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The Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA) and European Banking Authority (EBA) announced that they agreed a template memorandum of understanding (MoU). The template sets out the expectations for supervisory co-operation and information-sharing arrangements between UK and EU/EEA national
authorities. The FCA added that the UK authorities and EU/EEA national authorities intend to move swiftly to sign bilateral MoUs. These bilateral MoUs will allow supervisory co-operation in the event of a no-deal scenario. The chief executive of the
FCA, Andrew Bailey, said: ‘The bilateral MoUs will ensure that there will be no interruption in exchange of supervisory information in the event of a no-deal exit from the EU’.
The FCA published Primary Market Bulletin 22 which focuses on Brexit and summarises
the key changes to the Listing Rules, the Disclosure Guidance and Transparency Rules and the Prospectus Rules that will apply if the UK leaves the EU in a no deal scenario. The key changes for issuers in a no deal scenario as confirmed in the FCA’s
Policy Statement PS19/5: Feedback on CP18/28, CP18/29, CP18/34, CP18/36 and CP19/2 are set out in this bulletin.
The FCA published a technical communication on the
operation of Directive 2014/65/EU (the Markets in Financial Instruments Directive (MiFID II)) transparency regime post-Brexit. As set out in the supervisory statement outlining how the FCA will operate the pre- and post-trade transparency
regime if the UK leaves the EU without a deal on 29 March 2019, the FCA will make the Financial Instrument Reference Data System (FCA FITRS) available. The technical communication sits alongside the FCA’s statements of policy on the operation
of the MiFID transparency regime.
The FCA published a supervisory statement setting out how it intends
to operate the pre- and post-trade transparency regime for the secondary trading of financial instruments if the UK leaves the European Union on 29 March without a withdrawal agreement. Under the UK legislation that will then take effect the FCA will
be responsible for many of the tasks ESMA currently undertakes under the EU legislation, MiFID II. The supervisory statement takes into account the statement issued by ESMA on 5 February 2019 regarding the use of UK data in ESMA databases and performance
of MiFID II calculations in case of a no-deal Brexit.
The FCA confirmed that the EU regulatory and supervisory regime is ‘as
stringent as’ the UK regime for the purpose of allowing UK-registered credit rating agencies (CRAs) to endorse credit ratings from affiliated EU CRAs should the UK withdraw from the EU without a withdrawal agreement. ESMA reached a similar conclusion with regard to the UK regime, so that EU
CRAs can endorse credit ratings from UK-affiliated CRAs. Under the Credit Rating Agencies Regulation (EC) 1060/2009, as amended by The Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, SI 2019/266, the FCA will become the
UK regulator of CRAs. Once the new regime is in place, any legal person wishing to issue or endorse credit ratings for regulatory purposes will need to be registered or certified with the FCA.
ESMA published a statement ;in relation
to the impact on ESMA’s databases and IT systems of a no-deal Brexit scenario on 29 March 2019. The statement covers the actions related to the following systems (1) financial instruments reference data system (2) FITRS (3) double volume cap
system (4) transaction reporting systems, and (5) ESMA’s registers and data. The statement also sets out ESMA’s further communication plan to external stakeholders.
ESMA issued a statement in response to requests from many market participants for
additional clarity and certainty on the application of the trading obligation (TO) for shares under Regulation (EU) No 600/2014 (the Markets in Financial Instruments Regulation (MiFIR)) if the UK leaves the EU without a withdrawal agreement
and in the absence of an equivalence decision by the European Commission. ESMA noted that it recognises its approach may lead to an overlap of TOs for a number of shares and potentially a greater level of fragmentation of trading should the UK apply
an identical approach. However, the absence of any clarification by ESMA would by default lead to the application of the MiFIR TO to every share traded in the EU27. ESMA’s approach seeks to limit potential market disruption while also ensuring
Article 23 MiFIR is adequately and consistently applied across the EU.
The FCA published a statement responding to ESMA announcement of its expectations
for the share trading obligations (STOs) under MiFID II in the EU in the event of a no-deal Brexit and in the absence of an equivalence decision in respect of the UK by the European Commission. The FCA acknowledged that clarifying the application
of the STO in the event of a no-deal Brexit will help to provide certainty. It noted its belief that only a comprehensive and co-ordinated approach can provide the necessary certainty to market actors. The onshoring of EU legislation in preparation
for Brexit means that the UK will, as well as the EU, need an STO.
HM Treasury published guidance on how UK project
contracts with the European Investment Bank and European Investment Fund would be affected if the UK leaves the EU without a deal. The guidance states that any organisation that received financing for a UK project from the European Investment Bank
Group should be aware that the Group’s operating rights for such projects are preserved through section 4 of the EU Withdrawal Act 2018. Therefore, existing UK project contracts should be protected and organisations do not need to take any action.
On 13 March 2019, following parliament’s rejection of the Withdrawal Agreement and political declaration on the framework for the future UK/EU relationship in the second meaningful vote, MPs voted to approve an amended motion rejecting the UK leaving the EU without a deal in place. Experts from Bird & Bird and Leicester University comment on the outcome, its implications and the
likely next steps.
Five US agencies set out measures to allow banks to transfer so-called legacy swaps from the UK to a subsidiary based in Europe or America without triggering tougher margin requirements if Britain crashes out of the bloc without a deal. The Federal Reserve
Board and four other authorities said in a joint statement on Friday that non-cleared
swaps, which counterparties entered into before margin rules on over-the-counter (OTC) derivatives took effect in 2016, will not be made subject to stricter collateral rules if banks move them to EU or the US in the aftermath of a no-deal Brexit.
Traders must post collateral to their counterparties when they enter into a trade known as initial margin and when their side of the trade drops in value, known as variation margin, according to margin rules drawn up by the US Commodity Futures Trading
Commission (CFTC). Similar rules were set out in the EU by the International Swaps and Derivatives Association (ISDA).
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On 20 March 2019, 1000 days since the EU referendum and just nine days before the UK’s scheduled exit from the EU, the Prime Minister wrote to European Council President, Donald Tusk, requesting an extension to the Article 50 withdrawal period until 30 June 2019. EU27 leaders will consider the request at the European Council
meeting on 21 March 2019, but the EU warned against
extending the uncertainty without a ‘clear plan’ hence a short extension would be conditional on Parliament approving the Withdrawal Agreement.
The PRA updated its EU withdrawal webpage, requesting insurers with EEA business who are considering making a transfer
under Part VII of the Financial Services and Markets Act 2000 (FSMA 2000) and are yet to commence this action, to immediately contact the PRA. The PRA’s request follows the amended draft SI Financial Services (Miscellaneous) (Amendment)
(EU Exit) Regulations 2019, which at Part 5, allows businesses who are currently in the process of making a Part VII of FSMA 2000 transfer, up to two years (from exit day) for the parties to obtain a court order sanctioning the scheme under
the pre-exit Part VII regime.
