FS weekly highlights—24 September 2020

FS weekly highlights—24 September 2020

In this issue

 

 

Coronavirus (COVID-19)
Brexit news
MiFID II
UK, EU and international regulators and bodies
Authorisation, approval and supervision
Prudential requirements
Financial stability, recovery and resolution
Risk management and controls
Financial crime
Complaints, compensation and claims management
Investigations, enforcement and discipline
Competition in financial services
Regulation of benchmarks and IBOR reform
Regulation of capital markets
Regulation of derivatives
Banks and mutuals
Regulation of insurance
Payment services and systems
Fintech and cryptoassets
Sustainable finance
Islamic finance
Dates for your diary

 

Coronavirus (COVID-19)

For further information on the effects of COVID-19 on financial services, see: Coronavirus (COVID-19)—key developments for financial services lawyers and  Coronavirus (COVID-19)—key financial services issues.

Coronavirus (COVID-19)–EBA to phase out guidelines on payment moratoria

The European Banking Authority (EBA) announced that it plans to phase out its guidelines on legislative and non-legislative payment moratoria, issued in the early phases of the coronavirus (COVID-19) pandemic, in accordance with its end of September 2020 deadline. The EBA said the guidelines have provided the necessary flexibility as well as certainty for the regulatory framework, and that the payment moratoria have been an effective tool to address short-term liquidity challenges caused by the pandemic.

Source: EBA phases out its guidelines on legislative and non-legislative loan repayments moratoria.

Coronavirus (COVID-19)—ESAs publish first joint risk assessment report on the financial sector

The European Supervisory Authorities (the ESAs)—the EBA, the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA)—issued their first joint risk assessment report on the financial sector since the outbreak of the coronavirus (COVID-19) pandemic. It highlights how the pandemic has led to further amplified profitability concerns across the board and heightened liquidity challenges in segments of the investment fund sector. It particularly points to economic and market uncertainty as a key challenge going forward.

Source: EU financial regulators assess risks to the financial sector after the outbreak of COVID-19 and call for enhanced co-operation.

ECB Decision on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic published in Official Journal

Decision (EU) 2020/1306 of the European Central Bank (ECB) of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the coronavirus (COVID-19) pandemic (ECB/2020/44) has been published in the Official Journal.

Source: Decision (EU) 2020/1306 of the European Central Bank of 16 September 2020 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic (ECB/2020/44).

FLA and ACCA urge government to use the Comprehensive Spending Review to kickstart the economy

The Finance & Leasing Association (FLA) and the Association of Chartered Certified Accountants (ACCA) will co-host a roundtable event on 17 September 2020 to discuss with the Minister for Small Business, Paul Scully MP, the practical measures that need to be included in the Comprehensive Spending Review to kickstart the economy. The FLA is urging the government to transfer the key features of the temporary Coronavirus Business Interruption Loan Scheme (CBILS)—such as the 80% government guarantee—to the existing asset finance variant of the Enterprise Finance Guarantee Scheme, in order to improve its effectiveness in channelling finance to businesses for capital investment.

Source: FLA publishes Comprehensive Spending Review submission ahead of roundtable with the Small Business Minister to discuss measures needed for the recovery.

Coronavirus (COVID-19)–CCFF to close for new purchases with effect from 23 March 2021

HM Treasury and the Bank of England (BoE) confirmed that the Covid Corporate Financing Facility (CCFF) will close for new purchases of commercial paper (CP) from eligible issuers with effect from 23 March 2021. In the Market Notice of 22 September 2020 published on the BoE’s website, HM Treasury and the BoE confirmed that the CCFF will make no purchases of CP after 22 March 2021 and will close to new applications from counterparties and issuers looking to become eligible on 31 December 2020.

Source: Update on the Covid Corporate Financing Facility (CCFF)—Market Notice 22 September 2020.

FSB RCG for the Middle East and North Africa discuss coronavirus (COVID 19) implications and G20 work

The Financial Stability Board (FSB) Regional Consultative Group (RCG) for the Middle East and North Africa held its 18th meeting (virtually) on 21 September 2020 to discuss recent global and regional macroeconomic and financial market developments. Members exchanged views on the latest financial stability implications of the coronavirus (COVID-19), and received an update on the FSB’s deliverables to the Saudi Arabian G20 presidency, with an emphasis on the initiatives where the RCGs have provided input.

Source: FSB Middle East and North Africa group discusses economic and financial market developments.

Lending schemes supporting 1.33 million businesses amid coronavirus (COVID-19)

HM Treasury announced that 1.33 million businesses in the UK are currently being supported through coronavirus (COVID-19) lending schemes backed by the government. These schemes include the Coronavirus Business Interruption Loan Scheme, which has supported 66,600 businesses with £15.5bn in financing packages, the Bounce Back Loan Scheme, which has supported more than 1.26 million small and micro businesses, and the Coronavirus Large Business Interruption Loan, which has backed 566 larger businesses using £3.8bn in funding.

