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On 10 April 2019, the EU27 met to consider the UK’s request to extend the Article 50 withdrawal period beyond 12 April 2019. The UK originally repeated its request for an extension until 30 June 2019. Following extended talks, the European Council
adopted a decision, taken in agreement with the UK, providing for an extension until 31 October 2019 at the latest. The decision notes that the extension should last only as long as necessary, and no longer than 31 October 2019. The Withdrawal Agreement
may enter into force on an earlier date if approval and ratification procedures are completed sooner. On this basis, UK withdrawal would take place on the first day of the month following the completion of the ratification procedures or on 1 November
2019, whichever is the earliest. If the UK fails to adhere to the obligation to hold European Parliament elections, the extension will end on 31 May 2019.
Commission Implementing Decision (EU) 2019/544 amending Implementing Decision (EU) 2018/2030 determining, for a limited period of time, that the regulatory framework applicable to central securities depositories (CSD) of the United Kingdom
of Great Britain and Northern Ireland is equivalent in accordance with Regulation (EU) No 909/2014 (the Central Securities Depositories Regulation (CSDR)) of the European Parliament and of the Council was published in the Official Journal of the EU.
Commission Implementing Decision (EU) 2019/545 of 3 April 2019 amending Implementing Decision (EU) 2018/2031 determining, for a limited period of time, that the regulatory framework applicable to central counterparties (CCPs) in the
United Kingdom of Great Britain and Northern Ireland is equivalent, in accordance with Regulation (EU) No 648/2012 (the European Market Infrastructure Regulation (EMIR)) of the European Parliament and of the Council was published in the Official Journal of the EU.
Commission Delegated Regulation of 28 March 2019
amending Delegated Regulation (EU) 2015/2205, Delegated Regulation (EU) 2016/592 and Delegated Regulation (EU) 2016/1178 supplementing EMIR as regards the date at which the clearing obligation takes effect for certain types
of contracts was published in the Official Journal of the EU alongside Commission Delegated Regulation of
28 March 2019 amending Delegated Regulation (EU) 2016/2251 supplementing EMIR as regards the date until which counterparties may continue to apply their risk-management procedures for certain over-the-counter (OTC) derivative contracts not
cleared by a CCP.
The Council of the EU confirmed that it will raise no objections to two delegated regulations (C(2019)2533 and C(2019)2530) adopted by the European Commission on 28 March 2018 in order to extend the current exemptions from the clearing and margin requirements under EMIR in
light of the extension to the UK’s exit from the EU.
The European Parliament confirmed that it will raise no objections to two delegated regulations (C(2019)02533 and C(2019)02530)
adopted by the European Commission on 28 March 2019 in order to extend the current exemptions from the clearing and margin requirements under EMIR in light of the extension to the UK’s exit from the EU.
The Financial Conduct Authority (FCA) published instructions
for accessing and downloading its Financial Instruments Transparency System (FITRS) files. The FCA FITRS was built to replace the European Securities and Markets Authority (ESMA) FITRS in the UK as part of the FCA’s planning for Brexit. The
FCA will operate the Directive 2014/65/EU (the recast Markets in Financial Instruments Directive (MiFID II)) transparency regime if the UK leaves the EU without an implementation period. It will make the FCA FITRS available from exit day.
ESMA announced that it adopted
new recognition decisions for the three CCPs and the CSD established in the UK to reflect the extension to Article 50 of the Treaty of the European Union period to 12 April 2019. The recognition decisions would take effect on the date following Brexit
date, under a no-deal Brexit scenario.
ESMA updated its statement on its
data operational plan under a no-deal Brexit scenario, first issued on 19 March 2019. The changes reflect the postponement to 12 April 2019 of the date of a possible no-deal Brexit.
Ahead of the European Council (Article 50), the European Commission released practical guidance to Member
States regarding no-deal preparations in five areas. This is to ensure a co-ordinated EU approach. The guidance set out legislative proposals regarding a no-deal scenario, which passed or are passing through the European Parliament. For financial
services these legislative proposals related to temporary, limited measures to ensure that there is no immediate disruption in the central clearing of derivatives.
A number of trade associations wrote a joint letter
to HM Treasury requesting urgent action by the UK authorities to adopt equivalence decisions regarding EEA trading venues under EMIR and Regulation (EU) 600/2014 (the Markets in Financial Instruments Regulation (MiFIR)) as they apply in
the UK in a 'no-deal' scenario. As an alternative, the associations urge HM Treasury to work with the FCA with a view to the FCA granting transitional relief for this purpose using its temporary transitional powers.
The Association for Financial Markets in Europe (AFME) published a
Q&A document to help issuers understand why UK investment banks and capital markets firms will require additional flexibility to ensure certain equity capital market mandates continue after a no deal Brexit without disruption.
