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The Financial Conduct Authority (FCA) published the minutes from its 22 and 23 July 2020 board meeting. Among the issues the board discussed were the FCA’s digital strategy; the future regulatory framework and the issues associated with development
of the Financial Services Bill, due to be introduced in the autumn 2020; how the coronavirus (COVID 19) pandemic may impact existing Brexit implementation plans; and the proposed approach to mortgage and consumer credit payment deferrals beyond
the existing guidance.
Source: FCA board minutes 22 and 23 July 2020.
For further information, see: Brexit—impact on financial services.
TheCityUK and EY published a new report which sets out proposals for how the UK can evolve trade and migration policy to benefit the economy. The report highlights how vital this is for financial services, the UK’s largest net exporting sector.
Sources: Brexit provides a unique opportunity to evolve trade and migration policy to benefit UK business and
International trade agreements and UK immigration policy: a ctical blueprint for evolution.
The European Securities and Markets Authority (ESMA) announced that trading venues and investment firms may postpone, for operational reasons, the application of the annual transparency calculations (required by the Markets in Financial Instruments Regulation
(MiFIR)) for non-equity instruments other than bonds to 21 September 2020. This decision also applies to the quarterly calculations for the purpose of the systematic internaliser (SI) regime for non-equity instruments other than bonds.
Source: ESMA provides for the option to apply the annual transparency calculations for non-equity instruments from 21 September.
For further information, see: MiFID II & MiFIR—pre- and post-trade transparency.
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The FCA published Quarterly Consultation Paper No. 29 (CP20/18), in which it consults on proposed miscellaneous amendments to the FCA Handbook.
Source: CP20/18: Quarterly Consultation Paper No. 29.
The Prudential Regulation Authority (PRA) published policy statement PS20/20, Responses to Chapters 2 to 7 of CP3/20 ‘Occasional Consultation Paper’, together with final rules, updated supervisory statements (SS), forms, relevant templates,
and associated LOG files and instructions.
Sources: Responses to CP3/20 ‘Occasional Consultation Paper’,
PS20/20 Responses to Chapters 2 to 7 of CP3/20 ‘Occasional Consultation Paper’,
SS24/15 The ’s approach to supervising liquidity and funding risks,
SS34/15 Guidelines for completing regulatory reports and
SS7/17 Solvency II: Data collection of market risk sensitivities.
HM Treasury (HMT) has announced that senior officials from the department met with their counterparts from the Swiss State Secretariat for International Finance (SIF) to discuss how to deepen co-operation in financial services and exchange views on
financial market developments.
Source: UK-Switzerland Financial Dialogue 2020: joint communiqué.
ESMA published the September 2020 issue of its newsletter, which discusses the regulator’s launch of an assessment of the German financial reporting system following the Wirecard collapse, as well as the results of ESMA’s third EU-wide
central counterparty (CCP) stress test and proposed members for its CCP directorate.
Source: ESMA Newsletter—No 16.
The FCA announced that the deadline for solo-regulated firms to have undertaken the first assessment of the fitness and propriety of their Certified Persons has been delayed from 9 December 2020 until 31 March 2021. This will give firms significantly
affected by the coronavirus pandemic time to make the changes they need.
Source: Extension of the Senior Managers & Certification Regime (SM&CR) implementation periods for solo-regulated firms.
The European Central Bank (ECB) adopted a decision amending Decision (EU) 2019/1743 of the ECB on the remuneration of holdings of excess reserves and of certain deposits (ECB/2020/38) so that funds mandatorily deposited with the ECB for the purpose
of repaying financial assistance under Council Regulation (EU) 2020/672 will be exempt from negative interest rates.
Source: Decision amending Decision (EU) 2019/1743 of the ECB on the remuneration of holdings of excess reserves and of certain deposits.
The Financial Stability Board (FSB) published a video of the virtual workshop that it hosted on 4 September 2020 as part of the consultation process for its evaluation of the too-big-to-fail (TBTF) reforms. The virtual workshop included presentations
and discussions by a range of academic, regulatory, non-governmental organisation and industry stakeholders on the analysis and findings of the evaluation.
Source: Virtual workshop on the evaluation of too-big-to-fail reforms.