Source: Over 1.3 million businesses supported through Covid-19 lending schemes.

Treasury Committee calls for return to weekly Coronavirus (COVID-19) loan schemes updates

The chair of the House of Commons Treasury Committee, Mel Stride, has written to the chancellor of the exchequer, Rishi Sunak, requesting that the government return to publishing weekly updates on some of the government’s coronavirus (COVID-19) business loan schemes.

Source: Treasury Committee urges government to publish coronavirus business loans updates more frequently.

 

Brexit news

Consumer Protection (Enforcement) (Amendment etc) (EU Exit) Regulations 2020

SI 2020/Draft: This draft enactment is laid in exercise of legislative powers under the European Communities Act 1972 (ECA 1972) and the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for IP completion day. This draft enactment is proposed to amend one piece of UK primary legislation and five pieces of UK secondary legislation in relation to consumer protection to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It comes into force partly on the day following when these Regulations are made, and fully on IP completion day.

The full draft legislation can be found here. The draft explanatory memorandum can be found here.

For further information, see: Brexit—Financial Services—Statutory Instruments (SI) tracker.

BoE and PRA consult on further changes to retained EU law

The BoE and the Prudential Regulation Authority (PRA) jointly published a consultation paper (CP13/20) on the UK withdrawal from the EU: Changes before the end of the transition period. The consultation paper includes an update on the BoE’s and PRA’s intended use of the temporary transitional powers, as well as a consultation with proposals to fix deficiencies arising from Brexit and make consequential changes before the end of the implementation period. The consultation closes on 17 November 2020.

Source: UK withdrawal from the EU: Changes before the end of the transition period.

For further information ,see: Brexit—impact on financial services.

BoE and PRA report on use of sub-delegated powers under the EU (Withdrawal) Act 2018

The BoE and the PRA published a report on their exercise of sub-delegated powers under the European Union (Withdrawal) Act 2018 for the year ending 29 February 2020. It was presented to Parliament pursuant to paragraph 32(2)(a) of Schedule 7 to the Act.

Source: Exercise by the Bank of England and Prudential Regulation Authority of sub-delegated powers under the European Union (Withdrawal) Act 2018.

FCA consults on the regulation of international firms in the UK

The Financial Conduct Authority (FCA) launched consultation paper CP20/20 on its approach to the authorisation and supervision of international firms operating in the UK. The FCA does not propose to change existing rules or provisions. The deadline for consultation responses is 27 November 2020.

Source: FCA launches consultation on the regulation of international firms.

Back to top of page

 

MiFID II

Coronavirus (COVID-19)–ECON publishes draft report on proposed changes to MiFID II

The European Parliament’s Economic and Monetary Affairs Committee (ECON) published a draft report on the proposal for a directive amending the Markets in Financial Instruments Directive 2014/54/EU (MiFID II) in relation to information requirements, product governance and position limits to help the recovery from the coronavirus (COVID-19) pandemic. ECON’s position at first reading, set out in the draft report, includes a number of amendments to the proposed directive, which was adopted by the European Commission in July 2020 as part of its capital markets recovery package.

Source: Draft Report on the proposal for a directive of the European Parliament and of the Council amending Directive 2014/65/EU as regards information requirements, product governance and position limits to help the recovery from the COVID-19 pandemic (COM(2020)0280—C9-0210(2020) —2020/0152(COD)) Committee on Economic and Monetary Affairs.

Back to top of page

 

UK, EU and international regulators and bodies

ESMA announces CCP, data and investment management committee appointments

ESMA appointed the chair and independent members of the central counterparty (CCP) supervisory committee, and reappointed the chairs of its data and investment management standing committees.

Sources: ESMA appoints chair and independent members of the CCP supervisory committee and  ESMA reappoints the chairs of its data and investment management standing committees.

EIOPA submits to European Parliament its opinion on the discharge procedure for 2018 financial year

EIOPA submitted to the European Parliament its opinion on the discharge decision for the financial year 2018. The document, adopted by the board of supervisors, provides an overview of the measures taken by EIOPA in the light of the observations and comments made by the European Parliament in respect of the implementation of the budget for the financial year 2018.

Source: EIOPA submitted its opinion to the European Parliament on the discharge for the financial year 2018.

BoE publishes findings of review into misuse of press conferences audio feed

The BoE published a report setting out the findings of a review commissioned in December 2019 into misuse of the BoE’s press conferences audio feed, and associated recommendations. The governor of the BoE, Andrew Bailey, is now commissioning an external review to determine whether any further steps are needed, and the BoE has called on the government to consider whether the market abuse regime should be extended to include spot foreign exchange.

Sources: Report on the misuse of the Bank of England’s press conferences audio feedThe Bank of England’s response to the report on the misuse of the Bank of England’s press conferences audio feed and  Update on the FCA enquiry into the Bank of England audio issue.