The European Parliament confirmed that it will not object to delegated acts adopted by the European Commission amending MiFIR, Regulation (EU) No 596/2014 (the Market Abuse Regulation (MAR)), Regulation (EU) 648/2012 (the European Market Infrastructure Regulation (EMIR)) and Regulation (EU) 2015/2365 (Securities Financing Transactions Regulation (SFTR)) in order to add the Bank of England (BoE) and other public bodies charged with, or intervening in, the management of the public debt in the UK to the list of exempted entities after the UK leaves
the EU. The delegated acts were adopted by the Commission on 30 January 2019. The Council of the EU confirmed on 7 March 2019 that it would not object to the delegated acts. The delegated acts will now be published in the Official Journal of the EU
and will enter into force the following day.
SI 2019/576: This enactment is made in exercise of legislative powers under the European Union (Withdrawal) Act 2018 (EU(W)A
2018) in preparation for Brexit. This enactment amends UK subordinate legislation by adding the binding technical standards (BTS) to the list of BTS which the regulators may amend to correct deficiencies in order to ensure that the recently adopted
BTS continue to operate effectively after the UK withdraws from the EU, and by making some minor amendments in order to ensure that it effectively addresses deficiencies in retained EU law relating to markets in financial instruments, so that it continues
to operate effectively after the UK leaves the EU. It comes into force on 14 March 2019 (updated from draft on 14 March 2019).
SI 2019/576: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for
Brexit. This enactment amends UK subordinate legislation by adding the BTS to the list of BTS which the regulators may amend to correct deficiencies in order to ensure that the recently adopted BTS continue to operate effectively after the UK withdraws
from the EU, and by making some minor amendments in order to ensure that it effectively addresses deficiencies in retained EU law relating to markets in financial instruments, so that it continues to operate effectively after the UK leaves the EU.
It comes into force on 14 March 2019 (updated from draft on 13 March 2019).
SI 2019/589: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for
Brexit. This enactment amends UK primary and subordinate legislation in relation to financial services passporting rights between the UK and Gibraltar in order to address deficiencies arising from the withdrawal of the UK from the EU. This instrument
ensures authorised financial services firms in Gibraltar will continue to be able to provide services and establish branches in the UK market after exit day on current terms. It comes into force partly on 16 March 2019 and fully on exit day (updated
from draft on 15 March 2019).
SI 2018/1321: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation
for Brexit. This enactment amends UK primary legislation and EU retained legislation in order to address deficiencies in retained EU law in relation to short selling, the selling of securities which are either borrowed or not owned by the seller,
arising from the withdrawal of the UK from the EU. This ensures that the legislation continues to operate effectively at the point at which the UK leaves the EU. It comes into force on exit day (updated from draft on 7 December 2018. Updated to include
correction slip on 18 March 2019).
The Commons European Statutory Instruments Committee (ESIC) and the Lords Secondary Legislation Scrutiny Committee (SLSC) are responsible for the sifting process under the EU(W)A 2018. These committees scrutinise proposed negative Brexit SIs and
make recommendations on the appropriate parliamentary procedure before the instruments are laid in Parliament. This bulletin outlines the latest updates and recommendations, collated on 15 March 2019. The following financial services Brexit SI is
mentioned in the bulletin:
SI 2019/533: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for
Brexit. This enactment amends and revokes retained direct EU legislation to ensure that legislation governing the UK’s energy systems will function effectively in the event that the UK leaves the EU. These Regulations are intended to apply in
the event that no deal is reached on the UK’s withdrawal from the EU. It amends two retained direct EU regulations relating to electricity system operation to ensure that they will function effectively once incorporated in domestic law by the
2018 Act. It further revokes three retained direct EU regulations on the grounds that they would be inoperable if incorporated into domestic law in the UK. It will come into force on exit day (updated from draft on 15 March 2019).
SI 2019/531: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for
Brexit. This enactment amends and revokes provisions of retained direct EU legislation in order to ensure that legislation governing the UK’s energy systems will function effectively after the UK leaves the EU. These Regulations are intended
to apply in the event that no deal is reached on the UK’s withdrawal from the EU. It comes into force on exit day (updated from draft on 15 March 2019).
SI 2019/534: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for
Brexit. This enactment amends UK subordinate legislation and retained direct EU legislation in order to ensure that the legislation governing the UK’s energy systems will function effectively in the event that the UK leaves the EU. These Regulations
are intended to apply in the event that no deal is reached on the UK’s withdrawal from the EU. It makes technical modifications to Regulation (EU) 1227/2011 on wholesale energy market integrity and transparency, Commission Implementing Regulation
(EU) 1348/2014 and Regulation (EU) 543/2013 on submission and publication of data in electricity markets in order to ensure that they are operable when incorporated into domestic law by the 2018 Act. It also amends domestic legislation which
confers investigation and enforcement powers on the energy regulators in relation to breaches of Regulation (EU) 1227/2011 requirements in the UK. It comes into force on exit day (updated from draft on 15 March 2019).
SI 2019/532: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for
Brexit. This enactment amends and revokes retained direct EU legislation in order to ensure that legislation governing the UK’s energy systems will function effectively in the event that the UK leaves the EU. These Regulations are intended to
apply in the event that no deal is reached on the UK’s withdrawal from the EU. It amends two retained direct EU regulations relating to the cross-border trade of electricity to ensure that they will function effectively once incorporated in
domestic law by the 2018 Act and to revoke two retained direct EU regulations on the grounds that they would be inoperable if incorporated into domestic law in the UK. It comes into force on exit day (updated from draft on 15 March 2019).
SI 2019/573: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering
Act 2018 in preparation for Brexit. This enactment revokes certain retained direct EU legislation to provide for part of the UK’s counter-terrorism sanctions regimes after the UK leaves the EU. When these Regulations come into force
they will replace, with substantially the same effect, counter-terrorism regimes which are currently in force under a range of EU legislation and related UK legislation. They will replace the EU autonomous sanctions regime in respect of ISIL (Da’esh)
and Al-Qaida, and the EU’s counter-terrorism sanctions regime set out in Council Common Position 2001/931/CFSP. This sanctions regime also gives effect to the UK’s obligations under United Nations Security Council Resolution 1373.
It comes into force in accordance with regulations made by the Secretary of State under section 56 of the 2018 Act.
SI 2019/577: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering
Act 2018 in preparation for Brexit. This enactment makes provisions relating to counter-terrorism sanctions aimed at furthering the prevention of terrorism in the UK or elsewhere, and protecting UK national security interests. This will ensure
that the UK implements its international obligations under UN Security Council Resolution 1373. It comes into force in accordance with regulations made by the Treasury under section 56 of the 2018 Act.
SI 2019/600: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering
Act 2018 in preparation for Brexit. This enactment amends UK subordinate legislation and revokes other UK subordinate legislation and retained direct EU legislation to ensure that the UK can operate an effective sanctions regime in relation
to Belarus after the UK leaves the EU. It comes into force in accordance with regulations made by the Secretary of State under section 56 of the 2018 Act.
SI 2019/554: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering
Act 2018 in preparation for Brexit. This enactment repeals one UK secondary legislation and one EU enactment in relation to EU sanctions regime relating to the Republic of Guinea-Bissau that is currently in force under EU legislation and
related UK regulations. It comes into force in accordance with regulations made under section 56 of the Sanctions and Anti-Money Laundering Act 2018.