SI 2020/948: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends one piece of UK secondary legislation
and revokes two pieces of UK secondary legislation and one piece of retained EU legislation in relation to sanctions regime in order to give effect to the UK’s international obligations resulting from various United Nations Security Council
Resolutions imposing a sanctions regime in view of the situation in Afghanistan, including UN Security Council Resolution 2255 (2017) adopted by the Security Council on 21 December 2015 (and previously UN Security Council Resolution 1988 (2011)).
It comes into force in accordance with regulations made by the Secretary of State under section 56 of the Sanctions and Anti-Money Laundering Act 2018.
Read the official version of this legislation and the explanatory memorandum.
SI 2020/950: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends 11 pieces of UK secondary legislation
in relation to sanctions regime. It comes into force in accordance with regulations made by the Secretary of State under section 56 of the Sanctions and Anti-Money Laundering Act 2018.
SI 2020/951: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends 14 pieces of UK secondary legislation
in relation to sanctions regime. It comes into force in accordance with regulations made by the Secretary of State under section 56 of the Sanctions and Anti-Money Laundering Act 2018.
Read the official version of this legislation and the explanatory memorandum.
UK Finance says that bank branch staff stopped £19m of fraud in the first half of 2020 through the Banking Protocol, a scheme that alerts local police to suspected scams. According to the trade association, the Banking Protocol scheme is
now being expanded to telephone and online banking, with a focus on protecting vulnerable customers.
Sources: Bank branch staff and police team up to stop £19m of fraud in first half of 2020 and Expanding the Banking Protocol scheme.
The FCA published a feedback report: ‘Messages from the Engine Room’: 5 Conduct Questions: Industry Feedback for 2019/20’ on conduct risk management and culture in the wholesale banking industry.
Source: ‘Messages from the Engine Room’: 5 Conduct Questions: Industry Feedback for 2019/20 Wholesale Banking Supervision.
The FCA, the PRA and the Bank of England (BoE) announced the appointment of Amerdeep Somal as Complaints Commissioner. The Commissioner oversees the final stage of investigations into complaints against the FCA, and the BoE. The role is independent
from the three organisations.
Source: Amerdeep Somal appointed as Complaints Commissioner.
For further information, see: Complaints against UK financial services regulators.
The Financial Services Compensation Scheme (FSCS) issued a news alert with links to cards which contain a set of key questions for consumers to ask their provider when they are considering where to put their money. The FSCS says it wants consumers
to feel ‘confident and in control of their finance’.
Source: Ask these key questions to make sure your money is protected.
The FCA published a Final Notice in respect of Conor Foley, the former chief executive officer of WorldSpreads, publicly censuring him for market abuse and banning him from performing any roles linked to regulated activity. The FCA had published a Decision
Notice on 3 July 2020 that also imposed a financial penalty of £658,900 on Mr Foley, but decided to impose a public censure in lieu of the financial penalty as Mr Foley subsequently provided evidence of his serious financial hardship. Mr Foley
has withdrawn a reference to the Upper Tribunal seeking to review the FCA’s Decision Notice.
Sources: FCA publicly censures former Worldspreads CEO for market misconduct and
Final Notice: Conor Martin Foley.
Guarantee – Enforcement. The claimants successfully applied for summary judgment in respect of claims under three Guarantee and Indemnity Agreements, given by the defendant in respect of sums advanced by the claimants under individual loan
agreements entered into with an Indian company (BPSL) of which the defendant had been, at the relevant times, the Chairman and Managing Director. In allowing the application, the Commercial Court held that the relevant clauses in each of the
Guarantees had been breached when BPSL had failed to pay sums due. Further, the defendant had no real prospect of successfully defending the claim.
See:  All ER (D) 11 (Sep).
The Competition and Markets Authority (CMA) published a letter to Lloyds Banking Group plc (Lloyds) regarding a breach of the Small and Medium-sized Enterprise (SME) Banking Behavioural Undertakings 2002. The CMA explained that Lloyds breached the undertakings
by requiring SME customers to open a business current account (BCA) in order to progress their application for a loan under the Bounce Back Loan Scheme (BBLS), which was launched in May 2020 in response to the coronavirus (COVID-19) pandemic.