European Court of Auditors to publish report on learning the lessons of the 2008 financial crisis

The European Court of Auditors (ECA) announced that, on 24 September 2020, it will publish a review on how the EU took account of lessons learned from the 2008–2012 financial and sovereign debt crises. The ECA says ‘sound recovery’ from the coronavirus (COVID-19) pandemic will depend on learning lessons from the last crisis and being aware of the weaknesses observed.

Source: European Court of Auditors announcement 2009_18-02.

Christopher Woolard discusses the challenges facing the FCA

The FCA published a speech by its interim chief executive, Christopher Woolard, in which he discussed the impact of the coronavirus (COVID-19) pandemic, the response of the financial services sector, and how the FCA might adapt its regulatory models to a changing landscape.

Source: FCA speech: Evolution of a new model for financial regulation in the UK.

FCA publishes September 2020 regulation round-up

The FCA published its regulation round-up for September 2020, which includes discussion of its finalised guidance on mortgages and draft guidance on consumer credit products and overdrafts in light of the coronavirus (COVID-19) pandemic, as well as the launch of its call for input on the consumer investments market.

Source: Regulation round-up.

Financial Services Regulatory Initiatives Forum updates Regulatory Initiatives Grid

The Financial Services Regulatory Initiatives Forum issued the second edition of the Regulatory Initiatives Grid. The Forum is made up of the Bank of England (including the Prudential Regulation Authority), the Financial Conduct Authority, the Payment Systems Regulator and the Competition and Markets Authority, with HM Treasury attending as an observer member.

Source: Financial regulators publish updated Regulatory Initiatives Grid.

Back to top of page

 

Authorisation, approval and supervision

FCA announces first firms to begin move to RegData, the new data collection platform

The FCA issued a press release announcing that the first firms will be moved from Gabriel to RegData over the weekend of 17 and 18 October 2020. Those firms will then complete their regulatory reporting on RegData. Firms will continue to be moved to RegData from Gabriel in the coming months as the FCA moves users across in stages, based on their reporting requirements.

Sources: First firms to begin move to new data collection platform, RegData and  RegData (updated).

Back to top of page

 

Prudential requirements

PRA publishes Proprietary Trading Review

The PRA published a report, ‘Proprietary Trading Review’, which reviews the extent of proprietary trading engaged in by PRA-authorised deposit takers and investment firms incorporated in the UK.

Source: Proprietary Trading Review.

EBA opinion on the definition of 'credit institution'

The EBA published an opinion on elements of the definition of 'credit institution' under Article 4(1) the Capital Requirements Regulation (EU) 575/2013 (CRR) and on aspects of the scope of the authorisation of credit institutions. The opinion is intended to raise awareness of the opportunity to clarify certain issues relating to the definition of credit institution in the upcoming review of the CRR and Capital Requirements Directive 2013/36/EU (CRD IV).

Source: EBA flags to the EU Commission elements of the definition of credit institution and aspects of the scope of authorisation.

For further information, see: CRD IV—essentials.

ECB publishes finalised guidance on methodology for calculating CCR and CVA risk

The ECB published its finalised guide outlining the methodology it uses to assess how euro area banks calculate their exposure to counterparty credit risk (CCR) and advanced credit valuation adjustment (CVA) risk, following a public consultation which ended on 18 March 2020.

Source: ECB finalises guide to assessing how banks calculate counterparty credit risk.

For further information, see: Capital Requirements Regulation—counterparty credit risk, credit valuation adjustment and disclosures on quality of capital and  CRD IV Credit Valuation Adjustment.

ESCB reports on reducing the reporting burden under the CRR for the European banking industry

The ECB published the European System of Central Banks (ESCB)’s input into a EBA feasibility report on reducing the reporting burden for the European banking industry. Under Article 430c of the CRR, the European Parliament and the Council of the European Union mandated the EBA to carry out a feasibility study and requested that input from the ESCB be taken into account.

Sources: ECB proposes to reduce reporting burden for banks and increase data quality and  The ESCB input into the EBA feasibility report under article 430c of the Capital Requirements Regulation (CRR 2).

ECB working paper discusses banking euro area stress test model

The ECB published a staff working paper discussing the banking euro area stress test (BEAST)—a large scale semi-structural model developed to assess the resilience of the euro area banking system from a macroprudential perspective.

Source: Banking euro area stress test model.

ECJ annuls SRB decision on 2017 ex ante contributions to SRF and declares Delegated Regulation unlawful in part

The General Court of the European Union (ECJ) has annulled the decision of the Single Resolution Board (SRB) on the calculation of the 2017 ex ante contributions to the Single Resolution Fund (SRF) and declared that Delegated Regulation (EU) 2015/63 is unlawful in part. The SRB has said it will ‘carefully consider’ the ECJ’s judgments in cases T-411/17 Landesbank Baden-Württemberg v Conseil de résolution unique (CRU), T-414/17 Hypo Vorarlberg Bank AG v CRU and T-420/17 Portigon AG v CRU.

