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For further information on the effects of COVID-19 on financial services, see: Coronavirus (COVID-19)—key developments for financial services lawyers and
Coronavirus (COVID-19)—key financial services issues.
The Financial Conduct Authority (FCA) issued a statement aimed at firms providing portfolio management services or holding retail client accounts that include positions in leveraged financial instruments or contingent liability transactions. It outlines
a further six-month extension and amendments to a temporary coronavirus (COVID-19) measure that the FCA issued in March 2020 regarding 10% depreciation notifications.
Source: Coronavirus and 10% depreciation notifications: further temporary measures for firms.
The FCA published an update following the coronavirus (COVID-19) restrictions statements by the government and the devolved administrations on 22 September 2020. The FCA notes that firms should continue to follow government advice on working from home
until notified otherwise.
Source: FCA update following the recent coronavirus restrictions statements on Tuesday 22 September.
The FCA published two ‘Dear CEO letters’ as a result of the impact of the coronavirus (COVID-19) pandemic. One letter is addressed to the CEOs of all firms in relation to adequate handling of client assets and the other is addressed to the
CEOs of general insurance intermediaries in relation to adequate handling of client money. The letters highlight those areas that are particularly important to maintaining adequate client assets and client money arrangements in the current environment.
They also remind firms of their obligations to continue to oversee those arrangements and notify the FCA if they identify any material concerns.
Sources: Dear CEO Letter: Adequate client assets arrangements and Dear CEO Letter: Adequate client money arrangements—For General Insurance intermediaries.
The Basel Committee on Banking Supervision (BCBS) met on 14, 18 and 25 September 2020 to take stock of coronavirus (COVID-19) risks to the global banking system and related vulnerabilities, and to discuss a range of policy and supervisory initiatives.
Source: Basel Committee approves annual G-SIBs assessment, updates workplan to evaluate post-crisis reforms.
The general manager of the Bank for International Settlements (BIS), Agustín Carstens, gave a speech on supervisory priorities in the age of coronavirus (COVID-19) and beyond. Carstens said that although banks entered into the pandemic well capitalised
and prudential authorities took swift action, macroprudential policies may not have worked as intended, and significant challenges lie ahead for supervisors.
Source: Supervisory priorities in the age of COVID and beyond.
The Bank of England (BoE) published a Bank Overground piece examining whether the coronavirus (COVID-19) pandemic could lead to higher bank losses on unsecured debt. The authors find that lower income households, which tend to hold unsecured debt but
not mortgages, have faced financial pressure due to COVID-19, and this could lead to higher bank losses on unsecured debt with consequences for financial stability.
Source: Could COVID-19 lead to higher bank losses on unsecured debt?
The BoE announced further updates to the Term Funding Scheme with additional incentives for Small and Medium-sized Enterprises (TFSME) to reflect changes to HMT’s Bounce Back Loans Scheme (BBLS), in a Market Notice dated 24 September 2020. The TFSME
was launched in March 2020 as part of measures to respond to the economic shock from the coronavirus (COVID-19) pandemic.
Source: Further updates to the TFSME to reflect changes to HMT’s Bounce Back Loans Scheme (BBLS)—Market Notice 24 September 2020.
The European Banking Authority (EBA) launched its 7th annual EU-wide transparency exercise, with the objective of providing market participants with updated information on the financial conditions of EU banks as of June 2020, thus assessing the preliminary
impact of the COVID-19 crisis on the sector. The EBA expects to publish the results of this exercise at the beginning of December 2020, along with the Risk Assessment Report.
Source: EBA launches EU-wide transparency exercise.
The European Central Bank (ECB) published slides summarising the main features of European banking supervision measures during the coronavirus crisis. This include its prudential and operational relief measures (capital, liquidity and operational
relief, guidance on non-performing loans (NPL) and International Financial Reporting Standards 9 (IFRS9)
and reduction in requirements for market risk); recommendation on dividends and share buy-backs; and supervisory mitigation measures.
Source: European banking supervision measures in the context of the coronavirus (COVID-19) pandemic.
SI 2020/1033: Provisions are made to terminate certain temporary provisions introduced by the Corporate Insolvency and Governance Act 2020 and extended by the Corporate Insolvency and Governance (Coronavirus) (Extension of the Relevant Period)
Regulations 2020, before the current expiration date of 30 March 2021 in England, Scotland, and Wales. These Regulations come into force on 1 October 2020.