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The FCA and the Australian Securities and Investments Commission (ASIC) signed two
memoranda of understanding (MoUs) to ensure there is continuity once the UK leaves the EU. The MoUs cover trade repositories and alternative investment funds (AIFs). HM Treasury also confirmed that existing equivalence decisions granted in respect
of Australia by the European Commission before exit day will generally be incorporated into UK law and will continue to apply post-Brexit.
The Financial Affairs Sub-Committee of the House of Lords Select Committee on the European Union published oral evidence on Brexit and the movement of financial services firms. Testimony was given by William Wright, managing director of New Financial, and Andrew Pilgrim, associate partner,
government financial services at EY. Among other things, the witnesses discussed how firms responded in their planning to Brexit, the scale of relocations in staff business activities and assets, and how circumstances changed since the 2016 referendum.
HM Treasury published a
letter from the Exchequer Secretary to the Treasury, Robert Jenrick, MP, to the chair of the House of Lords EU Financial Affairs Sub-Committee, Baroness Faulkner, in response to the Sub-committee’s report on the European Investment Bank (EIB).
In his letter, Mr Jenrick thanks the Sub-committee for the report and notes that the government considered the points made.
The FCA published the latest version of its policy development update, which provides information on its
recent and upcoming publications. Future developments include a consultation on recovering the costs of regulating credit rating agencies, trade repositories and securitisation repositories after the UK leaves the EU–fee rates for 2019/20.
The FCA published an updated MoU between the FCA and the Advertising Standards Authority (ASA).
The purpose of the MoU is to facilitate and provide a framework for co-operation and co-ordination between the FCA and ASA by setting out their respective regulatory responsibilities and arrangements for co-operation and the exchange of relevant
The Payment Systems Regulator (PSR) published a formal description of the core responsibilities
of members of its board, executive committee and those carrying out senior management functions at the PSR, in keeping with the requirements of the Senior Managers Regime (SMR). The FCA decided it will apply the fundamental principles of the SMR
to its senior staff, even though it is not formally subject to the SMR. As an independent subsidiary of the FCA, the PSR is adopting and applying the same core principles.
The UK Department for Digital, Culture, Media & Sport, the Office for Civil Society, HM Treasury, and Minister for Civil Society Mims Davies MP published an industry-led report which makes a number of recommendations on how to broaden the current dormant assets scheme beyond bank and building society accounts. According to the report,
the dormant assets scheme should be extended to other sectors such as investment and wealth management to benefit more good causes.
At the latest meeting of the Eurogroup in Bucharest, Romania, on 5 April 2019, the finance
ministers of the Eurozone discussed the European Deposit Insurance Scheme (EDIS), bank resolution and resilience, the EU anti-money laundering (AML) framework, and Brexit, among other topics.
The Council of the EU adopted a
decision establishing a high-level group of ‘wise persons’ to look at the European financial architecture for development. The wise persons group will be required to submit a report by October 2019, setting out the challenges and opportunities
for rationalising the way development policies are financed at EU level, and recommending potential options for reforming the existing setup.
The governing council of the European Central Bank (ECB) proposed the
appointment of ECB executive board member Yves Mersch as vice-chair of the ECB’s supervisory board. The appointment needs the approval of the European Parliament. Mr Mersch will appear before the European Parliament’s Committee on
Economic and Monetary Affairs (ECON) at a hearing on a date to be confirmed.
The Single Resolution Board (SRB) announced the appointment of Sebastiano Laviola as a member of the board and director
of resolution strategy and co-operation. Mr Laviola will take up his duties on 1 May 2019, replacing Mr Mauro Grande, who resigned in July 2018. The decision was also published in the Official Journal.
The European Systemic Risk Board (ESRB) published a
report setting out its initial considerations on features of a macroprudential stance, which establishes the link between macroprudential policies and the objective of financial stability. The report is a first step towards developing a common
macroprudential stance framework which can support the decision-making process of macroprudential policymakers.
ECON published two reports setting out proposed amendments to two Regulations proposed by the European Commission to upgrade the framework of European Supervisory Authorities (ESAs) and the ESRB. The proposed Regulations are intended to ensure the
ESAs can assume an enhanced responsibility for financial market supervision and to strengthen the role of the ESRB:
The ESAs published the 2018 annual report providing a detailed account
of all the joint work achieved in the past year. The report says consumer protection and financial innovation matters were again a key priority, with the ESAs continuing their joint efforts in assessing the potential benefits and risks for consumers
and financial institutions related to the developments in financial technology.
ESMA published the third edition of its newsletter, which includes an op-ed
from ESMA's head of risk analysis and economics department, Steffen Kern. The newsletter also contains a full list of ESMA publications from March 2019. In addition, it provides details of speaking appearances by ESMA staff, consultation deadlines
and key dates for the coming month.