Source: The General Court annuls the decision of the Single Resolution Board on the calculation of the 2017 ex-ante contributions to the Single Resolution Fund and declares that Delegated Regulation 2015/63 is unlawful in part.

Back to top of page

 

Financial stability 

BIS publishes remarks by governor of the Bank of Spain on the impact of the coronavirus (COVID-19) crisis on financial stability

The Bank for International Settlements published the closing address by Mr Pablo Hernández de Cos, governor of the Bank of Spain and chair of the Basel Committee on Banking Supervision, to the seminar ‘The financial system in the COVID-19 crisis. Challenges and commitments’, in a summer course organised by the Spanish Financial Press Association Universidad Internacional Menéndez Pelayo, Madrid, 1 September 2020.

Source: Pablo Hernández de Cos: The impact of the COVID-19 crisis on financial stability.

Back to top of page

 

Risk management and controls

FCA director discusses firm culture, purpose, diversity and inclusion

The FCA published a speech by its director of wholesale supervision—supervision investment, wholesale & specialists division, Marc Teasdale, on the drivers of culture and the role of purpose and governance. Teasdale argued that a strong and genuinely held purpose is critical to good consumer outcomes; good governance supports that purpose; and an embedded focus on diversity and inclusion—both at staff and customer level—is essential for both.

Source: A regulatory perspective: the drivers of culture and the role of purpose and governance.

Back to top of page

 

Financial crime

Treasury Committee questions FinCEN papers

The Chair of the Treasury Committee, Rt Hon Mel Stride MP, wrote to government Ministers, HMRC and the FCA to answer a series of questions regarding the recently released FinCEN papers. Stride said: 'Some of the information coming from the release of the FinCEN papers is deeply troubling. The Treasury Committee wants to know whether Ministers, HMRC and the FCA are on top of this. With various roles to play in combatting economic crime, it’s vital that the appropriate parts of the system are ready to act, if required.'

Source: Treasury Committee seeks answers from Ministers, HMRC and FCA on FinCEN papers.

Back to top of page

 

Complaints, compensation and claims management

FSCS announces the closing of the book on the 2008 banking crisis

The Financial Services Compensation Scheme (FSCS) issued a press release noting that, 12 years on, it has just received the final recovery payment from the 2008 banking crisis through the administration of Heritable Bank. The FSCS has therefore taken the opportunity to explain the vital role the FSCS’s recoveries process plays.

Source: Full recovery: FSCS closes the book on the 2008 banking crisis.

ECJ Advocate General opines on DGSD concept of ‘deposit due and payable’

An opinion of Advocate General Campos Sánchez-Bordona of the European Court of Justice, delivered on 17 September 2020 in respect of BT v Balgarska Narodna Banka (Case C-501/18), has been published in the Official Journal of the EU. The opinion considers the concept of ‘deposit due and payable’ referred to in Article 1(3)(i) of the Deposit Guarantee Schemes Directive 94/19/EC (DGSD) and the validity of a recommendation of the EBA to the Bulgarian authorities on action necessary to comply with the DGSD.

Source: Opinion of Advocate General Campos Sánchez-Bordona delivered on 17 September 2020.

Back to top of page

 

Investigations, enforcement and discipline

FCA bans financial adviser convicted of £2.3m investment fraud

The FCA issued a prohibition order in respect of Simon Oakley, a financial adviser who was convicted in 2017 of making misleading, false or deceptive statements in relation to two fraudulent investment schemes that resulted in more than £2.3m of losses. In a final notice, the FCA said that his conviction demonstrates a ‘clear and serious lack of integrity’ such that he is not fit and proper to perform regulated activities.

Source: Final Notice: Simon Charles Oakley.

Back to top of page

 

Competition in financial services

List of Competition Act 1998 cases updated to include new FCA investigation

The list available on the UK government website of public cases currently being undertaken in the regulated sectors by UK Competition Network (UKCN) members under the Competition Act 1998 has been updated to include an investigation by the FCA into suspected anti-competitive arrangements under Chapter I of the Act, which was opened in September 2020. No other details have been provided.

Source: Competition Act 1998 cases in the sectors regulated by UKCN members (updated).

Back to top of page

 

Regulation of benchmarks and IBOR reform

ECB issues opinion on proposed amendments to the Benchmarks Regulation

The Council of the EU published an opinion of the ECB, dated 18 September 2020, on the proposed regulation amending the Benchmarks Regulation (EU) 2016/1011 (BMR) in relation to the exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation (CON/2020/20). The ECB welcomes the main objective of the proposal but sets out some proposed drafting amendments in an accompanying technical working document.

Source: Opinion of the ECB on the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2016/1011 as regards the exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation.

For further information, see: Benchmarks Regulation—essentials.

ESMA chair examines state of play of global interest rates reform

The ESMA published a speech by its chair, Steven Maijoor, on recent and expected developments in global interest rates reform and the crucial role that the co-operation between public authorities and the financial industry is playing in this process.

Source: Steven Maijoor delivers keynote speech at City Week 2020.