The general manager of the Bank for International Settlements (BIS), Agustín Carstens, gave a speech at the 20th
anniversary conference of the Financial Stability Institute (FSI) on the role of central banks in preserving financial stability and the impact of recent technological developments on the policy framework. He stressed the continued importance
of central bank independence and noted that while new technologies present opportunities, they also require a regulatory response. In recent years, central banks tended to assume more financial stability-related responsibilities, Mr Carstens said.
The main rationale for allocating prudential responsibilities to central banks is the existence of important synergies between the pursuit of macroeconomic stability and the preservation of financial stability.
The National Audit Office (NAO) published ‘Regulating
to protect consumers: Utilities, communications and financial services markets’, a report on examining the challenges that regulators, including the FCA, face when measuring their performance and understanding what works well for consumers.
The report makes a number of recommendations for regulators on measuring and reporting their performance in protecting the interests of consumers. Responding to the report, the FCA’s CEO Andrew Bailey said ‘Understanding the impact of our interventions is an important part of our mission to ensure that financial markets are
working in consumers’ best interests.
The Treasury Committee announced the launch of two new inquiries. The Work of the Debt Management Office inquiry and the Work of the Adjudicator’s Office inquiry are part of the Committee’s ongoing scrutiny of HM Treasury's associated bodies, with the Committee holding evidence sessions with
A recommendation of the European Systemic Risk Board (ESRB) of 15 January 2019 amending Recommendation ESRB/2015/2 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures (ESRB/2019/1) was
published in the Official Journal of the EU. The framework on voluntary reciprocity for
macroprudential policy measures set out in recommendation ESRB/2015/2 aims to ensure that all exposure-based macroprudential policy measures activated in one Member State are reciprocated in the other Member States. The amendments aim to reciprocate
the macroprudential policy measures adopted by other relevant authorities in Estonia, Finland, Belgium, France and Sweden.
The European Parliament Think Tank published four briefing papers (Report 1,
Report 2, Report 3 and Report 4)
commissioned by the Parliament’s Committee on Economic and Monetary Affairs (ECON), on the single supervisory mechanism and the challenges it faces in the coming years. The papers were prepared by experts appointed to the standing panel
on bank supervisory issues, and highlighted a shared concern that effective market discipline should be improved by disclosing more detailed supervisory information on the supervisory review and evaluation process outcomes.
The European Commission published a
speech given by its vice-president responsible for financial stability, financial services and capital markets union, Valdis Dombrovskis, on the international role of the euro. Mr Dombrovskis said a globally stronger euro makes it easier for European
companies to trade around the world; could make the global economy less dependent on a single currency and less vulnerable to shocks; and would enable Europe to be more independent at international level, better protecting its citizens and businesses.
The BIS published a report that summarises and analyses the results of the third-wave survey conducted by the Research
Task Force on the role of multiple regulatory constraints in the Basel III framework. Most banks said that they are confident in their capital positions. In addition, most banks can manage regulatory complexity. The latest survey (end-December
2017) retains the format of the end-December 2016 survey: each block of questions tests the impact of a regulatory instrument and provides an indication of the interaction among said instruments and the problems created by the growing complexity
of the Basel III framework.
The BIS published a report on Basel III monitoring results published by the Basel Committee on Banking Supervision
(BCBS). The report is based on data as of 30 June 2018. The Committee regularly reviews the implications of the Basel III standards for banks, and published the results of such exercises since 2012. The report sets out the impact of the Basel
III framework that was initially agreed in 2010 as well as the effects of the Committee's December 2017 finalisation of the Basel III reforms. However, it does not yet reflect the finalisation of the market risk framework published in January
The EBA published two
reports measuring the impact of implementing the final Basel III reforms and monitoring the current implementation of liquidity measures in the EU. The EBA Basel III capital monitoring report includes a preliminary assessment of the impact
of the Basel reform package on EU banks, assuming its full implementation. Overall, the results of the Basel III capital monitoring exercise, based on data as of 30 June 2018, show that European banks' minimum Tier 1 capital requirement would
increase by 19.1% at the full implementation date (2027). The semi-annual update of the EBA report on liquidity measures shows that EU banks continued to improve their compliance with the liquidity coverage ratio.
The PRA issued consultation paper 6/19
setting out proposals for regulatory reporting amendments and clarifications to the Pillar 2 liquidity framework. The proposals include amendments to the PRA Rulebook as well as to supervisory statements, the reporting template and reporting
instructions. Feedback is sought by 19 April 2019. Since publishing the PRA110 liquidity reporting template and associated reporting instructions in its policy statement PS2/18 in February 2018, the PRA received several questions regarding
the template and reporting instructions. CP6/19 sets out proposals to amend the PRA110 template and instructions to address the questions and feedback received.
The PRA published policy statement
9/19 providing feedback on the responses to consultation paper 15/18 ‘Solvency II: Group own fund availability’. CP15/18 proposed further details on certain aspects of how group own funds should be assessed as available. The PRA
also published supervisory statement 9/15 ‘Solvency II: Group supervision’ which sets out the PRA’s updated expectations for group supervision and incorporates the PRA’s expectations for assessments of the availability
of own funds to cover the group solvency capital requirement (SCR) as set out in CP15/18.
The Council of the European Union confirmed the final compromise texts for a Regulation
of the European Parliament and of the Council on the prudential requirements of investment firms and amending Regulations (EU) No 575/2013 (Capital Requirements Regulation (CRR)), MiFIR and (EU) No 1093/2010 (establishing a European
Supervisory Authority); and the proposal for a Directive of the European Parliament and of the Council on the prudential supervision of investment firms and amending Directives 2013/36/EU (CRD IV) and MiFID II. The Council asks the
Permanent Representatives Committee (Coreper) to approve the final compromise texts and to confirm in writing to the European Parliament that, should the European Parliament adopt its positions at first reading, the Council would approve the
European Parliament’s first-reading positions and the acts would be adopted.
HM Treasury announced that over 800,000 employees in the UK are now covered by the Women in Finance Charter, as more than 30 new companies sign up to the government’s plan to tackle gender inequality
in financial services. The announcement comes with the Treasury’s launch of the second Women in Finance Charter Annual Review. The review indicates that female representation in senior management at firms who signed up to the charter
increased, with 86% of signatories upped or maintained the proportion of women in the top jobs.
MEPs adopted a
resolution expressing regret that the European Commission and the large majority of EU governments ‘so far failed in promoting greater gender balance in EU institutions and bodies, particularly with regard to high-level appointments
in economic, financial and monetary affairs’. The MEPs requested more transparency in the recruitment and appointment procedures for executive directors of EU agencies by having the list of applicants and the shortlisted candidates published,
as well as the reasons for their shortlisting. The MEPs state that, in future, the European Parliament commits not to take into account lists of candidates where the gender balance principle is not respected alongside the requirements concerning
qualifications and experience in the selection process.
EU Member States’ ambassadors confirmed the
agreement reached on 11 March 2019 by the Romanian presidency and Parliament negotiators on the directive on the protection of whistleblowers, and provided more detail on the terms of the compromise. The new rules will require the creation
of safe channels for reporting both within an organisation–private or public–and to public authorities. They will also give a high level of protection to whistleblowers against retaliation, and require national authorities to adequately
inform citizens and train public officials on how to deal with whistleblowing. Once the Parliament confirms the deal, the text will be reviewed by lawyer linguists before formal adoption by both Parliament and Council. Once finally adopted
and published in the Official Journal, Member States will have two years to implement the new rules in their national legal system.