On 10 April 2019 the new EU framework for the screening of foreign direct investments officially entered into
force. The proposal to create the first EU-wide framework for the screening of foreign direct investments was presented by President Juncker during the 2017 State of the Union address and was adopted by the European Parliament and by the Council
on 19 March 2019.
The Economic Secretary to the Treasury, John Glen MP, wrote to the Chair of the House of Lords European Union Committee, Lord Boswell of Aynho, and to Sir William Cash MP, the Chair of the Commons European Scrutiny Committee, to update them on discussions in the EU as regards the European System of Financial Supervision (ESFS) Omnibus proposal.
EU political agreement was reached on 21 March 2019 and Mr Glen said he expected the file to be adopted at the Economic and Financial Affairs Council (ECOFIN) in May 2019. Mr Glen said the final compromise met the UK’s negotiating objectives.
ECON published a report setting out proposed amendments to a proposed Directive
amending MiFID II and Directive 2009/138/EC on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II). The proposed Directive is part of a package of measures proposed by the European Commission in September
2018 to strengthen the ESFS.
The Basel Committee on Banking Supervision (BCBS) launched a new section of its website setting out a consolidated version
of its global standards for the regulation and supervision of banks. The consolidated framework aims to improve the accessibility of the Basel Committee's standards and to promote their consistent global interpretation and implementation. Although
the new format focuses on reorganising existing requirements rather than introducing new ones, during preparation certain inconsistencies and ambiguities emerged. These been addressed through minor policy changes, which the BCBS is consulting on. Feedback is sought by 9 August 2019.
The Financial Stability Board (FSB) published a letter from
its chair, Randal K. Quarles, to G20 finance ministers and central bank governors, providing an update on the FSB’s work and discussing current vulnerabilities in the financial system. The letter was sent to the ministers and governors ahead
of their meeting in Washington DC.
The Financial Action Task Force (FATF) published its report to the April
2019 G20 finance ministers and central bank governors’ meeting, which provides an overview of FATF’s recent and future work to fight money laundering and terrorist financing in a number of key areas.
The Council of the EU adopted a
proposed Regulation amending Regulation (EU) 575/2013 (the Capital Requirements Regulation (CRR)) as regards minimum loss coverage for non-performing exposures. The new rules set capital requirements applying to banks with non-performing
loans (NPLs) on their balance sheets, to ensure those banks set aside sufficient own resources to cover NPLs and to create appropriate incentives to avoid the accumulation of NPLs. The Council of the EU reached a provisional political
agreement with the European Parliament on the proposed Regulation on 18 December 2018. On 9 April 2019, the Council confirmed that it adopted the Regulation and published the adopted text.
The Prudential Regulation Authority (PRA) published consultation
paper CP8/19, setting out its proposals for changes to the format and content of the branch return form, and additional guidance to assist firms in completing it. It is relevant to all existing and prospective PRA-supervised branches of deposit-takers
and designated investment firms which are not UK headquartered firms. Feedback is sought by 7 July 2019.
The European Banking Authority (EBA) published its final draft regulatory technical standards (RTS) setting out conditions to allow institutions to calculate capital requirements of the securitised exposures in accordance with
the purchased receivables approach laid down in the CRR. The RTS are part of 28 mandates assigned to the EBA within its important role in the implementation of the new securitisation framework.
ECON published two reports detailing proposed amendments to the political agreement reached on 26 February 2019 by the Parliament and the Council of the EU on the European Commission’s December 2017 proposals for a new directive on the prudential
supervision of investment firms and a new regulation on the prudential requirements of investment firms. A vote in plenary is scheduled for 17 April 2019:
The European Parliament published three reports detailing amendments made by ECON to some of the revised rules aimed at reducing risks in the EU banking sector, which were agreed by the Romanian Presidency and the European Parliament in December 2018.
The package agreed by the Parliament and Council on 4 December 2018 comprises two regulations and two directives, relating to bank capital requirements and the recovery and resolution of banks in difficulty:
The ESAs published two pieces of joint
advice in response to requests made by the European Commission in its March 2018 FinTech action plan. The proposals presented in the joint advice on the need for legislative improvements are designed to promote stronger operational resilience
and harmonisation in the EU financial sector by applying changes to their respective sectoral legislation.
The European Parliament announced that
MEPs will vote on 16 April 2019 on the directive on the protection of persons reporting on breaches of EU law (the Whistleblowing Directive), which was proposed by the European Commission in April 2018. The Parliament and the Council of the EU
reached a provisional agreement on the new rules on 12 March 2019.