Bank of England publishes speech on the transition from LIBOR to SONIA

The BoE published details of a speech given by its executive director of markets, Andrew Hauser, in which he notes that LIBOR is not safe. Structural change in the financial markets mean that the trading that used to underpin LIBOR—term unsecured lending between banks—has virtually disappeared. In its place lies little more than informed guesswork. And that is not a viable long-term basis for the debt and financial instruments on which all businesses rely. Sooner or later, a benchmark based on such shaky foundations would, according to Hauser, collapse.

Source: From LIBOR to SONIA: a bridge to the future—remarks by Andrew Hauser.

For further information, see: LIBOR transition.

New FCA webpage on LIBOR transition

The FCA published a new webpage on how firms can prepare for LIBOR transition. The webpage covers general LIBOR transition issues, the need to consider all exposures and risks raised by LIBOR transition, including how it may affect pricing, valuation, risk management and booking, systems and software, as well as the need to treat customer fairly and timely customer communications. It also covers LIBOR transition issues which are specific to asset management, benchmark administration, corporate finance (and similar) advice, custody services provision, principal trading and wholesale brokerage.

Source: LIBOR transition: getting my firm ready.

BoE article urges firms to move away from LIBOR before the end of 2021

The BoE published a ‘Bank Overground’ piece on why firms need to accelerate the transition from Libor benchmarks. The authors note that market volatility in response to the coronavirus (COVID-19) pandemic further highlighted Libor’s weakness as an interest rate benchmark and made it clear that firms must move away from Libor before the end of 2021.

Source: Why do firms need to accelerate the transition from Libor benchmarks?.

ISDA publishes letter and article on fallbacks timetable for derivatives referencing key IBORs

The International Swaps and Derivatives Association (ISDA) published an article by its CEO Scott O'Malia on the fallbacks timetable for derivatives referencing key interbank offered rates (IBORs). It also published a letter ISDA sent to the Bank of England and the Federal Reserve Bank of New York on the forthcoming launch of the IBOR Fallbacks Protocol and the IBOR Fallbacks Supplement to implement the new fallbacks for legacy and new derivative contracts, respectively.

Sources: Updating the fallbacks timetable and Timing of the ISDA IBOR Fallbacks Protocol.

Back to top of page

 

Regulation of capital markets

European Commission adopts delegated regulation on securitisation repository fees

The European Commission adopted a delegated regulation supplementing Regulation (EU) 2017/2402 (the Securitisation Regulation) with regard to fees charged by the ESMA to securitisation repositories. The regulation specifies the type of fees to be charged by ESMA to securitisation repositories, the matters for which fees are due and the manner in which they are to be paid.

Source: COMMISSION DELEGATED REGULATION (EU) …/... of 18.9.2020 supplementing Regulation (EU) No 2017/2402 of the European Parliament and of the Council with regard to fees charged by the European Securities and Markets Authority to securitisation repositories.

For further information, see: Securitisation Regulation—essentials.

ESMA announces receipt of first securitisation repository registration application

The ESMA announced that it has received its first application for registration as a securitisation repository under the Securitisation Regulation.

Source: ESMA receives securitisation repository registration application.

FCA announces opening of registration applications for UK securitisation repositories

The FCA has published a new webpage for securitisation repositories under the Securitisation Regulation, announcing the ability to apply for registration in the UK following the onshoring of the Securitisation Regulation. An securitisation repositories is a legal entity which centrally collects and maintains the records of securitisations, as set out by the Securitisation Regulation.

Source: FCA announces opening of registration applications for UK securitisation repositories.

ECON adopts report on the future of capital markets union

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) adopted a report on further development of the capital markets union (CMU), improving access to capital market finance, in particular by SMEs, and further enabling retail investor participation. The report has been tabled for consideration by the Parliament in plenary on 5 October 2020.

Source: Report on further development of the capital markets union (CMU): improving access to capital market finance, in particular by SMEs, and further enabling retail investor participation.

For further information, see: The Capital Markets Union.

Coronavirus (COVID-19)—ESMA renews short selling notification requirement

The ESMA renewed its decision to temporarily require the holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority (NCA) if the position exceeds 0.1% of the issued share capital. This temporary notification measure applies from 18 September 2020 for a period of three months. It applies to any natural or legal person, irrespective of their country of residence. However, it does not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making or stabilisation activities.

Sources: ESMA renews its decision requiring net short position holders to report positions of 0.1% and above and  Decision of 16 September 2020 renewing the temporary requirement to natural or legal persons who have net short positions to lower the notification thresholds of net short positions in relation to the issued share capital of companies whose shares are admitted to trading on a regulated market to notify the competent authorities above a certain threshold in accordance with point (a) of Article 28(1) of Regulation (EU) No 236/2012 of the European Parliament and of the Council.

For further information, see: The EU Short Selling regulation.

FCA sets out approach to cannabis-related companies seeking listing in the UK

The FCA published a webpage setting out its approach to the assessment of cannabis-related companies interested in listing in the UK. This is pending a guidance consultation which the FCA says will follow in due course.