The FCA published consultation
paper 19/13 in which it feeds back on the variable fee it will charge professional body supervisors (PBSs) in 2018/19 to recover the costs of establishing and running the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
The FCA is also consulting on removing the minimum fee threshold from its fees model. The new consultation closes on 26 April 2019. The Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations
2017, SI 2017/1301, give the FCA the power to recover the costs of OPBAS’s supervisory activities from PBSs.
MEPs adopted a
resolution expressing concern that member states scuppered the Commission’s plan to place new countries on the EU money-laundering blacklist. The MEPs praised the work done by the Commission to adopt a list drawn up using ‘strict
criteria’, which was accepted in the past by both the Council and the European Parliament. The MEPs believe countries on the list exerted diplomatic pressure and lobbying. For this reason, MEPs consider that the screening and decision-making
process should be carried out solely on the basis of the commonly agreed methodology. The Commission will now need to present another list, identical or amended, and the European Parliament and the Council will get one month to approve or
The European Parliament adopted the
proposal for a directive of the European Parliament and of the Council on combating fraud and counterfeiting of non-cash means of payment and replacing Council Framework Decision 2001/413/JHA (COM(2017)0489–C8-0311/2017–2017/0226(COD)).
The text sets out that fraud and counterfeiting of non-cash means of payment represent obstacles to the digital single market, as they erode consumers’ trust and cause direct economic loss. The proposed directive would impose criminal
offences with potential terms ranging from at least one to three years depending on the offence committed. The adopted text will now be forwarded to the Council of the EU, the European Commission and the national parliaments.
The European Parliament published a
final report issued by its special committee on financial crimes, tax evasion and tax avoidance. Among the recommendations in the report is a call for a new EU watchdog in charge of countering money laundering and financing of terrorism, and
a European financial police force operating under Europol, with its own investigative powers to carry out international investigations into tax and financial crimes. The special committee highlights the current lack of co-operation and co-ordination
among authorities within and between EU Member States, resulting in money laundering cases (which tend to carry an international dimension) not being prevented, tackled at an earlier stage or investigated properly.
The Serious Fraud Office (SFO) opened an investigation in conjunction
with the Financial Conduct Authority, into individuals associated with London Capital & Finance Plc (LC&F). Four individuals were arrested in the Kent and Sussex areas on 4 March 2019 and since released pending further investigation.
The SFO is asking members of the public who invested in this scheme over the period of 2016–2018 to contact them via a secure reporting form.
The Joint Money Laundering Steering Group (JMLSG) published 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. Feedback on the proposals is sought by 18 April 2019. The proposed revisions, to sector
4: Credit unions, and sector 20: Brokerage services to funds, seek to describe in more current terms how to assess the risks in the sectors and how to identify who the customers are.
The House of Lords Select Committee on the Bribery Act 2010 published its post-legislative scrutiny report. The report, running to 110 pages (plus appendices), follows the call for evidence last year during which several leading figures in the
field gave evidence to the Committee in oral sessions. The report calls for the director of the SFO and the Director of Public Prosecutions (DPP) to publish plans outlining how they will speed up bribery investigations and improve the level
of communication with those placed under investigation for bribery. The Committee concluded that a lack of awareness and training on the Bribery Act might be a contributing factor in the lack of bribery prosecutions under the Act to date.
HM Revenue & Customs (HMRC) published a
report on the impact of the commencement of the corporate criminal offences introduced in the Criminal Finances Act 2017. The report was prepared based on a quantitative telephone survey, conducted with senior individuals in 1,002 UK
companies and partnerships across all sectors of the economy and of all sizes. This research aimed to understand companies’ and partnerships’ awareness of the new corporate criminal offences and the extent to which the introduction
of the corporate criminal offences resulted in changes to the culture and behaviour change of companies and partnerships.
Sweden's financial regulator said that Swedbank handed over a report about suspected money laundering activity to add to the agency's ongoing investigation of the lender’s alleged links to the €200bn ($227bn) money laundering scandal
at Danske Bank. Finansinspektionen, known as FI, declined to provide further details. But it said in February that it could not rule out that Swedbank AB was involved in at least some of the suspicious transactions involving Danske Bank. The
Danish lender is accused of allowing its small branch in Estonia to become a hub through which illicit funds from the former Soviet Union made their way to the West. ‘FI confirms that on 1 March we received a report from Swedbank about
suspected money laundering,’ the regulator said in a statement.
The FCA fined UBS AG £27,599,400 for
failings relating to 135.8m transaction reports between November 2007 and May 2017. The fine, which was initially set at £39,427,795, was reduced as UBS agreed to resolve the matter, earning a 30% discount under the FCA’s executive
settlement procedures. A transaction report is a data set submitted to the FCA that relates to an individual financial market transaction, including details of the product traded, the firm that undertook the trade, the trade counterparty,
the client and the trade characteristics, price, quantity and venue. Firms are required to submit transaction reports to the FCA under rules based on MiFID II. The FCA uses the information from transaction reports to monitor for market
abuse, to supervise firms and markets, and to share with certain external parties such as the BoE.
The chair of the Treasury Committee, Nicky Morgan MP, called on the FCA to investigate the events at LC&F, which went into administration in January 2019. This followed concerns raised by the FCA in December 2018. The FCA is currently
investigating LC&F’s marketing material and the SFO is investigating individuals associated with the company, but the Treasury Committee says there is ‘a broader need to understand what can be learned in a regulatory sense
from the events at LC&F’. The FCA directed LC&F in December 2018 to withdraw its promotional material for its mini bonds on the basis that the marketing was ‘misleading, not fair and unclear’. While the promotional
material is regulated by the FCA, the product itself mini-bonds is unregulated.
The Treasury Committee published correspondence relating to the ongoing investigation into an accounting discrepancy at Metro Bank, when the firm wrongly classified a bundle of loans as lower-risk, increasing the lender’s risk weighted
assets by £900m and reducing its Common Equity Tier 1 capital surplus by around £95m. The Committee published a letter from
the chair of Banking Competition Remedies (BCR) seeking assurances, as it is about to sign an agreement with Metro on the award of Alternative Remedies Package funds. Metro CEO Craig Donaldson replied to BCR chair Godfrey Cromwell dealing with the various questions and saying the bank remained committed to deliver on the bid and ‘to serve the needs of small and medium-sized
enterprises (SMEs) across the UK’. The Treasury Committee also published a 5 March 2019 letter it sent to BCR asking
a number of questions about the award of the £120m grant, which was announced a month after Metro’s accounting error was made public, as well as the BCRs reply.
The All-Party Parliamentary Group (APPG) on Fair Business Banking published correspondence between Kevin Hollinrake MP, the chief executive of the FCA, Andrew Bailey, and the chair of the FCA, Charles Randell. In a letter to the FCA dated 11 March 2019, Mr Hollinrake voices
his concern that in the period between UK Finance’s historic compensation scheme being designed and the proposed scheme opening in September 2019, documentation is being destroyed which may prejudice the outcome of the historic scheme.