ECON published a report setting out its proposed amendments to the proposed
Whistleblowing Directive, which was proposed by the European Commission in April 2018. The European Parliament and the Council of the EU reached a provisional political agreement on the new rules on 12 March 2019.
The Committee on Legal Affairs for the European Parliament issued a second legal
opinion on the proposal for a Whistleblowing Directive. The opinion notes that on 18 February 2019, pursuant to Rule 39(5) of the Rules of Procedure, the committee decided of its own motion to provide the second opinion on the appropriateness
of the legal base of the Whistleblowing proposal with regard to the results of the interinstitutional negotiations.
Insurance Europe urged the European Data Protection Board (EDPB)
to acknowledge that its draft guidelines on codes of conduct and monitoring bodies go beyond the text of the General Data Protection Regulation (GDPR).
The FCA fined Standard Chartered Bank £102,163,200
for AML breaches in two higher risk areas of its business. This is the second largest financial penalty for AML controls failings ever imposed by the FCA. The bank was also fined $164m by the Federal Reserve Board for unsafe and unsound practices relating to inadequate sanctions controls and failure to disclose sanctions risks to the Federal Reserve.
The Council of the EU formally adopted a
Directive on combating fraud and counterfeiting of non-cash means of payment, which updates the existing rules to ensure that a clear, robust and technology-neutral legal framework is in place, removes operational obstacles to investigation
and prosecution, and foresees actions to enhance public awareness of fraudulent techniques such as phishing or skimming. The Directive will now be formally signed and then published in the Official Journal of the EU. Member States will be
given two years from the date of publication in the Official Journal to implement the new rules.
The FATF published its report to the April 2019 G20 finance ministers
and central bank governors’ meeting, which provides an overview of FATF’s recent and future work to fight money laundering and terrorist financing in a number of key areas.
The EU Commissioner for Justice, Consumers and Gender Equality, Věra Jourová, will visit Washington, DC this week, where she is expected to discuss criminal justice co-operation, including access to electronic evidence, with the new Attorney General, William Barr. This follows on from the Commission's recommendation for an EU-US
agreement in this area. Ms Jourová will represent the EU in the ministerial meeting of the FATF, where she is expected to endorse the revised mandate of the FATF in its fight against money laundering and terrorist financing.
The FCA’s executive director of enforcement and market oversight, Mark Steward, gave a speech on the partly contested case process, at a Global Investigations Review live event in London. Mr Steward also discussed dual-track FCA AML investigations, which might give rise to either criminal
or civil proceedings.
The director of policy at AFME, Adam Willman, issued a statement calling for the European Commission to improve is EU-wide AML supervision. Mr Willman noted that the Commission published bold AML proposals, which if implemented successfully, would mark
a significant improvement in the AML regulatory framework and would represent a major step forward in the fight against financial crime.
The House of Commons Treasury Committee published oral
evidence on economic crime given on 2 April 2019 by the head of financial crime operations at Metro Bank, Mark Tingey, the chair of the Authorised Push Payments (APP) Scams Steering Group, Ruth Evans, and Richard Lloyd, an independent
adviser to the APP Scams Steering Group.
HMRC published a summary of the responses it received
to its consultation on AML supervision: discussion about fees. It also set out the resulting decision and fee changes. The consultation ran from 20 August 2018 to 28 September 2018. It set out three options for the way HMRC might charge
fees from the businesses it supervises for AML.
The jury hearing the Serious Fraud Office's (SFO) landmark prosecution of four former Barclays executives accused of fraud over the bank’s emergency cash-raising at the height of the financial crisis was discharged. Judge Robert Jay
told the jury at Southwark Crown Court that he was required to discharge them from hearing the trial of former Barclays chief executive John Varley and three senior colleagues, who are accused of using sham advisory deals to hide extra
fees paid to Qatar in 2008 to help the lender secure a £3.9bn ($5.1bn) investment in the bank by the Gulf state.
The FCA published a final notice regarding Samrat Bhandari,
who was sentenced in January 2018 to a total of 3½ years’ imprisonment for his role in a £1.4m investment scheme. The FCA decided that Mr Bhandari is not a fit and proper person to perform a regulatory activity and imposed
a prohibition order. Mr Bhandari was a director of William Albert Securities Ltd, a UK company which acted as corporate advisors to Symbiosis Healthcare Plc and organised the selling of its shares.
In Linear Investments Ltd v The Financial Conduct Authority  UKUT 0115 (TCC) the Upper Tribunal (Tax and Chancery Chamber) considered the penalty imposed by the FCA on the applicant,
Linear Investments Limited, for breach of Principle 3 of the FCA’s Principles for Business. The appellant’s breach comprised a failure to take reasonable care to organise and control its affairs responsibly and effectively
with adequate risk management systems in relation to the detection and reporting of potential instances of market abuse during a period of two years and seven months. The Upper Tribunal concluded that the FCA took the appropriate action
in imposing a penalty of £409,300. The FCA subsequently published a statement on the Upper Tribunals decision.