Sources: CMA letter to Lloyds on a breach of the SME Banking Undertakings and
CMA stops Lloyds ‘bundling’ business accounts with loans.
The Futures Industry Association (FIA) published new guidelines to assist market participants in fulfilling obligations set by UK and European regulators in relation to surveillance and market abuse requirements. Under the Market Abuse Regulation (EU) 596/2014
(MAR) and the Criminal Sanctions for Market Abuse Directive 2014/57/EU, market participants in Europe are subject to prescriptive requirements relating to monitoring, surveillance systems and the filing of suspicious transaction and order reports
(STORs). The FIA guidelines aim to provide a useful implementation standard for these requirements, and in particular the surveillance systems and controls that are required under Article 16 of MAR.
Source: FIA releases surveillance and market abuse guidelines.
For further information, see: Market Abuse Regulation (MAR)—essentials.
The Bank of England (BoE) published the minutes of the Working Group on Sterling Risk-Free Reference Rates (RFRs) meeting held remotely on 23 June 2020.
Source: Minutes of the Working Group on Sterling Risk-Free Reference Rates Tuesday 23 June 2020.
Commission Delegated Regulations (EU) 2020/1224, 2020/1226, 2020/1229, 2020/1230, and Commission Implementing Regulations (EU) 2020/1225, 2020/1227 and 2020/1228, setting out regulatory technical standards (RTS) and implementing technical standards
(ITS) relating to Regulation (EU) 2017/2402 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation (the Securitisation Regulation) have been published
in the Official Journal of the EU (OJ).
Source: Commission Delegated regulations relating to the Securities Regulation published in the OJ.
For further information, see: Securitisation Regulation—essentials.
ESMA confirmed that seven regulatory technical standards (RTS) under Regulation (EU) 2017/2402 (the Securitisation Regulation) will enter into force on 23 September 2020.
Source: ESMA confirms Securitisation Regulation requirements entry into force on 23 September 2020.
The International Capital Market Association (ICMA) published a briefing note on Central Securities Depositories Regulation (CSDR) (Regulation (EU) 909/2014) mandatory buy-ins and the requirement to appoint a buy-in agent.
Source: ICMA publishes a briefing note on CSDR mandatory buy-ins and the requirement to appoint a buy-in agent.
For further information, see: Central Securities Depositories Regulation—essentials.
The FCA published Market Watch 65, the FCA’s newsletter on market conduct and transaction reporting issues. In this issue the FCA discusses confidentiality of information requirements, legally privileged documentation, and transaction reporting.
Source: FCA publishes Market Watch 65.
The Fixed Income, Currencies and Commodities (FICC) Markets Standards Board (FMSB) published a spotlight review exploring the challenges in measuring the quality of trade execution and how this varies across different market participants and segments.
The review explores the causes of those challenges, highlights the progress made in regulation and market participants’ ctices with regard to data reporting and best execution, and sets out key points of focus for firms in navigating these
Source: FMSB publishes spotlight review on measuring execution quality in FICC markets.
The agreed text of the proposed Regulation on a framework for the recovery and resolution of central counterparties (CCPs) has been submitted to COREPER for endorsement.
Source: Proposal for a Regulation of the European Parliament and of the Council on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU and (EU) 2017/1132—letter from the Chair of the European Parliament's ECON Committee.
The European Association of CCP Clearing Houses (EACH) announced that, during the second quarter of 2020, 16 of its members successfully performed ‘fire drill tests’ in business continuity planning (BCP) mode. Such tests are regularly
performed by CCPs to confirm the readiness of a CCP’s default management structure.
Source: Resilience of European CCPs confirmed by fire drill tests in BCP mode.
The International Swaps and Derivatives Association (ISDA) announced that it is holding a voluntary self-disclosure exercise, in order to help the industry be best prepared for phase 5 and 6 of the Initial Margin (IM) requirements. Phase 5 is
effective from 1 September 2021 and phase 6 from 1 September 2022. The exercise will be similar to previous ISDA-facilitated multi-lateral disclosure exercises for phases 1–5, but phase 5 thresholds have been adjusted along with the
addition of phase 6. ISDA encourages participation by parties that previously disclosed, but which have had a change or addition to their disclosure information, as well as parties who have not participated previously.