Read the official version of this legislation and the explanatory memorandum.
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The House of Commons European Scrutiny Committee published the 22nd report of session 2019–21, which sets out a list of documents to be reported to the House as legally and/or politically important, including an update on the EU supervision of UK
central counterparties (EMIR 2.2) and the EU capital markets recovery package in response to the coronavirus (COVID-19).
Source: Twenty-second report of session 2019–21.
For further information, see: EMIR REFIT and EMIR 2.2 roadmap.
House of Commons European Scrutiny Committee member Sir William Cash MP wrote a letter to the economic secretary to HM Treasury, John Glen, on EU supervision of UK central counterparties (CCPs) under EMIR 2.2. In particular, Cash asks for clarification
from HM Treasury on whether the UK government, as part of its equivalence discussions with the European Commission, has agreed to regulatory alignment under EMIR 2.2 after the end of the Brexit transition period. A response is requested by 16 October
Source: HoC European Scrutiny Committee letter to John Glen: EU supervision of central counterparties under EMIR 2.2. (update), dated 24 September 2020 (published 28 September 2020).
The European Securities and Markets Authority (ESMA) announced that the three central counterparties (CCPs) established in the UK—ICE Clear Europe Limited, LCH Limited, and LME Clear Limited—will be recognised as third country CCPs (TC-CCPs)
eligible to provide their services in the EU after the end of the transition period following the withdrawal of the UK from the EU on 31 December 2020. The move has been welcomed by the BoE.
Source: ESMA to recognise three UK CCPs from 1 January 2021.
For further information, see: EU regulation of CCPs.
The FCA has issued a press release stating that, as part of developing the post-Brexit MiFID regime, industry testing for the FCA FITRS (Financial Instruments Transparency System) will open on 5 October 2020.
Source: Industry to begin testing the Financial Instruments Transparency System (FITRS).
The FCA updated its temporary permissions regime (TPR) webpage to reflect the fact that EEA firms and fund managers can now notify the FCA if they wish to use the TPR. The FCA has also published several directions under relevant statutory instruments
setting out how notifications can be made to the FCA to join the TPR.
Source: Temporary permissions regime.
For further information, see: Brexit and financial services—the temporary permissions regime (TPR).
The House of Commons Treasury Select Committee has asked the FCA to clarify the position of British expats in the EU who are being told that their UK bank accounts will be terminated at the end of the Brexit transition period on 31 December 2020.
Source: British expats in EU need ‘sufficient warning’ from UK banks if accounts will be terminated.
We have published an update to our Brexit Bulletin—key updates, research tips and resources. The latest edition includes commentary and updates on key transition priorities including negotiations on the future UK-EU relationship, implementation
of the Withdrawal Agreement, domestic preparation and contingency planning, plus updates on the Brexit legislation pipeline including the UK Internal Market Bill.
See: LNB News 30/09/2020 80.
Brian McDonnell, Partner at McDonnell Ellis LLP, analyses the recent FCA consultation paper (CP20/20) on the FCA’s general approach to international firms doing business in the UK.
See News Analysis: FCA consults on approach to international firms doing business in the UK.
ESMA published its final report containing draft regulatory and implementing technical standards (RTS and ITS) on the provision of investment services and activities in the EU by third-country firms under the Market in Financial Instruments Regulation
(MiFIR) and the Markets in Financial Instruments Directive (MiFID II). They reflect changes introduced by the Investment Firms Regulation (EU) No 2019/2033 (IFR) and Directive (EU) 2019/2034 (IFD), and have been submitted to the European Commission
for the adoption of the final legal text.
Source: ESMA publishes draft rules for third-country firms under new MiFIR and MiFID II regimes.
For further information, see: MiFID II & MiFIR—third-country regime.
ESMA published a consultation paper on the functioning of Organised Trading Facilities (OTFs). The consultation relates to the review report which the European Commission is required to present on the functioning of OTFs under Article 90(1)(a)
of MiFID II. Responses should be submitted by 25 November 2020.
Sources: ESMA consults on OTF regime and Consultation paper on the functioning of Organised Trading Facilities (OTF).