The All-Party Parliamentary Group (APPG) on Fair Business Banking published a letter dated
26 March 2019 from its co-chair, Kevin Hollinrake MP, to Mark Carney, governor of the Bank of England (BoE), regarding the handling of the HBOS Reading fraud and the evidence of subsequent attempts to cover up its extent. Mr Hollinrake
says the matter raises ‘serious questions’ about the corporate governance and conduct of the executive directors of Lloyds Banking Group, including its chief executive, António Horta-Osório.
The Financial Services Compensation Scheme (FSCS) announced an
update regarding compensation decisions for British Steel Pension Scheme members affected by the failure of Active Wealth, which wrongly advised them on pension transfers. It noted that to date it received 77 claims and paid compensation
totalling £1.8m to 61 of these claimants, an average of just over £30,000 per claimant. The announcement comes ahead of a debate in Parliament due to take place on 10 April 2019 regarding the steelworkers’ case, which
will be led by Nick Smith MP.
As part of its market investigation into the supply of services by funeral directors at the point of need and the supply of crematoria services, the Competition and Markets Authority (CMA) published an issues statement outlining initial theories on what might be affecting competition and potential remedies. The CMA stresses, however, that the document does not set out
its findings or conclusions, no competition concerns were found at this early stage of the investigation, and the potential remedies are hypothetical.
On 10 April 2019, the CMA published its 2019 report on
the operation of concurrency arrangements in the regulated sector from 1 April 2018 to 31 March 2019. The report summarises the relevant work carried out by each regulator and the CMA by type of work, signposting where further details
can be found. The report concludes concurrency arrangements maintained positive progress in 2019, with a particularly good focus on case delivery—there were seven ongoing cases at the beginning of the reporting period, three of which
are now closed with an infringement decision having been reached. The CMA notes in particular that concurrency supported the effective delivery of Competition Act 1998 cases, with several infringement decisions, as well as the
launch of new cases.
ECON published a report setting out proposed amendments to the proposed
Regulation amending Regulation (EU) 596/2014 (the Market Abuse Regulation) and Regulation (EU) 2017/1129 (the Prospectus Regulation) as regards the promotion of the use of SME growth markets.
The European Commission published its final report on EU loan syndication and
its impact on competition in credit markets, focussing on specific segments of the syndicated loan market, namely those connected with Leveraged Buy-Outs, project finance and infrastructure finance. The aim of this market study was to
assess the loan syndication market in terms of its effectiveness and functioning, and to identify potential competition concerns. The study concentrates on those Member States that are the most significant in terms of the location of borrowers,
lenders and investors.
Yves Mersch, a member of the executive board of the ECB spoke at
the ‘Outlook for the Economy and Finance’ conference in Cernobbio, Italy, on the competitiveness of Europe and European financial markets. He said that payment systems, an improved framework for securities issuance and more
harmonisation of national insolvency rules can all play a part in boosting the competitiveness of the EU.
The Global Financial Markets Association (GFMA) released documents
outlining the various parts and players in the development of overnight, nearly risk-free rates, and the transition processes from interbank offered rates impacting globally-active financial institutions.
ESMA published an
updated version of its supervisory briefing on MiFID II appropriateness requirements. The briefing is an updated version of ESMA’s 2012 supervisory briefing on the same topic and takes into account the new version of ESMA’s
guidelines on suitability published on 28 May 2018 with respect to aspects also relevant to the appropriateness rules.
ESMA updated the public register of
those derivative contracts that are subject to the trading obligation under MiFIR. The update follows the authorisation of one additional Dutch venue where some of the classes of derivatives subject to the trading obligation are available
for trading. In addition, the register also reflects the recent adoption by the European Commission of an equivalence decision for Singapore.
ESMA updated its Q&As on data reporting under MiFIR. The
Q&As clarify the requirements for submitting reference data under MiFIR, particularly in relation to reporting obligations for trading venues operating on the basis of a specified list of instruments. The amendments to the existing
Q&A are effective from 9 April 2019.
ECON published two reports setting out its amendments to a proposed new Directive and Regulation relating to covered bonds. The proposals were introduced by the European Commission in March 2018, and the European Parliament and the Council
of the EU reached political agreement on the measures on 26 February 2019:
ECON published its report and amendments on the European Commission’s proposal for a regulation on sovereign bond-backed securities (SBBS). The report was adopted by ECON on 22 March 2019. A vote in plenary is scheduled for 16 April 2019. ECON made a
number of changes to the proposed regulation, which was adopted by the Commission on 24 May 2018. Among other things, ECON would allow special purpose entities to deviate from the nominal value of sovereign bonds of each Member State by
up to 10%, compared to a maximum of 5% in the original proposal.