Source: Listings of cannabis-related businesses.

IOSCO issues measures to reduce conflict of interests in debt capital raising

The board of the International Organization of Securities Commissions (IOSCO) published final guidance to help its members address potential conflicts of interest and associated conduct risks market intermediaries may face during the debt capital raising process. The guidance also seeks to address some specific concerns observed by certain regulators during the coronavirus (COVID-19) crisis that may affect the integrity of the capital raising process.

Source: IOSCO issues measures to reduce conflict of interests in debt capital raising.

AFME urges policy makers to use independent data in review of equities markets structure

The Association for Financial Markets in Europe (AFME) is calling on policy makers to use independent data to support their review of equities markets structure with a view to promoting ‘competitive, diverse, well-regulated and innovative European capital markets’ which are more efficient to attract further investment. AFME has launched a data-driven initiative to highlight the threat of inaccurate information and market data, and promote a fact-based approach to policymaking.

Source: AFME calls for data-led approach on market structure policymaking.

Back to top of page

 

Regulation of derivatives

Delegated regulations relating to third-country CCPs under EMIR published in Official Journal

Three Commission delegated regulations relating to third-country central counterparties (CCPs) under the European Markets Infrastructure Regulation (Regulation (EU) No 648/2012) (EMIR) have been published in the Official Journal.

For further information, see: EMIR—essentials.

European Commission adopts time-limited EMIR equivalence decision giving market participants the time needed to reduce exposure to UK CCPs

The European Commission adopted a time-limited decision that the regulatory framework applicable to central counterparties (CCPs) in the UK is equivalent to the EMIR, to give financial market participants 18 months to reduce their exposure to UK central counterparties (CCPs). The decision, which has been published in the Official Journal of the EU, applies from 1 January 2021 until 30 June 2022 and is intended to ensure legal certainty for clearing members and trading venues until a full review of equivalence has been carried out.

Sources: Financial stability: Commission adopts time-limited decision giving market participants the time needed to reduce exposure to UK central counterparties (CCPs)Commission Implementing Decision (EU) 2020/1308 of 21 September 2020 determining, for a limited period of time, that the regulatory framework applicable to central counterparties in the United Kingdom of Great Britain and Northern Ireland is equivalent, in accordance with Regulation (EU) No 648/2012 of the European Parliament and of the Council and Bank of England statement on the European Commission equivalence decision on the future UK legal and supervisory framework for central counterparties (CCPs).

Non-objection to delegated acts supplementing EMIR on third country aspects

The European Parliament published decisions to raise no objections to three Commission delegated regulations of 14 July 2020 supplementing EMIR (Regulation (EU) No 648/2012) with regard to third country central counterparties (CCPs), in particular on assessment of systemic importance, comparable compliance and fees.

Sources: Non-objection to a delegated act: minimum elements for assessing third country CCP's comparable compliance and modalitiesNon-objection to a delegated act: criteria for determining third-country CCP's systemic importance and  Non-objection to a delegated act: fees charged by ESMA to third country CCPs.

Council of the EU publishes note on political agreement on proposed CCP recovery and resolution regulation

The Council of the EU published a note from its general secretariat to the Permanent Representatives Committee regarding a political agreement on a proposal for a regulation on a framework for the recovery and resolution of central counterparties (CCPs).

Source: Proposal for a Regulation of the European Parliament and of the Council on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU and (EU) 2017/1132—Political agreement.

ISDA sets out step-by-step guide to initial margin preparation

ISDA published a guide to the steps required in preparation for initial margin, taking account of the new Basel Committee on Banking Supervision/IOSCO implementation schedule. Each September until 2022 increasing numbers of entities will be required to meet initial margin regulations as the threshold level for compliance reduces. ISDA notes that preparation for meeting these requirements will take significant time, and will involve intensive work to ensure systems, processes and documentation are in place.

Source: Getting ready for initial margin: The steps to take.

Back to top of page

 

Banks and mutuals

Banking Competition Remedies announces awards for Capability and Innovation Fund Pool E

Banking Competition Remedies Ltd (BCR) announced the awards of the Capability and Innovation Fund (CIF) Pool E (Application Period Two), which was open to organisations that meet the same eligibility criteria as previous Pool A, B and C bodies. Grants with a combined value of £80m were awarded.

Source: Banking Competition Remedies Ltd (BCR) announces the awards of Capability and Innovation Fund Pool E (Application Period Two).

Coronavirus (COVID-19)—ECB says banks can exclude certain central bank exposures from leverage ratio

The ECB announced that euro area banks under its direct supervision may exclude certain central bank exposures from the leverage ratio. The move is aimed at easing the implementation of monetary policy, and came after the Governing Council of the ECB, as monetary authority of the euro area, confirmed that there are exceptional circumstances due to the coronavirus (COVID-19) pandemic.

Source: ECB allows temporary relief in banks’ leverage ratio after declaring exceptional circumstances due to pandemic.