Separately, in a letter to Mr Hollinrake from
Mr Randell, the FCA discusses lessons it learned from the review of the supervisory intervention on interest rate hedging products (IRHP). The FCA notes that it commissioned a review to be conducted by an independent external reviewer,
and requests the APPG’s input on what should be covered by the review.
The APPG on Fair Business Banking accepted its
place on UK Finance’s Dispute Resolution Service (DRS) implementation steering group, joining other stakeholders to design and implement a historic compensation scheme and a new dispute resolution mechanism for disputes between businesses
and financial institutions. The APPG says participation in the scheme presents ‘a vital opportunity to establish a scheme that provides compensation for historic cases and levels the playing field between businesses and their finance
providers for future generations’.
The Scottish National Party (SNP) MP for Lanark and Hamilton East, Angela Crawley, asked the government to make a statement on the treatment of SMEs by Clydesdale Bank. The urgent question follows criticism of Clydesdale Bank for neglecting small-business owners
by allegedly mis-selling loans. Ms Crawley raised the case of a constituent who was carrying out a hunger strike to protest at Clydesdale Bank’s treatment of his business. She said: ‘This tragic case brings to attention the
vulnerability of UK businesses to the abusive treatment by lenders and vulture funds and the inadequacy of the current regulation in preventing it’.
The European Commission released a
joint statement with the US CFTC on EMIR 2.2 and cross-border derivatives regulation, saying they are committed to ensuring the G20 reforms increase financial stability, resilience and transparency in the global transatlantic OTC derivatives
market. The statement said EMIR 2.2 would enhance the supervision of central counterparties (CCPs), with a view to safeguarding the financial stability of the EU and its Member States as part of the EU’s re-assessment of the effectiveness
of its implementation of the G20 reforms. The legislation is in response to the need to monitor changes in the concentration of risk in these infrastructures as well as the departure of the UK from the EU.
ESMA registered Beyond Ratings SAS as a CRA under
the CRA Regulation. Beyond Ratings SAS is based in Paris and intends to issue sovereign and public finance ratings. The registration takes effect from 18 March 2019. The CRA Regulation seeks to ensure that credit ratings issued in the
EU meet minimum standards of quality, transparency and independence by providing that only companies registered by ESMA as CRAs may lawfully issue credit ratings which can be used for regulatory purposes by credit institutions, investment
firms, insurance and reinsurance undertakings, institutions for occupational retirement provision, management companies, investment companies, alternative investment fund managers and CCPs.
ECON published a document setting out amendments to the proposed Regulation
on a framework for the recovery and resolution of CCPs and amending Regulations (EU) 1095/2010, EMIR, and the SFTR. These amendments were included in ECON’s report dated 31 January 2019 to the European Parliament.
The European Securities Committee will vote on
two draft Implementing Decisions under the Benchmarks Regulation (EU) 2016/1011 (BMR) on the equivalence of the legal and supervisory framework applicable to benchmarks in Australia and Singapore on 25 March 2019.
The private sector working group on euro risk-free rates announced that
they endorsed recommendations to market participants regarding the transition from the euro overnight index average (EONIA) to the euro short-term rate (the € STR) and the calculation of a € STR-based term structure. The working
group on euro risk-free rates, for which the European Central Bank (ECB) provides the secretariat, is an industry-led group established in 2018 by the ECB, the Financial Services and Markets Authority, ESMA and the European Commission.
The ECB announced simultaneously that it will start publishing
€ STR as of 2 October 2019, reflecting the trading activity of 1 October 2019.
The BoE published a discussion paper on ‘Conventions for referencing SONIA in new contracts’, prepared by its working group on Sterling risk-free reference rates. The paper, addressed
to market participants who are considering how to reference SONIA in new contracts, is intended to raise market awareness of the identified conventions for referencing SONIA and, in doing so, delivers the working group’s key milestone
of highlighting how to reference SONIA in new contracts. The working group’s overall objective is to enable a broad-based transition to SONIA by the end of 2021 across the sterling bond, loan and derivative markets, which will reduce
the financial stability risks arising from widespread reliance on sterling LIBOR.
The European Money Markets Institute (EMMI) announced a public consultation
on the change in the methodology of EONIA, as recommended by the working group on euro risk-free rates. The consultation aims to raise awareness of the implications of the suggested changes, and ensure a timely preparation for the upcoming
changes by EONIA’s users. Feedback is sought by 15 April 2019. The working group on euro risk-free rates was established to identify and recommend a risk-free rate that could serve as an alternative to EONIA.
The co-chairs of the Official Sector Steering Group (OSSG) of the Financial Stability Board (FSB) wrote to ISDA urging it to continue its work on derivatives’ contractual robustness to risks of interest rate benchmark discontinuation. The letter raises three issues that the OSSG
believes ISDA is moving to address (1) the addition of other trigger events (2) the timing for an ISDA consultation on US dollar LIBOR and certain other key interbank offered rates IBORs, and (3) the governance and transparency necessary
as ISDA makes its final decisions.
ISDA, the Futures Industry Association (FIA) and the Institute of International Finance (IIF) published a
paper on CCP Recovery and resolution: incentives analysis. It looks at the tools and processes around CCP recovery and resolution, and analyses the incentives and disincentives they would each create. The paper reviews how these tools
may be effected, based on various legal structures, especially regarding CCPs with several clearing silos in one legal entity. The paper sets out the positions of the organsations’ members on the buy-side and sell-side, and points
out that it does not reflect the views of many CCPs, and many of the CCPs are in disagreement with the views expressed.
ISDA, the Securities Industry and Financial Markets Association (SIFMA), the American Bankers Association (ABA), the Bank Policy Institute (BPI), and the FIA (together, the Associations) published comment on the proposed standardised approach for counterparty credit risk ( SA-CCR ). SA-CCR from the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) (together, the Agencies) replaces the current exposure method, addresses changes to the cleared transaction framework and the supplementary leverage
ratio, and includes a proposal for the OCC to amend its lending limit Rule 3 to use SA-CCR.
The BIS’s Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO) issued an
update on the progress made by jurisdictions on implementing international standards for payment systems, central securities depositories, securities settlement systems, CCPs and trade repositories. The Level 1 implementation monitoring
is based on self-assessments by individual jurisdictions of how they have adopted measures to implement the 24 Principles for financial market infrastructures (PFMI) and four of the five Responsibilities for authorities that are included
in the PFMI.
The Fixed Income, Currencies and Commodities Markets Standards Board (FMSB) issued its
2018 annual report setting out the progress made to enhance standards of behaviour in the wholesale markets. The report provides information on the FMSB’s 13 published standards and statements of good practice, which cover a range
of topics including risk management transactions, suspicious transaction & order reporting and monitoring of written electronic communications. It also gives an overview of FMSB’s behavioural cluster analysis study, which reviewed
the behavioural patterns in 390 cases of misconduct in financial markets stretching back to 1792.