The International Capital Market Association’s (ICMA) European Repo and Collateral Council (ERCC) published the results of its 36th semi-annual survey of the European repo market. The survey sets the baseline figure for European market size at €7,739bn, up from €7,351bn
in the June 2018 survey. This represents an increase of 6.3% year-on-year since December 2017. ERCC calculated the amount of repo business outstanding on 5 December 2018 from the returns of 58 offices of 54 financial groups.
The Association of National Numbering Agencies (ANNA) and the Global Legal Entity Identifier Foundation (GLEIF) announced 4
April 2019 as the ‘go-live’ date for the new initiative to start linking International Securities Identification Numbers (ISINs) and Legal Entity Identifiers (LEIs) for the global financial industry. The initiative was created
to help improve transparency of exposure by linking the legal issuing entity (issuer) to their issuance of securities, and to also address some of the regulatory requirements under the Prospectus Regulation, the CSDR and Regulation
(EU) 2015/2365 (the Securities Financing Transactions Regulation (SFTR)).
The European Parliament published a report detailing amendments made
by ECON to the European Commission’s proposal for a new regulation on the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs. A vote in plenary is scheduled
for 18 April 2019.
ESMA issued the official translations
of its guidelines on CCP conflict of interest management. National competent authorities (NCAs) to which the guidelines apply must now notify ESMA whether they comply or intend to comply within two months. Article 33 of EMIR requires CCPs
to create written organisational and administrative arrangements to identify and manage any potential conflicts of interest between themselves and their clearing members or the clients known to them.
The International Swaps and Derivatives Association (ISDA) published the April 2019
edition of ISDA Quarterly. The newsletter looks at the results of a new ISDA survey of 480 derivatives market participants active in Asia-Pacific, which identified the existence of a sound legal and regulatory framework as one of the main
factors in determining where to trade. The publication also includes articles on fragmentation and benchmarks.
ISDA published its latest
margin survey, which shows the amount of initial margin (IM) collected by the 20 largest market participants for their non-cleared derivatives trades continued to rise in 2018, increasing by 47% to approximately $157.9bn at the end of
2018, compared with $107.1bn in the initial survey at the end of March 2017. ISDA CEO Scott O’Malia said the ISDA margin survey ‘shows unmistakable progress has been made in making markets safer. The margin regulations are
risk-based, and the posting of IM and variation margin (VM) reduces counterparty credit risk’.
ISDA announced that it is working with FinTech
firm Digital Assets to develop an open-source reference code library that will help derivatives market participants adopt the ISDA Common Domain Model (CDM). The new tool will assist developers in implementing the ISDA CDM in solutions
for trading and managing derivatives via DAML, the smart contract language created by Digital Asset.
ECON published two reports setting out proposed amendments to the proposed Regulation and proposed Directive on the cross-border distribution of investment undertakings. The proposals make amendments to Regulation (EU) 345/2013 (the
European Venture Capital Funds Regulation (EuVECA Regulation)), Regulation (EU) 346/2013 (the European Social Entrepreneurship Funds Regulation (EuSEF Regulation)), Directive 2009/65/EC (the and takes a closer look
at ESMA’s latest Directive 2014/91/EU(the fourth Undertakings for Collective Investment in Transferable Securities Directive (UCITS IV)) and Directive 2011/61/EC (the Alternative Investment Fund Managers Directive
ESMA issued its first annual report
on sanctions imposed by NCAs under the UCITS IV. The report provides an aggregated overview of the penalties and measures issued under UCITS IV for 2016/2017, based on data submitted to ESMA by NCAs, as well as an overview of the applicable
ESMA published the responses
it received to its consultation on draft guidelines on the liquidity stress test for UCITS and AIFs. The consultation closed on 1 April 2019, with 28 responses received. ESMA will consider the feedback it received to this consultation
in early Q2 2019 and expects to publish a final report by the summer of 2019.
ESMA published the third edition of its newsletter, which includes
an op-ed from ESMA's head of risk analysis and economics department, Steffen Kern. The newsletter also contains a full list of ESMA publications from March 2019 and takes a closer look at ESMA’s latest UCITS Q&As. In addition,
it provides details of speaking appearances by ESMA staff, consultation deadlines and key dates for the coming month.
The ECB published an interim update
on the targeted review of internal models (TRIM), which will be sent to relevant institutions. The note provides an overview of the TRIM project and supplements information shared with institutions in June 2018, updating it where necessary.