For further information, see: Organised Trading Facilities (OTFs).
ESMA launched a consultation on the MiFIR reference data and transaction reporting obligations. The changes are intended to simplify the current regime and enhance the quality of data reported by ensuring consistency with other EU reporting measures
(including as set out in the Benchmarks Regulation and EMIR). Responses are sought by 20 November 2020 and ESMA intends to submit its final review report to the European Commission in Q1 2021.
Source: ESMA consults on MiFIR reference data and transaction reporting.
For further information, see: MIFID II & MIFIR—Transaction Reporting.
ESMA updated its Q&As document on data reporting under the Market in Financial Instruments Regulation (MiFIR). The purpose of the Q&As is to promote common supervisory approaches and practices in the application of MiFIR. They guidance
to investment firms, trading venues, ARMs and systematic internalisers on compliance with the reporting provisions of MiFIR.
Source: ESMA updates Q&As on MiFIR data reporting.
ESMA published the final report on the MiFID II/MiFIR transparency regime applicable to non-equity financial instruments. This sets out proposals contained in the report aimed at simplifying the transparency regime.
Source: ESMA proposes amendments to the MiFIR transparency regime for non-equity financial instruments.
For further information, see: MiFID II & MiFIR—pre- and post-trade transparency.
ESMA updated its guidance on the annex to its opinion dated 28 July 2020 determining third-country trading venues for the purpose of transparency under the Markets in Financial Instruments Regulation (EU) 600/2014 (MiFIR). The annex provides a list of venues which meet the relevant criteria defined in the opinion.
Source: Guidance on the annex to ESMA opinion determining third-country trading venues for the purpose of transparency under MiFIR.
ESMA published three opinions on position limits regarding commodity derivatives under the Markets in Financial Instruments Directive and Regulation (MiFID II/MiFIR).
Source: ESMA agrees position limits under MiFID II.
For further information, see: MiFID II—commodity derivatives—position limits.
The FCA issued a press release stating that, as part of developing the post-Brexit MiFID regime, industry testing for the FCA FITRS (Financial Instruments Transparency System) will open on 5 October 2020.
The Council of the EU announced that a meeting of economic and finance ministers will take place via video conference on 6 October 2020. The agenda will include discussion of the European Commission’s digital finance package and action plan on further
progressing the capital markets union (CMU). The meeting will also discuss the appointment of a new member of the executive board of the ECB.
Source: Video conference of economics and finance ministers, 6 October 2020.
The General Secretariat of the Council of the EU published information to delegations on the progress and status of EU financial services legislative files.
Source: Progress on financial services legislative files.
The EBA published its annual work programme for 2021. The work programme package describes and summarises the main objectives, priorities and deliverables of the EBA in the coming year. It is based on the tasks specified in the EBA Regulation and in the
relevant EU banking sector legislation.
Sources: EBA 2021 work programme and EBA publishes work programme for 2021.
TheCityUK issued a press release highlighting the work of the UK/US Financial Regulatory Working Group (FRWG), and the launch of a paper by the new British American Finance Alliance (BAFA) setting out proposals for future UK-US regulatory co-operation
and dialogue. BAFA argues that establishing the right parameters and repurposing the FRWG behind a long-term vision will enhance regulatory dialogue and, in turn, reduce cross-border frictions between the UK and US, bolster cross-border investment,
and support stronger economic growth and job creation for both countries.
Source: UK and US finance industries join forces to propose a vision for closer regulatory co-operation.
The ECB published amendments to its guidelines on the implementation of monetary policy in the Eurosystem, applicable from 1 January 2021. The amended guidelines implement a decision taken by the Governing Council on 13 December 2019 whereby secured marketable
assets other than asset-backed securities and covered bonds would no longer be accepted as Eurosystem collateral.
Source: ECB amends monetary policy implementation guidelines.
The board of supervisors of the European Insurance and Occupational Pensions Authority (EIOPA) has extended the term of Fausto Parente, the current executive director of EIOPA, for another five years. The decision is based on the evaluation of the work
delivered during the first mandate and expectations for the next term.
Source: EIOPA board of supervisors reappoints Fausto Parente as executive director for further five years.
The board of supervisors of ESMA has published a summary of conclusions reached at its 9 September 2020 conference call. The board chiefly discussed the reporting of net short positions and the potential renewal of the ESMA Decision under Article 28 SSR.
