in combating money laundering.

Source: Response to European Commission Roadmap: Preventing and combating money laundering and terrorism financing: 3 March 2020.

UK plans economic crime levy to fight money laundering

The Chancellor of the Exchequer unveiled plans in the Budget on Wednesday 11 March 2020 to generate more cash to fight financial crime by imposing a new levy on banks, law firms and other businesses that must comply with anti-money laundering regulations.


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About the author:

Zahra started working as a paralegal at LexisNexis in the Lexis®PSL Banking & Finance and Restructuring & Insolvency teams in April 2019 and moved to the Corporate team in June 2020, where she currently works as a Market Tracker Analyst. Zahra graduated with 2.1 honours in BA French and Spanish and completed the GDL at BPP University. She has undertaken voluntary work for law firms in London, Argentina and Colombia.