In particular, the note complements the analysis on credit risk internal models, presenting an overview of the main findings related to the data quality review, and reports the most common or critical shortcomings identified during TRIM
investigations on internal models for market risk.
The ECB published the aggregate outcome of its 2018
supervisory review and evaluation process (SREP). The overall SREP demand for common equity tier 1 (CET1) capital increased to 10.6% in 2018 from 10.1% in 2017, which the ECB says was driven by the last step of the phase-in of the capital
conservation buffer. The overall SREP demand excludes systemic buffers and the countercyclical capital buffer. The ECB says the most significant institutions already carry capital levels above the CET1 levels and buffers required by the
ECB and national authorities, respectively. CET1 is a bank’s highest-quality capital, consisting largely of common stock, and measures a bank’s capital strength.
Senior officials representing resolution, regulatory and supervisory authorities, central banks, and finance ministries in the US, the UK and the EU will hold a meeting on 13 April 2019, as part of a series of regular exchanges to enhance understanding of one another’s resolution regimes for global systemically important banks, and to strengthen co-ordination
on cross-border resolution.
In Pilgrim Rock v Mr Iwaniuk  EWHC 203 (Ch) the High Court considered the circumstances
in which a court may consider the relationship between a debtor and a third party closely connected to a creditor when determining whether a debtor-creditor relationship is unfair under section 140A of the Consumer Credit Act
1974. The Court upheld a County Court decision to vary the terms of a loan on the grounds that there was an unfair relationship between the contracting parties under s 140A. It confirmed that the relationship between the borrower and the
individual who was ultimately behind the lender company was relevant in establishing the unfairness, even though that individual was not an agent or associate of the company.
The European Commission launched a public consultation on the EU rules on distance marketing
of financial services. The current rules provide details on the information a consumer should receive about a financial service and the financial service provider before they conclude a distance contract. The public consultation is part
of a bigger assessment to check whether the rules on distance marketing of financial services are still fit for purpose and meet users' needs and expectations. Feedback is sought by 2 July 2019.
The FCA issued a reminder
to general insurance firms regarding the recently implemented Insurance Distribution Directive, which requires that all firms in the general insurance distribution chain act in accordance with the best interests of the customer. The FCA
warned in a report published on 10 April 2019 that it will not hesitate to intervene with both firms and their senior managers where it sees a failure to give appropriate regard to the value their ultimate customers receive.
The ESAs published additional
Q&As on the key information document requirements for packaged retail and insurance-based investment products (PRIIPs), laid down in the European Commission's Delegated Regulation (EU) 2017/653. The additional questions and answers
relate to general topics and multi-option products.
The PRA’s executive director for insurance supervision, David Rule, delivered a speech highlighting the continuing trend in the transfer of defined benefit pension liabilities from employers to insurers, and setting out some of the key risks facing annuity writers.
Mr Rule also argued that the PRA’s implementation of Solvency II achieves a balance of protecting policyholders and facilitating long-term investment in the economy.
The European Parliament adopted the
EU Commission's proposal for a regulation on a pan-European personal
pension product (PEPP). Following the adoption, the new regulation needs to be adopted by the Council, and will enter into force 20 days after the regulation's publication in the Official Journal. The PEPP is a voluntary personal pension
scheme that will offer consumers a new pan-European option to save for retirement. This new type of product is designed to give savers more choice and provide them with more competitive products, while enjoying strong consumer protection.
A number of bodies including the European Insurance and Occupational Pensions Authority (EIOPA), the European Fund and Asset Management Association (EFAMA) and Insurance Europe welcomed the adoption of the proposal. The Council of the EU also subsequently published an information note on the PEPP proposal.
The government gave the green light
for pensions dashboards to be established in 2019, in its response to a consultation on dashboards. The Work and Pensions Secretary Amber Rudd MP unveiled proposals to support industry to deliver free, user-friendly services showing people
their pensions information online.
The Single Financial Guidance Body officially relaunched as the Money and Pensions
Service, and called on organisations throughout the UK to get involved in the development of its strategy to improve the nation’s financial wellbeing. The newly launched Money and Pensions Service is a joined-up service for everything
from debt help to money and pensions guidance. Uniquely, the organisation will focus on improving financial wellbeing throughout people’s lifetimes, equipping, empowering and enabling individuals to make informed financial decisions
A voluntary code of good practice for safeguarded and defined benefit pension transfer advice, based around a set of principles, was published by a taskforce set up by the Personal Finance Society. Firms can adopt and promote this standard and principles, so consumers can better understand and find good advice,
and be confident they are dealing with a firm that is going beyond minimum requirements when giving financial advice.
The chief cashier of the BoE, Sarah John, spoke at
the Currency Conference 2019 in Dubai about the future of cash in the UK and the role the BoE is playing in the future of cash. While the use of cash is declining, Ms John believes it is highly unlikely that it will fall to zero. The BoE
is committed to supporting cash as a viable means of payment for as long as the public still wants to use it.