Source: Summary of conclusions: Board of supervisors conference call—9 September 2020.
The Global Foreign Exchange Committee (GFXC) held a videoconference to discuss the progress of the FX Global Code review, trading conditions and settlement risk. It was agreed to strengthen GFXC guidance on the management of settlement risk as part of
the current review of the FX Global Code.
Source: GFXC meets via videoconference to discuss the progress of the FX Global Code review, trading conditions and settlement risk.
The Global Legal Entity Identifier Foundation (GLEIF) has announced that financial institutions are able to assume a new ‘validation agent’ role within the Global LEI system. Validation agents would simplify LEI issuance for their clients,
reduce time-to-revenue, and facilitate digital innovation. The validation agent role would be a new operational model in the Global LEI system.
Source: GLEIF defines new validation agent role for banks & financial institutions to simplify and accelerate client lifecycle management.
SI 2020/1054: Provisions are made to increase the limit on the amount HM Treasury can lend to the International Monetary Fund (IMF). The International Monetary Fund (Limit on Lending) Order 2010 is revoked. This Order came into force on 30 September 2020.
The FCA published its annual report on the regulatory perimeter, setting out which activities require authorisation and what level of protection consumers can expect for the financial services and products they purchase. The perimeter is decided by the
government and Parliament through legislation. The report will form the basis of a formal discussion with the economic secretary to HM Treasury later in 2020, the outputs of which will be published to help improve transparency around the actions being
taken on the perimeter.
Source: FCA publishes annual report on the regulatory perimeter.
A European Commission notice relating to the interpretation of certain legal provisions of the revised bank resolution framework in reply to questions raised by Member States’ authorities has been published in the Official Journal of the EU. The
notice is intended to assist Member States’ authorities in the transposition in national law and implementation of the relevant legal provisions.
Source: Commission Notice relating to the interpretation of certain legal provisions of the revised bank resolution framework in reply to questions raised by Member States’ authorities 2020/C 321/01
The Prudential Regulation Authority (PRA) published consultation paper CP14/20, Internal Ratings Based UK mortgage risk weights: Managing deficiencies in model risk capture, setting out its proposals to introduce new expectations on Internal Ratings
Based (IRB) approach UK mortgage risk weights. Responses are sought by 30 January 2021.
Source: Internal ratings based on UK mortgage risk weights: Managing deficiencies in model risk capture.
Due to newly introduced eligibility criteria, the ECB has amended the annexes to the public guidance on the review of the qualification of capital instruments as Additional Tier 1 and Tier 2 instruments. Institutions are advised to make use
of the updated templates for their new issuances of these instruments.
Source: Amendments to the annexes to public guidance on the review of the qualification of capital instruments as Additional Tier 1 and Tier 2 instruments.
The Financial Stability Board (FSB) held its annual roundtable on external audit on 23 September 2020. The objective was to enable constructive dialogue on ways to promote financial stability by enhancing public confidence in the quality of external
audits. The discussion focused on current challenges, linked to the economic downturn and volatility in financial markets, to the estimation of expected credit losses, goodwill impairment and to other complex components of banks’ financial
Source: FSB holds virtual roundtable on external audit.
European Union – Economic and monetary union. The applicant credit institution succeeded in its action for annulment of the determination by the Single Resolution Board (the SRB) of the amount of the applicant's 2017 ex ante contribution to
the respondent single resolution fund (the contested decision). The Court of Justice of the European Union (Eighth Chamber, Extended Composition) held that: (i) the requirement that the contested decision be authenticated was not met; and (ii)
the SRB had infringed the obligation to state reasons set out in art 296 of the Treaty on the Functioning of the European Union.
See:  All ER (D) 56 (Sep).
ESMA published its final report on its inquiry into Cum/Ex, Cum/Cum and withholding tax (WHT) reclaim schemes. ESMA’s key proposal is that national competent authorities (NCAs) for securities markets should be empowered to share information with
the tax authorities, to assist in detecting WHT reclaim schemes. The final report will be submitted to the European Parliament.
Source: ESMA makes proposals to help prevent and detect WHT reclaim schemes.