Source: ISDA Self-Disclosure Exercise for Regulatory IM Phases 5 and 6.
The FSB announced extensions to the implementation timelines for minimum haircut standards for non-centrally cleared securities financing transactions (SFTs), to ease operational burdens on market participants and authorities, and thereby
assist them in focusing on priorities from the impact of coronavirus COVID-19.
Source: FSB extends implementation timelines for securities financing transactions.
ICMA European Repo and Collateral Council (ERCC) published an updated version of the ICMA Recommendations for Reporting under the Securities Financing Transactions Regulation (SFTR). This is the fourth public edition of the document, which was initially
released on 24 February 2020 and previously updated on 30 June 2020.
Source: ICMA ERCC publishes fourth edition of its SFTR recommendations.
For further information, see: Securities Financing Transactions Regulation (SFTR)—essentials.
ESMA published a working paper on closet indexing indicators and investor outcomes. The study finds that investors can expect lower net returns from closet indexers than from a genuinely actively managed fund portfolio.
Source: Investors see lower net returns from potential closet index funds.
The Chartered Institute for Securities & Investment (CISI) and the European Institute of Management and Finance (EIMF), launched an e-learning and assessment programme aimed at Cyprus Investment Firm Information Providers. The key learning outcomes
are to know, understand, and apply all areas required under the European Securities and Markets Authority’s Knowledge and Competence standards under MiFID II.
Source: The Chartered Institute for Securities & Investment (CISI) and the European Institute of Management and Finance (EIMF) launch e-learning training and assessment for the Cyprus Investment Firm’s (CIF) information providers.
The Competition and Markets Authority (CMA) published a letter to Lloyds Banking Group plc (Lloyds) regarding a breach of the Small and Medium-sized Enterprise (SME) Banking Behavioural Undertakings 2002. The CMA explained that Lloyds breached
the undertakings by requiring SME customers to open a business current account (BCA) in order to progress their application for a loan under the Bounce Back Loan Scheme (BBLS), which was launched in May 2020 in response to the coronavirus
Following the Office for National Statistics' classification of Pool Re as a central government subsector, the government will undertake an assessment to ensure that Pool Re is meeting requirements to operate effectively. The review will be with close
engagement with Pool Re, stakeholders and the (re)insurance sector, and it will focus on Pool Re’s role as a reinsurer of terrorism risk and to ensure that the UK public benefits from the scheme. The review will include a public call for
evidence in late 2020 and there will be a further review in 2025.
Source: HMT launches review of Pool Reinsurance Limited.
The FCA published its value measures data under the General Insurance value measures pilot, highlighting concerns about the value of personal accident and key cover add-on insurance.
Source: General Insurance value measures.
Anna Sweeney, the Executive Director of the Insurance Supervision Division at the Bank of England (BOE), delivered a speech on managing climate risk in the insurance sector. The speech, given on 9 September 2020, outlined the important and
critical role that insurers have in relation to climate change. It was noted that while insurers have demonstrated resilience to coronavirus (COVID-19), the impact of climate change will be a longer challenge.
Source: Paving the way forward: managing climate risk in the insurance sector - speech by Anna Sweeney.
The International Association of Insurance Supervisors (IAIS) launched a survey on the existing prudential treatments for investments in infrastructure and strategic equity. The survey is intended to support the IAIS’s work in exploring whether
there should be a differentiated capital treatment of certain eligible infrastructure (both equity and debt) as well as strategic equity investments within the Insurance Capital Standard (ICS). The survey closes on 7 December 2020.
Source: IAIS issues a survey invitation on the existing prudential treatments for investments in infrastructure and strategic equity (Public).
Insurance Europe (IE) published its response to a consultation by the International Association of Insurance Supervisors (IAIS) on the impact of COVID-19 on insurers.
Source: European insurers respond to IAIS consultation on impact of COVID-19.
The FCA published an update on its three-week DataSprint in July and August 2020, which brought together 120 participants from across regulated firms, start-ups, academia, professional services and data science, as well as other subject matter
experts. They collaborated on developing high-quality synthetic financial datasets to be used by participants in the FCA’s forthcoming digital sandbox pilot.
Source: Digital sandbox pilot: FCA DataSprint.