ECB chair responds to questions on supervision of Wirecard Bank AG

The chair of the supervisory board of the ECB, Andrea Enria, responded to a letter dated 10 August 2020 from Markus Herbrand, a member of the Bundestag, regarding the supervision of Wirecard Bank AG.

Source: Letter from Andrea Enria, chair of the supervisory board, to Mr Herbrand, member of the German Bundestag, on banking supervision.

Back to top of page

 

Regulation of insurance

FCA consults on proposals to reform home and motor insurance pricing

The FCA has published the final report of its market study into the pricing of home and motor insurance, and is proposing ‘significant reform’ of these markets through measures which seek to enhance competition, ensure consumers will receive fair value, and increase trust in these markets. Feedback to consultation paper CP20/19, published alongside the report, is sought by 25 January 2021. Alongside the consultation, the FCA has published policy statement PS20/9, General Insurance value measures reporting and publication, with rules on the publication of value measures data on claims frequencies and related data.

Source: FCA sets out proposals to tackle concerns about general insurance pricing.

Coronavirus (COVID-19)—FCA issues guidance on settling BI insurance claims following judgment

The FCA published its Dear CEO letter, dated 18 September 2020, in relation to the High Court's decision in the FCA test case, relating to whether certain business interruption (BI) insurance policies respond to coronavirus (COVID-19) related losses.

Sources: FCA—Dear CEO letter and Business interruption insurance.

For further information, see: Coronavirus (COVID-19)—business interruption insurance.

Coronavirus (COVID-19)—role of insurance in economic recovery examined

The executive director of the insurance supervision division at the BoE, Anna Sweeney, delivered a speech on 22 September 2020 at the Bank of America 25th European Financials CEO Conference, focusing on the role of the insurance sector and regulatory framework in supporting the economy in a changed landscape due to coronavirus (COVID-19).

Sources: Ask not what the economy can do for insurers – ask what insurers can do for the economy - speech by Anna Sweeney and  Speech given by Anna Sweeney, Executive Director, Insurance Supervision Division.

Insurance Europe responds to ​European Commission's AI consultation

Insurance Europe (IE) published its response to the European Commission's consultation on ethical and legal requirements for artificial intelligence (AI). IE welcomes the initiative and believes a European approach is necessary so a digital single market is not fragmented. It will also ensure fair competition and protect businesses and individuals.

Sources: Insurers call on EC to adopt appropriate framework to promote uptake of AI and  Response to EC roadmap consultation on ethical and legal requirements for trustworthy AI.

Back to top of page

 

Payment services and systems

Community Access to Cash Pilot reveals schemes to help improve cash access and acceptance

The Community Access to Cash Pilot (CACP) initiative announced the plans for the nine Cash Pilot locations across the UK, where trials are being tested to help address challenges of improving cash access and acceptance. The pilots operate in a wider context of a UK-wide cash infrastructure under threat, and aim to trial solutions which could have wider applicability across the UK.

Source: Innovation in Community Access to Cash Pilots unveiled.

EPC calls for change requests and updates SEPA payment scheme rulebooks timeline

The European Payments Council (EPC) decided to migrate all its Single European Payments Area (SEPA) payment schemes to the 2019 version of the ISO 20022 message standard by 19 November 2023, ie the entry-into-force date of the 2023 EPC SEPA payment scheme rulebooks. The EPC says this implementation, combined with possibly new/amended business and/or functional rules in a single rulebook release, may present a challenge for some SEPA payment scheme participants. Therefore, all 2023 EPC SEPA payment scheme rulebooks and related implementation guidelines will be published in May 2022 instead of November 2022.

Source: Some 2020 change requests entering into force in November 2023.

For further information, see: SEPA Regulation and cross-border payments—essentials.

Back to top of page

 

Fintech and cryptoassets

ECON proposes recommendations to the European Commission on digital finance

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) adopted a report with recommendations to the European Commission on emerging risks in crypto-assets and regulatory and supervisory challenges in the area of financial services, institutions and markets. The report has been tabled for consideration by the Parliament in plenary on 5 October 2020.

Source: Report with recommendations to the Commission on Digital Finance: emerging risks in crypto-assets—regulatory and supervisory challenges in the area of financial services, institutions and markets.

Law Commission to ensure law can accommodate smart contracts and digital assets

The Law Commission announced that it has begun work on two new projects in order to ensure that English law can accommodate the two emerging technologies of smart contracts and digital assets. The projects will attempt to fill any gaps in law, as well as ensure that the law ‘is capable of accommodating electronic documents, cryptoassets and other digital assets’. With regards to smart contracts, the Law Commission is ‘currently seeking initial views from business and from the technology sector, with a view to publishing a call for evidence in late 2020’. Similarly, with digital assets, the Law Commission intends to publish a consultation paper on the subject during the first half of 2021.

Source: Adapting English law for the digital revolution.