The EU Commission is hosting an online conference, ‘Closing the door on dirty money’, on 30 September 2020 at 14:00 (CET). Among the list of speakers are the chief prosecutor of Catanzo, Nicola Gratteri, and the general prosecutor at the
French Court of Cassation, François Molins.
Source: Anti-money Laundering online conference.
The Business Banking Resolution Service (BBRS) published two reports on its Live Pilot ‘test’ phase of the new service to resolve SME banking complaints. Customers using the pilot service rated their experience ‘very highly’ and
had positive suggestions on how the service could evolve further when it goes live in autumn 2020.
Source: Live pilot perspectives report.
The Competition and Markets Authority (CMA) wrote to Cardif Pinnacle about two Payment Protection Insurance (PPI) breaches, relating to Article 4 of the PPI Market Investigation Order 2011. This follows four breaches of the Order for which the CMA issued
formal Directions to Cardif Pinnacle in July 2020. Cardif Pinnacle has sent an apology letter to all
Source: CMA letter to Cardif Pinnacle about two breaches of the PPI Order.
The Financial Ombudsman Service (FOS) published data showing how many complaints it received about individual businesses, and the uphold rate of those it resolved, between January and June 2020. The FOS received a total of just over 118,000 complaints
in this period. PPI continues to be the most complained about product, with a total of almost 41,500 new complaints received in the first half of 2020. The FOS upheld 31% of complaints in the consumers’ favour.
Source: We’ve published our latest complaints data about individual businesses.
For further information, see: Financial Ombudsman Service—essentials.
The FCA issued a statement noting that—in a case brought by the regulator—Konstantin Vishnyak has been found not guilty at Southwark Crown Court of one count of destroying documents in September 2018. The FCA says it is disappointed with the
outcome but respects the verdict.
Source: FCA press release: Konstantin Vishnyak found not guilty of destroying documents.
ESMA published a review of the Market Abuse Regulation (EU) No 596/2014 (MAR), delayed from spring 2020 by the coronavirus (COVID-19) pandemic. The report is the first in-depth review of the functioning of MAR since its implementation in 2016, and its recommendations
will feed into the European Commission’s review of MAR.
Source: ESMA publishes outcomes of MAR review.
For further information, see: Market Abuse Regulation (MAR)—essentials.
ESMA published draft regulatory technical standards (RTS) under the Benchmarks Regulation and in particular on expectations of administrators. ESMA will submit the final draft RTS to the European Commission by 1 October 2020, and the European Commission
will approve or reject them within three months.
Source: ESMA updates regulatory technical standards (RTS) under the Benchmarks Regulation (BMR).
For further information, see: Benchmarks Regulation—essentials.
ESMA published a consultation paper on its technical advice to the European Commission on fees for benchmark administrators under the Benchmarks Regulation. The closing date for responses is 6 November 2020.
Source: ESMA consults on fees for benchmarks administrators.
The ECB published its statement of compliance with the Principles for Financial Benchmarks developed by the International Organization of Securities Commissions (IOSCO). The statement shows how the ECB complies with these principles, and therefore
with international best practice, in its administration of the euro short-term rate €STR. The statement has been independently assured by the auditing firm PricewaterhouseCoopers.
Source: ECB publishes statement of compliance of €STR with IOSCO Principles for Financial Benchmarks.
The BoE published a joint statement with the FCA which states that, following close engagement with market participants, the FCA and BoE support and encourage liquidity providers in the sterling swaps market to adopt new quoting conventions for
inter-dealer trading based on SONIA instead of LIBOR from 27 October 2020. The intention is to facilitate the further shift in market liquidity toward SONIA swaps, bringing benefits for a wide range of end users and other market participants
as they move away from use of LIBOR.
Source: The FCA and the Bank of England encourage market participants in further switch to SONIA in interest rate swap markets.
For further information, see: LIBOR transition.
As the 31 December 2021 end date for LIBOR approaches, it is becoming increasingly apparent that it will not be possible for market participants to amend all legacy contracts to add LIBOR fallback provisions or replace or ameliorate problematic fallback
See News Analysis: Competing LIBOR-transition proposals create more problems.
The European Commission published a new action plan to boost the EU's capital markets union (CMU) over the coming years, saying ensuring access to market financing will be crucial to ensure that Europe recovers from the economic crisis caused by the coronavirus
Sources: Capital markets union: Commission to boost Europe's capital markets, AFME response and IE response.