Commission Delegated Regulation (EU) 2019/443 of 13 February 2019 amending Delegated Regulation (EU) 2017/588 as regards the possibility to adjust the average daily number of transactions for a share where the trading venue with
the highest turnover of that share is located outside the Union was published in
the Official Journal of the European Union. The Delegated Regulation permits the competent authority for a specific share to adjust the average daily number of transactions calculated or estimated by that competent authority for that share
in accordance with the procedure specified in Delegated Regulation (EU) 2017/588 where certain conditions are met.
The European Commission adopted a Delegated Regulation providing for an exemption from pre-
and post-trade transparency requirements under EU law to the People's Bank of China in its performance of monetary, foreign exchange and financial stability policies. EU central banks already benefit from certain exemptions under MiFIR
assisting them to carry out their statutory tasks in the pursuit of monetary, foreign exchange and financial stability policy more efficiently. The Commission noted that such exemptions are necessary given the special public role of central
The European Parliament adopted the provisional
text of its decision to raise no objections to Commission Delegated Regulation of 13 February 2019 amending Delegated Regulation (EU) 2017/588 as regards the possibility to adjust the average daily number of transactions for a share
where the trading venue with the highest turnover of that share is located outside the Union (C(2019)00904–2019/2579(DEA)). The Commission wrote to the European Parliament on 21 February 2019 requesting that Parliament declare that
it would raise no objections to the delegated regulation, and subsequently adopted the Delegated Regulation on 13 March 2019.
The European Securities Committee adopted a
favourable opinion regarding Implementing Decision of the European Commission on the equivalence of the legal and supervisory framework applicable to approved exchanges and recognised market operators in Singapore in accordance with MiFID
II. The implementing regulation is subject to the examination procedure set out in Articles 5, 6 and 7 of Regulation (EU) 182/2011 as regards the Commission’s exercise of implementing powers. Pursuant
to the examination procedure, where the committee delivers a positive opinion, the Commission shall adopt the draft implementing act.
ESMA updated its Interactive Single
Rulebook, the online tool allowing overview of, and access to, all level 2 and level 3 measures adopted in relation to a given level 1 text. The update includes all L2 and L3 measures related to the provisions of MIFID II and MiFIR. ESMA’s
Interactive Single Rulebook aims to facilitate the consistent application of the EU single rulebook in the securities markets area.
ESMA published the
results of the annual transparency calculations of the large in scale (LIS) and size specific to the instruments (SSTI) thresholds for bonds. The results are published on a per bond-type basis in excel format in the annual transparency
calculations for non-equity instruments register. The results on a per ISIN basis will be published through the FITRS in the XML files and through the Register web interface starting on 30 April 2019. ESMA says it will publish until 31
May 2019 two records with this type of calculation for each ISIN (the one applicable until that date, and the one applicable starting on 1 June 2019).
HM Treasury published the Regulatory Policy
Committee (RPC)’s opinion on the FCA’s extension of MiFID II product governance provisions to non-MiFID firms. The RPC validates the FCA’s proposal to extend MiFID II product governance rules to non-MiFID firms that distribute
and/or manufacture MiFID products. The FCA estimates that managers of alternative investment funds and undertakings for the collective investment of transferable securities (UCITS) will be affected by the changes, a total of 407 firms
(187 manufacturers and 220 distributors).
The European Presidency and Parliament reached a
provisional agreement on how EU and third country clearing houses should be supervised in the future. The deal takes into particular account the effects of Brexit on the European financial system. The new rules will be implemented through
a revision of EMIR and by revising the statute of the European system of central banks and the ECB. The aim of the reform is to strengthen the supervision of clearing houses or CCPs in order to take into account the growing size, complexity
and cross-border dimension of clearing in Europe. It will set up a new mechanism within ESMA to bring together expertise in the field of CCP supervision and ensure closer co-operation between supervisory authorities and central banks responsible
for EU currency.
The European Commission published a report on progress achieved on the capital markets union
(CMU), including with regard to sustainable finance, ahead of the upcoming meeting of the Council of the EU on 21-22 March 2018. The Commission called on EU leaders to keep up the political engagement necessary to lay down the foundation
of the CMU. Following the previous progress report in November 2018 and the statement of the Euro Summit in December 2018, which called for ambitious progress on the CMU by spring 2019, the latest communication reviews developments including
political compromises reached on several of the Commission's proposals, as well as a number of non-legislative actions.
The European Council announced that EU ambassadors confirmed an agreement reached between the Romanian presidency and the European Parliament on 6 March, aimed at providing cheaper and easier access to public markets for SMEs. The initiative concerns,
specifically, access to ‘SME growth markets’, a recently introduced category of trading venue dedicated to small issuers. The proposal contains amendments to MAR and the Prospectus Regulations, which make the obligations placed
on SME growth market issuers more proportionate while maintaining market integrity and investor protection.
The Council of the EU published an I Item note on the proposed Regulation amending
MAR and the Prospectus Regulation as regards the promotion of the use of SME growth markets. The note sets out the final compromise text of the Regulation, gives a brief summary of events leading up to the provisional agreement reached
by the Council of the EU and the European Parliament on 6 March 2019, sets out the final compromise text and invites COREPER to approve the final compromise text and confirm that the Presidency can indicate to the European Parliament that,
should the European Parliament adopt the agreed text at first reading, the Council would approve the European Parliament’s position and the Regulation would be adopted.
The Council of the European Union confirmed the final compromise texts for
a proposed Directive of the European Parliament and of the Council on the issue of covered bonds and covered bond public supervision and amending Directive 2009/65/EC (UCITS IV) and Directive 2014/59/EU (BRRD), and
a proposed Regulation of the European Parliament and of the Council on amending the CRR as regards exposures in the form of covered bonds. The Council asks Coreper to approve the final compromise texts and to confirm in writing to the
European Parliament that, should the European Parliament adopt its positions at first reading, the Council would approve the European Parliament’s first-reading positions and the acts would be adopted.
The European Commission adopted two Delegated Regulations on certain provisions in the Prospectus Regulation. One Delegated Regulation (C(2019) 2020 final) concerns the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated
market. The other Delegated Regulation (C(2019) 2022 final) relates
to regulatory technical standards concerning key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification
The European Parliament adopted new
EU rules for standard minimum coverage of bad loans. Measures to mitigate the risk of possible, future, non-performing loans (NPLs) accumulating due to the recessions brought about by the 2008 financial crisis were approved by the Parliament,
with 426 votes to 151 and 22 abstentions. The measures are intended to help strengthen the banking union, preserve financial stability and help banks’ profitability and encourage lending, which creates jobs and growth across Europe.
The new rules, which have already been informally agreed with the European Council, will only apply to NPLs taken out after the entry into force of the regulation.
The European Parliament published amendments by ECON to the Commission
proposal 2018/0048 (COD) for a Regulation of the European Parliament and of the Council on European Crowdfunding Service Providers for Business.
The European Parliament published an updated
version of its procedure file for the proposed Directive on credit servicers, credit purchasers and the recovery of collateral. The updated webpage indicates that the Parliament will consider the proposed Directive at its plenary session
on 16 April 2019. The proposed Directive, first published in March 2018, is intended to strengthen the ability of credit institutions to cope with loans that have become non-performing by establishing an EU-wide framework for servicers
of credit agreements issued by credit institutions.