The PSR published the minutes of its January 2019 board meeting. Amongst other things, the board
discussed the wider impact on the payment sector of the UK’s withdrawal from the EU and the Access to Cash Review lead by Natalie Ceeney CBE. The board also received an update on the Contingent Reimbursement Model Code and the confirmation
of payee consultation.
The FSB published a directory of crypto-assets regulators, containing
information on the relevant regulators and other authorities in FSB jurisdictions, international bodies who are dealing with crypto-asset issues, and the aspects covered by them. The directory will be delivered to the G20 finance ministers
and central bank governors meeting on 11-12 April 2019.
European Commission Vice President Valdis Dombrovskis said that he is asking his services
to prepare the ground for actions by the Commission on crypto-assets. Speaking at the Eurofi High-level Seminar in Bucharest, Romania, Mr Dombrovskis also said that he will make ‘full use’ of the remaining months of his mandate
to move the sustainable finance agenda.
11 April 2019
Regulation of capital markets
A number of delegated and implementing acts in relation to the SFTR will enter into force on 11 April 2019:
Commission Delegated Regulation (EU) 2019/356
Commission Delegated Regulation (EU) 2019/357
Commission Delegated Regulation (EU) 2019/358
Commission Delegated Regulation (EU) 2019/359
Commission Delegated Regulation (EU) 2019/360
Commission Delegated Regulation (EU) 2019/361
Commission Delegated Regulation (EU) 2019/362
Commission Implementing Regulation (EU) 2019/363
Commission Implementing Regulation (EU) 2019/364 ,
Commission Implementing Regulation (EU) 2019/365
Payment services and systems
The deadline for responses to the ECB’s public consultation
on its draft decision on the procedure and conditions for exercise by a competent authority of certain powers in relation to the oversight of systemically important payment systems is 12 April 2019.
Banks and mutuals
Recovery and resolution
Senior officials representing resolution, regulatory and supervisory authorities, central banks, and finance ministries in the US, the UK and the EU will hold a meeting on 13 April 2019, as part of a series of regular exchanges to enhance understanding of one another’s resolution regimes for global systemically important
banks, and to strengthen co-ordination on cross-border resolution.
CRL Management must find
an alternative insurer to provide replacement cover for Alpha latent defect and structural damage insurance policyholders whose policies terminated last August, by 14 April 2019.
The re-trial of Fabiana Abdel-Malek and Walid Anis Choucair is listed for
15 April 2019. The case concerns five counts of insider dealing.
Markets and trading
The deadline for responses to the European Money Market
Institute’s (EMMI) public consultation on the change in the methodology of the Euro OverNight Index Average (EONIA), as recommended by the working group on euro risk-free rates is 15 April 2019.
Risk management and controls
A vote on the European Commission’s proposal for a whistleblowing directive is scheduled for 16 April 2019 in the European Parliament’s plenary session.
A vote on the European Commission’s proposal for a Directive on credit servicers, credit purchasers and the recovery of collateral is scheduled for 16 April 2019 in the European Parliament’s plenary session.
A vote on the European Commission’s package of risk-reduction measures for banks is scheduled for 16 April 2019 in the European Parliament’s plenary session.
A vote on the European Commission’s proposals in relation to SBBS is scheduled for 16 April 2019 in the European Parliament’s plenary session.
A vote on the European Commission’s proposals for changes to rules in relation to the ESFS is scheduled for 17 April 2019 in the European Parliament’s plenary session.
A vote on the European Commission’s proposals for changes to rules in relation to prudential requirements for investment firms is scheduled for 17 April 2019 in the European Parliament’s plenary session.
Capital Markets Union
A vote on the European Commission’s proposals for changes to rules in relation to sustainability related disclosures is scheduled for 18 April 2019 in the European Parliament’s plenary session.
BaFin (the German Financial Services Regulator) issued a emergency net short position ban in Wirecard AG shares under the Short Selling Regulation. The measure is applicable until midnight Central European Time on 18 April 2019.
The deadline for feedback to the Joint Money Laundering Steering
Group (JMLSG) proposed revisions to two of the sectors in Part II of its guidance on the prevention of money laundering and the financing of terrorism for the UK financial services industry is 18 April 2019.
Regulation of derivatives
A vote on the European Commission’s proposals for changes to rules in relation to authorisation of CCPs and requirements for the recognition of third-country CCPs is scheduled for 18 April 2019 in the European Parliament’s plenary session.
A vote on the European Commission’s proposals for changes to rules in relation to covered bonds is scheduled for 18 April 2019 in the European Parliament’s plenary session.
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