For further information, see: The Capital Markets Union.
ESMA published its annual report on EEA prospectus activity. The report found that in 2019 the number of prospectus approvals across the EEA decreased from 3,390 to 3,113, continuing the downward trend from the 2008 financial crisis. ESMA makes prospectus
data available to ‘provide information about trends in general prospectus approval statistics and passporting activity, as well as trends concerning the structure of approved prospectuses and the types of securities they cover.’
Source: ESMA REPORTS DECREASE IN PROSPECTUS ACTIVITY FOR 2019.
ESMA issued a public statement concerning the applicability of Level 3 guidance published under the Prospectus Directive. It contains an update of the status of the Q&As and the Committee of European Securities Regulators (CESR) recommendations relating
to specialist issuers.
Sources: ESMA publishes a statement concerning the applicability of Level 3 guidance published under the Prospectus Directive and
Public statement: Update on the process of revising the guidance published under the Prospectus Directive and applicability of the CESR recommendations concerning specialist issuers.
ESMA published the final report for its guidelines on internal control for credit rating agencies (CRAs). The guidelines will be translated into all official languages and published on ESMA’s website. They will apply from 1 July 2021.
Sources: ESMA publishes final report for guidelines on internal control and
For further information, see: EU regulatory regime for credit rating agencies.
The Chartered Institute for Securities & Investment (CISI) announced that it will participate in World Financial Planning Day on 7 October 2020, organised by the Financial Planning Standards Board (FPSB), and World Investor Week (5-11 October 2020),
run by the International Organization of Securities Commissions (IOSCO).
Source: CISI joins global financial planning community for World Financial Planning Day 7 October and World Investor Week.
The International Capital Market Association (ICMA) published a discussion paper on transparency and liquidity in the European bond markets. The paper addresses the ‘ongoing parallel discussion on the issue of transparency in the European bond markets’
on the subjects of bond market liquidity and the design and implementation of the European transparency framework for bonds. The paper endeavours to ‘to pull those two workstreams together’ in an effort to ‘explain how bond market
structure and dynamics are very different to those of equity markets’.
Source: ICMA publishes discussion paper on Transparency and liquidity in the European bond markets.
The Law Society and City of London Law Society (CLLS) published a joint response to the FCA’s Primary Markets Bulletin 30 and proposed new technical note 606.1: ‘When a prospectus is required where securities are issued pursuant to Schemes
of Arrangement’ (Draft TN).
Source: Primary Market Bulletin No. 30: Proposed Technical Note 606.1—Law Society and City of London Law Society joint response.
The European Commission’s annual report to the European Parliament and the Council under Article 85(2) of Regulation (EU) No 648/2012 on over-the-counter (OTC) derivatives, central counterparties (CCPs) and trade repositories (EMIR), as amended by Regulation (EU) No 834/2019 (EMIR Refit) has been published. The report relates to the temporary exemption from the central clearing obligation (and the associated requirement for cash variation margin) for pension scheme
arrangements (PSAs). This exemption is intended to allow time to find a suitable technical solution which would allow central clearing at CCPs for PSAs while avoiding adverse effects for pensioners.
Source: Report from the Commission to the European Parliament and the Council under Article 85(2) of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, as amended by Regulation (EU) No 834/2019, assessing whether viable technical solutions have been developed for the transfer by pension scheme arrangements of cash and non-cash collateral as variation margins and the need for any measures to facilitate those viable technical solutions.
ESMA updated its Q&A document on practical questions regarding data reporting issues, under the EMIR.
Source: ESMA updates Q&A on data reporting under EMIR.
For further information, see: EMIR—essentials.
ESMA announced that the three central counterparties (CCPs) established in the UK—ICE Clear Europe Limited, LCH Limited, and LME Clear Limited—will be recognised as third country CCPs (TC-CCPs) eligible to provide their services in the EU
after the end of the transition period following the withdrawal of the UK from the EU on 31 December 2020. The move has been welcomed by the BoE.
The FSB confirmed the Regulatory Oversight Committee (ROC) of the global Legal Entity Identifier (LEI) system as the international governance body (IGB) for the globally harmonised identifiers used to track over-the-counter (OTC) derivatives transactions.