The Association for Financial Markets in Europe (AFME) published its
securitisation data report for the final quarter of 2018. The figures reveal an increase in the amount of securitised product issued in Europe, and finalisation of new regulatory material. The key findings of the report include that in
Q4 2018, €88.4bn of securitised product was issued in Europe, a 62.1% increase from Q3 2018, while European asset backed commercial paper issuance was €97.6bn in Q4 2018, a 24.4% decrease quarter-on-quarter (from €129.1bn
in Q3 2018) but a 30.1% increase year on year (from €75.0bn in Q4 2017).
The FCA launched a package of measures to help
consumers who invest through investment platforms more easily find and switch to the right one for them. The package is laid out in the final report of the FCA’s Investment Platforms Market Study and includes proposed FCA rules and
actions industry is taking forward. To address the issues uncovered in the study, the FCA is consulting on rules to allow consumers to switch platforms and remain in the same fund without having to sell their investments, and is proposing
to ban or cap exit fees, in consultation paper 19/12, Consultation on Investment Platforms Market Study Remedies. The consultation runs until 14 June 2019.
The UK government published a letter from the economic secretary to the Treasury, John Glen MP, to the chair of the House of Commons European Scrutiny Committee, Sir William Cash MP, providing an update on the progress of the
European Commission’s proposals on the cross-border distribution of collective investment funds. The letter also responds to points raised in the Committee’s report of 11 July 2018 on the proposals. In its July 2018 report,
the Committee granted a scrutiny waiver for the Economic and Financial Affairs Council (ECOFIN) on 13 July 2018 but withheld full scrutiny clearance. According to Mr Glen, the original proposal would have prevented firms from circulating
draft documents referring to existing funds. The UK government successfully negotiated in the Council of the EU for these provisions to be removed, and they do not appear in the final text agreed at trilogues.
The BCBS published the results of its survey on proportionality practices in bank regulation and supervision.
The report summarises the responses received to the survey by Basel Committee member jurisdictions and those of the Basel Consultative Group. The survey was conducted by BCBS to take stock of the proportionality measures that have been
put in place across jurisdictions, to address the more complex framework that resulted from the BCBS’s post-crisis reforms. The majority of respondents to the survey currently apply proportionality measures in their jurisdictions.
In most cases, such measures are applied to banks that represent a relatively small share of total banking assets in the relevant jurisdiction, although there is a fair degree of heterogeneity.
The EBA updated the 2018 list of Other Systemically
Important Institutions (O-SIIs) in the EU. The list reflects the additional capital buffers that the relevant authorities have set for the identified O-SIIs. The EBA guidelines define the size, importance, complexity (or cross-border activities)
and interconnectedness as the criteria to identify O-SIIs. The guidelines provide flexibility for relevant authorities to apply their supervisory judgement when deciding to include other institutions which might not have been automatically
identified as O-SIIs. This approach allows for the assessment of all financial institutions across the EU in a comparable way.
The EBA published its annual report on the convergence
of supervisory practices in the EU. The report provides a summary of the EBA's observations on convergence of supervisory practices and highlights the EBA's activities in 2018 to promote this convergence in accordance with its mandates
in its Founding Regulation and CRD IV. The EBA's work in supervisory convergence aims at fostering comparable supervisory approaches across the single market. This is necessary to ensure a level playing field, effective supervision of
cross border groups, and to promote supervisory best practices.
The EBA published a revised EBA methodological guide risk indicators, its guide to serve EBA compilers of risk indicators and
internal users presenting risk indicators and Detailed Risk Analysis Tools (DRATs). The guide provides guidance on indicators’ concepts, data sources (ie precise ITS data points involved in their calculation), techniques upon which
they are computed, and clarity on methodological issues that may assist in their accurate interpretation and use. Among other things, the guide is designed to enable other competent authorities to compute indicators following the same
The FCA published its second thematic review of the debt management
sector (TR19/1), looking at commercial and not-for-profit firms that provide debt advice and administer debt management plans to help customers deal with their debts. The review found that most customers are getting better advice and outcomes
than was previously the case. However, while firms’ identification and treatment of vulnerable consumers is generally better than at the time of the first review, two thirds of the firms that the FCA looked at still needed to make
improvements in this area. The review also identified a general need for firms to provide better advice to couples, or others seeking help together.
The PRA published PS9/19 providing
feedback on the responses to consultation paper 15/18 ‘Solvency II: Group own fund availability’. CP15/18 proposed further details on certain aspects of how group own funds should be assessed as available. The PRA also published
supervisory statement 9/15 ‘Solvency II: Group supervision’ which sets out the PRA’s updated expectations for group supervision and incorporates the PRA’s expectations for assessments of the availability of own
funds to cover the group SCR as set out in CP15/18.
The European Insurance and Occupational Pensions Authority (EIOPA) asked insurance undertakings established in the European Economic Area (EEA) and subject to the Solvency II Directive (Solvency II) to provide it with information on the long-term
guarantees (LTGs) measures, the dynamic volatility adjustment and long-term liquid liabilities. National supervisory authorities will contact a representative sample of undertakings regarding the provision of information for each information
The European Parliament published a letter from the European
Commission to ECON regarding the review of Delegated Regulation (EU) 2015/35 under the Solvency II Directive. Valdis Dombrovskis, vice-president of the Commission, was responding to issues raised by ECON in its letter to the
Commission dated 6 December 2018 regarding the risk margin, the treatment of equities and the recalibration of premium risk under Solvency II. In the December 2018 letter to the Commission, the chair of ECON, Roberto Gualtieri, reiterated
ECON’s position on the importance of reconsidering the points raised in earlier correspondence with the Commission regarding its review of Delegated Regulation (EU) 2015/35, which contains implementing rules for Solvency II.
EIOPA updated its Q&As on the templates for submission
of information to the supervisory authorities and Commission Delegated Regulation (EU) 2015/35 (the Solvency II Delegated Act). The most recent question on the Solvency II Delegated Act relates to Article 135, Annex II and the
risk factor of 40% applying to miscellaneous financial loss.
Two level 2 measures setting out the technical requirements for the centralised payment services register to be maintained by the EBA pursuant to Directive (EU) 2015/2366 (PSD2), as well as the information to be notified by competent
authorities to the EBA, were published in
the Official Journal of the EU. PSD2 requires the EBA to maintain a central register containing a list of all payment institutions and electronic money institutions and their respective agents and branches, as well as details of service
providers excluded from the scope of PSD2, based on information provided by competent authorities.
The European Commission adopted a Commission Delegated Regulation
with regard to regulatory technical standards (RTS) that specify the criteria for determining the appointment of a central contact point under PSD2 and the functions that these contact points should have. The RTS aim to ensure that, where
host Member States choose to require the appointment of a central contact point, this request is proportionate to the aims pursued by PSD2. In order to facilitate the supervision of payment institutions (PIs) and electronic money institutions
(EMIs) providing cross-border payment services in another Member State through agents under the right of establishment, Article 29(4) of PSD2 confers an option on host Member States to require those PIs and EMIs to appoint a central contact
point in their territory.