IE responded to the European Commission roadmap consultation on an EU digital ID scheme, saying digital identities and the associated processes of authentication and authorisation are an essential component of the digital single market. However,
IE calls on the Commission to ensure that any new system does not create an additional regulatory burden.
Source: EC digital ID proposals welcomed in principle; should not increase regulatory burden.
Innovate Finance issued a press release regarding the launch of the Fintech For All Charter, an industry-led initiative to end harassment and promote diversity within the sector. Signatories to the Charter will pledge to create a culture where
inclusive behaviour is championed, harassment is not tolerated, and diversity is widely promoted, with the aim of futureproofing UK fintech and enabling sustainable growth.
Source: Fintech sector launches inclusion charter to address high levels of workplace harassment.
The Law Society and Tech London Advocates (TLA) published a report setting out legal and regulatory guidance on blockchain, against the background of the huge rise in the use of technology due to the coronavirus (COVID-19) pandemic. It discusses
the key issues for legal ctitioners to be aware of when advising on distributed ledger technologies (DLT), arguing that lawyers will need to become conceptually and functionally familiar with DLT, smart legal contracts and cryptoassets.
Source: Blockchain report: Lawyers given regulation guidance.
The governor of the Bank of England (BoE), Andrew Bailey, gave a speech on innovation in payments and the future of cryptoassets and stablecoins at a virtual event at the Brookings Institution.
Source: Speech by Andrew Bailey: Reinventing the wheel (with more automation).
The Economic Secretary to the Treasury, John Glen, has delivered a speech on sustainability and responsible investment (SRI). In a virtual meeting with the Investment Association, Glen spoke about the opportunity to extend the UK’s leadership
in responsible investing and to strengthen the UK’s position as a leading global financial center. In his speech, Glen discussed the UK investment management sector, the importance of sustainability and responsible investing (noting
that the investment management sector’s work in this area will be particularly important as the UK looks to deepen its relationship with international partners and strengthen its position as a leading global financial hub) and how HM Treasury
(HMT) is supporting the SRI agenda and sustainability more broadly.
Source: John Glen addresses Investment Association on Sustainability and Responsible Investment.
The Islamic Financial Services Board (IFSB) announced that it has signed a Technical Assistance (TA) Grant agreement with The Islamic Development Bank (IsDB) for the Final Review of the Ten-Year Framework and Strategy Project for the Islamic financial
services industry. The TA from the IsDB to the IFSB is planned to be implemented up to 31 December 2021.
Source: The IFSB and the Islamic Development Bank (IsDB) sign Technical Assistance (TA) Grant Agreement for the final review of the ten-year framework and strategy project for the Islamic financial services industry.
11 September 2020
Regulation of benchmarks and IBOR reform
Deadline for responses to the ECB’s consultation on the publication of compounded term rates based on the euro short-term rate (€STR). The publication would take place on a daily basis shortly after the publication of €STR.
Published maturities could range from one week up to one year.
Deadline for responses to the EBA’s call for input on
to understand the scale and drivers of ‘de-risking’ at EU level and its impact on customers.
14 September 2020
Complaints, compensation and claims management
Deadline for responses to the FCA’s, PRA’s and the BoE’s joint consultation paper (FCA—CP20/11 and PRA—CP8/20) on Complaints against the Regulators under the Financial Regulators’ Complaints Scheme (the Scheme).
Risk management and controls
Payment services and systems
Deadline for responses to the European Data Protection Board’s (EDPB) consultation on its guidelines on the interplay of the Second Payment Services Directive (EU) 2015/2366 (PSD2) and the General Data Protection Regulation (EU) 2016/679 (GDPR).
UK, EU and international regulators and bodies
Deadline for responses to ESMA’s call for all for expressions of interest from prospective candidates wishing to
join the Consultative Working Group (CWG) of the ESMA Secondary Markets Standing Committee (SMSC).
15 September 2020
Securities financing transactions
Deadline for responses to ESMA ’Consultation Paper Draft Guidelines on calculation of positions in SFTs by Trade Repositories (ESMA74-362-608)’.
Regulation of capital markets
Deadline for applications for membership
of the Technical Expert Stakeholder Group on SMEs.
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