Source: LEI ROC to become governance body for OTC derivatives identifiers.
SI 2020/Draft: These draft Regulations are laid to close a technical loophole which still allowed certain collective investment schemes to issue bearer certificates. By prohibiting bearer certificates and making provision for the cancellation and conversion
of outstanding bearer certificates, this instrument will increase transparency around who owns and controls UK investment entities and will help deter and identify those who hide their interest in UK entities to facilitate illegal activities. They
come into force on 1 January 2021.
The full draft legislation can be found here. The draft explanatory memorandum can be found here
The European Parliament’s Committee on Economic and Monetary Affairs (ECON) recommended that the Parliament approve the Council of the EU’s position at first reading on the European Commission’s proposed regulation on European crowdfunding
service providers, as well as the complementary regulation amending MiFID II to exclude crowdfunding service providers from its scope.
Sources: Recommendation for second reading on the Council position at first reading with a view to the adoption of a regulation of the European Parliament and of the Council on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 and
Recommendation for second reading on the Council position at first reading with a view to the adoption of a directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments.
For further information, see: The regulation of crowdfunding platforms.
A European Commission notice relating to the interpretation of certain legal provisions of the revised bank resolution framework in reply to questions raised by Member States’ authorities has been published in the Official Journal of the EU.
The notice is intended to assist Member States’ authorities in the transposition in national law and implementation of the relevant legal provisions.
The Open Banking Implementation Entity (OBIE), the body set up by the Competition and Markets Authority (CMA) to deliver open banking in the UK, has announced that over two million customers are now using open banking-enabled products.
Source: Real demand for open banking as user numbers grow to more than two million.
The FCA published additional finalised guidance for firms on coronavirus (COVID-19) and consumer credit and overdrafts, which supplements its previous guidance from 1 July 2020. The FCA’s finalised guidance comes into force on 2 October 2020 and
covers users of credit cards, as well as other revolving credit (store card and catalogue credit), personal loans, motor finance, buy-now pay-later (BNPL), rent-to-own (RTO), pawnbroking and high-cost short-term credit (HCSTC) products, and overdrafts.
A feedback statement (FS20/15) ‘Consumer credit (including overdrafts) and coronavirus: Additional guidance for firms—Feedback on draft guidance’ has also been published.
Sources: FCA confirms next stage of support for consumer credit and overdraft customers and
For further information, see: FCA: Treating Customers Fairly—essentials.
The European Insurance and Occupational Pensions Authority (EIOPA) launched a consultation on a supervisory statement on the use of risk mitigation techniques by insurance and reinsurance undertakings. This statement aims to promote supervisory convergence
on the assessment of the use of risk-mitigation techniques under Solvency II, including ‘group issues’ and ‘internal reinsurance’. Responses are requested by 24 November 2020.
Source: EIOPA launches consultation on supervisory statement on the use of risk mitigation techniques by insurance and reinsurance undertakings.
The FCA confirmed, in a press release dated 29 September 2020, that it has made a 'precautionary' leapfrog application to appeal to the Supreme Court parts of the decision of the business interruption (BI) test case for losses arising out of coronavirus
Source: Update on Business interruption insurance test case appeals process.
The FCA updated its dedicated business interruption website, providing details of its meetings with policyholders and deadlines for parties to apply for an appeal.
Source: Meetings with policyholders and other stakeholders.
The Economic Secretary to the Treasury, John Glen MP, published a response to the Director General of the Association of British Insurers (ABI), Huw Evans, regarding HM Treasury’s expectation that the government grant schemes intended to support
businesses during the coronavirus (COVID-19) pandemic should not be deducted from business interruption (BI) insurance claims settlements.
Source: Treatment of government grant support schemes in business interruption insurance settlements: Letter from the Economic Secretary to the Treasury to the Association of British Insurers.
A request for an Advisory Opinion from the EFTA Court by Fürstlicher Oberster Gerichtshof dated 8 May 2020 in the case of SMA SA and Société Mutuelle d'Assurance du Batiment et des Travaux Publics v Finanzmarktaufsicht has been published
in the Official Journal of the EU (OJ). This request relates to interpretation of Directive 2009/138/EC on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II) and other directives. In particular, the request
relates to rights for creditors of a supervised direct insurance undertaking who are not policy holders, insured persons or beneficiaries of the insurance undertaking.