The EBA launched its central
electronic register under PSD2. The register will provide information on several thousand payment and electronic money institutions and 150,000 agents within the EU. Its objective is to increase transparency and ensure a high level of
consumer protection within the European Single Market. The register provides information on (1) the identity of authorised payment and electronic money institutions, including payment initiation service providers and account information
service providers (2) the country of establishment of these providers and the services they provide, and (3) information on passporting, ie the services provided in host Member States.
The Payment Systems Regulator (PSR) issued a
policy statement setting out its decisions on changes to the General and Specific Directions originally issued in March 2015 (‘day one’ Directions) and also released a draft text of the proposed Directions for consultation.
In March 2018, the PSR consulted on a review of its six General Directions (GDs 1–6) and one Specific Direction (SD1) under the Financial Services (Banking Reform) Act 2013 (the ‘day one’ Directions), to ensure
that they continue to be fit for purpose in a changing payments landscape, reflecting market realities, changes to legislation and the PSR’s role, and potential future developments. CP19/3 sets out the PSR’s policy decisions
on changes to the ‘day one’ directions and also contains a draft text of the proposed Directions for consultation. Comments on the proposed Directions are due by 26 April 2019.
The Open Banking Implementation Entity (OBIE) announced the
publication of the Open Banking Standard, version 3.1.1. This is a minor update to version 3.1 which was released in November 2018. Based on feedback from participants within the ecosystem, and latest regulatory references, this version
provides clarifications to previous versions and introduces enhanced functionality, guidelines and features (arising from approved change requests) to enable further compliance with PSD2 and related regulatory technical standards. Implementation
is expected by 13 September 2019, to align with PSD2 timelines.
The Council of the EU published an opinion, given by the European Data Protection
Supervisor (EDPS) to the President of the Council of the EU, on the proposed Council Directive amending Directive 2006/112/EC (the VAT Directive) as regards introducing certain requirements for payment service providers (PSPs).
The proposed Directive is intended to combat e-commerce VAT fraud through amendments to the VAT Directive. The EDPS opinion makes recommendations aimed at minimising the impact of the proposal on the fundamental right to privacy and to
the protection of personal data.
ESMA published an analysis of the regulatory and supervisory technologies that are in the process of being developed in response
to various demand and supply drivers. The results of this analysis are presented in an article in the latest Trends, Risks and Vulnerabilities (TRV) Report. According to ESMA, regulatory pressure and budget limitations are pushing the
market towards an increased use of automated software to replace human decision-making activities. This is fueled by increasing computing capacity and improved data architecture. ESMA believes that with the correct implementation and safeguards,
RegTech and SupTech can assist a firm’s ability to meet its regulatory demands in a cost-efficient manner.
The Global Financial Markets Association (GFMA) and PwC published a
new report on current trends in technology and innovation and their impact on the investment bank of the future. The report examines the key trends which are expected to impact the industry over the next five years, providing a vision
for the future and identifying the implications for the industry and for future policymaking. The report builds on a previous version, to now include perspectives from the US and Asia.
The Foreign & Commonwealth Office and the Department for International Trade published a speech by Mark Field MP marking a visit to London by members of Thailand and Vietnam’s FinTech communities. Mr Field said FinTech lay at the heart of the UK’s ASEAN Economic
Reform Programme, which will focus on Southeast Asia and aims to promote inclusive economic growth. The three-year programme will provide technical assistance and the opportunity to share experiences in support of the continuing development
of FinTech regulation in Thailand, Vietnam and some other ASEAN countries.
Two European Parliament committees adopted a
report on the European Commission’s proposal for a regulation on the establishment of a framework to facilitate sustainable investment. ECON and the Committee on the Environment, Public Health and Food Safety (ENVI) made a number
of changes to the proposed regulation and called on the Parliament to adopt its position at first reading. The Commission adopted the proposal in May 2018 as part of a broader initiative on sustainable development. The proposal sets out
uniform criteria for determining whether an economic activity is environmentally sustainable.
The European Economic and Social Committee (EESC) issued an opinion on the
proposal for a Regulation of the European Parliament and of the Council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341 (IORP II). In the opinion, the EESC notes
that it welcomes the design of the action plan contained in the proposal. The opinion focuses on measures linked to redirecting capital flows towards sustainable investments, helping end investors to bring their sustainability preferences
into line with their informed investment decisions.
21 March 2019
Regulation of the European Parliament and of the Council establishing a framework for the screening of foreign direct investments into the Union ;will be published in the Official Journal of the EU on 21 March 2019.
The European Commission to begin a review of the Mortgage Credit Directive (MCD).Deadline for the European Commission to submit a comprehensive report assessing the wider challenges of private
over-indebtedness directly linked to credit activity.
Capital markets union
The European Commission will host a high level conference on ‘The Global Approach to Sustainable Finance’ which will be held in Brussels on March 21.
The deadline for feedback to joint PRA and FCA consultation paper on changes to mortgage reporting requirements (PRA CP30/18; FCA CP 18/41) is 22 March 2019.
Banks and mutuals
Bank recovery and resolution
Commission Delegated Regulation(EU)
2019/348 of 25 October 2018 supplementing the Bank Recovery and Resolution Directive 2014/59/EU (BRRD) with regard to regulatory technical standards specifying the criteria for assessing the impact of an institution's failure on financial markets, on
other institutions and on funding conditions will enter into force on 24 March 2019.
Regulation of capital markets
The European Parliament will consider the
proposed Regulation on European crowdfunding service providers during its plenary session to be held from 25 to 28 March 2019.
Consumer access to financial services
The deadline for written evidence to be submitted to the Scottish Affairs Select Committee’s inquiry on access to financial services in Scotland is 25 March 2019.
Risk management and controls
The European Parliament will consider the detailed roadmap and recommendations (the numerous findings and recommendations include, among other things (1) requiring the European
Commission to immediately work on a proposal for a European financial police force (2) setting up an EU anti-money laundering watchdog, and (3) providing whistleblowers and investigative journalists
with better protection) adopted by the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance at its plenary commencing 25 March 2019.
The European Parliaments Special Committee on Financial Crimes final report will be debated by MEPs during the European Parliament’s plenary session on 25 March 2019 and voted on the next day.
EU regulator updates
Payment services and systems
The Payments Systems Regulator (PSR) will launch its
2019–20 annual plan on 27 March 2019, at Old Billingsgate. The PSR will introduce its programme of work and priorities for the year ahead, and hold discussions around key payments issues.
The deadline for responses to FCA ‘CP19/7: Consultation on proposals to improve shareholder engagement’ is 27 March 2019.
As part of its live and local series the FCA will host its interactive workshop on
defined benefit pension transfers on 27 March 2019 in Doncaster.
The FCA is due to hold its March board meeting on
The deadline for responses to FCA ‘CP19/6: Changes to align the FCA Handbook with the EU Prospectus Regulation’
is 28 March 2019.
As part of its live and local series the FCA will host its interactive workshop on
defined benefit pension transfers on 28 March 2019 in Newcastle.
The deadline for temporary permission notifications to be made to the FCA under paragraphs 3(1)(a) and 15(1)(a) of schedule 3 of the Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations
2018 is 28 March 2019.
The deadline for temporary permission notifications to be made to the FCA ;for inbound passporting European Economic Area (EEA) investment funds is 28 March 2019.
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