Source: Request for an Advisory Opinion from the EFTA Court by Fürstlicher Oberster Gerichtshof dated 8 May 2020 in the case of SMA SA and Société Mutuelle d'Assurance du Batiment et des Travaux Publics v Finanzmarktaufsicht (Case E-5/20) 2020/C 316/07
The PRA reviewed and updated the parameters to be used in the Solvency II Effective Value Test (EVT), as set out in supervisory statement SS3/17. The updated minimum deferment rate parameter and volatility parameter apply from 30 September 2020.
Source: Review of Solvency II Effective Value Test parameters—applicable from 30 September 2020.
Insurance Europe (IE) published a document setting out key industry positions for the 2020 review of Solvency II. IE notes that Solvency II is strongly supported by the insurance industry. The economic, risk-based framework has proved its value since
it was first applied in January 2016. However, IE states that the framework is excessively conservative, contains some measurement flaws and places excessive operational burdens on companies, which create unnecessary costs and barriers to the
provision of—in particular—long-term products and investments.
Source: Key positions for the 2020 review of Solvency II.
A request for an Advisory Opinion from the EFTA Court by Beschwerdekommission der Finanzmarktaufsicht dated 28 May 2020 in the case of Pintail AG v Finanzmarktaufsicht (Case E-6/20) (2020/C 316/08) has been published in the Official Journal of the EU (OJ). This relates to interpretation of the terms ‘activity’ and ‘business activity’ and ‘ceasing to engage in business’ in Directive (EU) 2015/2366 on payment services in the internal market (Payment Services Directive) and Directives 2009/110/EC and 2007/64/EC.
Source: Request for an Advisory Opinion from the EFTA Court by Beschwerdekommission der Finanzmarktaufsicht dated 28 May 2020 in the case of Pintail AG v Finanzmarktaufsicht (Case E-6/20) 2020/C 316/08
The BIS Committee on Payments and Market Infrastructures (CPMI) and the World Bank have published a report on payment aspects of financial inclusion: application tools.
Source: Payment aspects of financial inclusion—tools to facilitate the application of the guidance and measure progress.
The Payment Systems Regulator (PSR) published two blogs and a video on competition issues in the payments sector, looking at the role of competition in card schemes, how to measure value, how it impacts on costs and prices, and how regulators should promote competition in their various fields of influence.
Sources: Competition... the final frontier?, Competition—something to create benefits, not a benefit in itself and Video—The role of competition and the need for regulation.
The European Commission adopted a digital finance package, including digital finance and retail payments strategies along with legislative proposals on crypto-assets, digital operational resilience and a regulatory 'sandbox' for market infrastructures based on distributed ledger technology. The proposals are intended to boost Europe's competitiveness and innovation in the financial sector. It aims to give consumers more choice and opportunities in financial services and modern payments, while ensuring consumer protection and financial stability.
Source: Digital Finance Package: Commission sets out new, ambitious approach to encourage responsible innovation to benefit consumers and businesses.
The Chancery Lane Project published the third edition of its Climate Contract Playbook. The Playbook is a collection of contracts and model laws which help fight climate change, drafted by lawyers from across the world. The third edition includes 21 new clauses. There have been no substantive changes to the clauses published in the earlier editions, only the re-ordering of clauses to group them by subject matter for ease of finding. Feedback on the clauses is encouraged so that they can be updated in subsequent versions.
Source: Climate Contract Playbook Edition 3.
2 October 2020
Regulation of insurance
Deadline for responses to EIOPA’s second Discussion Paper on Methodological Principles of Insurance Stress Testing.
Deadline for parties and stakeholders to submit their opinions to the European Commission on Green Bond Standard.
Industry testing for the FCA FITRS (Financial Instruments Transparency System) will open on 5 October 2020.
The European Parliament is expected to consider the Committee on Economic and Monetary Affairs (ECON) report on further development of the capital markets union (CMU), improving access to capital market finance, in particular by SMEs, and further enabling retail investor participation.
Deadline for responses to the European Commissions proposal for a regulation which makes targeted amendments to the Benchmarks Regulation (EU) 2016/1011 (BMR) regarding the exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation.
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