Back to top of page

 

Sustainable finance

ESAs launch survey on environmental and/or social financial product templates

The European Supervisory Authorities—namely the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority (the ESAs)—have published a survey seeking public feedback on presentational aspects of product templates, pursuant to Articles 8(3), 9(5) and 11(4) of the Regulation on sustainability‐related disclosures in the financial services (SFDR). The survey is open for comments until 16 October 2020.

Sources: ESAs launch survey on environmental and/or social financial product templates and  EIOPA: ESAs launch survey on environmental and/or social financial product templates.

European Commission launches €1b investment to boost green and digital change

SI 2020/Draft: This draft enactment is laid in exercise of legislative powers under the European Communities Act 1972 (ECA 1972) and the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for IP completion day. This draft enactment is propo

Source: European Green Deal Call: €1 billion investment to boost the green and digital transition.

ECB to accept sustainability-linked bonds as collateral from 1 January 2021

The ECB decided that bonds with coupon structures linked to certain sustainability performance targets will become eligible as collateral for Eurosystem credit operations and also for Eurosystem outright purchases for monetary policy purposes, provided they comply with all other eligibility criteria. The decision applies from 1 January 2021.

Source: ECB to accept sustainability-linked bonds as collateral.

Back to top of page

 

Islamic finance

BoE KnowledgeBank piece notes creation of Islamic-compliant BoE deposit account

The BoE published a KnowledgeBank piece explaining the fundamental concepts of Islamic finance and noting that, as Islamic banks are unable to use BoE deposit accounts because interest is paid on them, the BoE is creating a new type of account for such banks that doesn’t pay interest. This means Islamic banks in the UK will be able to use some of the same support the BoE gives to other banks.

Source: What is Islamic finance?.

IFSB and INCEIF to hold virtual executive programme on Islamic finance and post-crisis reform

The Islamic Financial Services Board (IFSB) and the International Centre for Education in Islamic Finance (INCEIF) will hold the 14th executive programme on Islamic finance, virtually, on 24 September 2020. The programme will explore measures to create resilience for the Islamic finance industry during and after the coronavirus (COVID-19) crisis, with an emphasis on regulatory perspectives.

Source: The 14th IFSB-INCEIF executive programme to discuss measures to create resilience for the Islamic finance industry during and post-crisis: Regulator’s perspectives.

Back to top of page

 

Dates for your diary

 

DateSubjectEvent

 

25 September 2020

 

 

 

Prudential requirements

 

 

 

Deadline for responses to the EBA’s discussion paper exploring ways on how to enhance the Bank Recovery and Resolution Directive (BRRD) framework on early intervention measures.

 

 

25 September 2020

 

 

Prudential requirements



Investment funds and asset management

 

 

Deadline for responses to the FCA’s discussion paper (DP20/2) on a new prudential regime for UK investment firms.

 

 

25 September 2020

 

 

Banks and mutuals


Sustainable finance

 

 

Deadline for responses to the ECB’s guide for consultation that explains how it expects banks to safely and prudently manage climate-related and environmental risks, and how firms should disclose such risks transparently under the current prudential framework.

 

 

25 September 2020

 

 

Prudential requirements


Brexit


SM&CR

 

 

Deadline for responses to the FCA’s consultation paper ‘CP20/14: Updating the Dual-regulated firms Remuneration Code to reflect CRD V’.

 

 

27 September 2020

 

 

Competition in financial services

 



Consumer credit, mortgage and home finance

 

 

The statutory deadline for funeral investigation hearings.

 

 

28 September 2020

 

 

Regulation of benchmarks and IBOR reform

 

 

Deadline for responses to the IASB’s proposals to update the IFRS Taxonomy to reflect the disclosure requirements included in the amendments.

 

 

30 September 2020

 

 

Coronavirus (COVID-19)


Consumer credit, mortgage and home finance

 

 

Deadline for responses to the FCA’s consultation paper ‘CP20/16: Debt advice levy rates for 2020/21 – additional funding’.

 

 

30 September 2020

 

 

Consumer credit, mortgage and home finance

 

Deadline for responses to the FCA’s ‘GC20/3: Guidance consultation and feedback statement for firms on the fair treatment of vulnerable customers’.

 

 

30 September 2020.

 

 

Coronavirus (COVID-19)


Banks and mutuals

 

 

Deadline for the application of the EBA’s guidelines on the criteria to be fulfilled by legislative and non-legislative moratoria.

 

 

30 September 2020

 

 

Brexit


Prudential requirements


Banks and mutuals

 

 

Deadline for responses to the PRA’s consultation on the implementation of CRD V.

 

 

30 September 2020

 

 

Brexit

 

 

The FCA will re-open the notification window on 30 September 2020 to allow firms and fund managers that have not yet notified the FCA that they wish to use the temporary permissions regime.

 

 

30 September 2020

 

 

Financial stability

 

 

Deadline for responses to FSB’s consultation on report on evaluation of too-big-to-fail (TBTF) reforms for systemically important banks.

 

 

30 September 2020

 

 

Consumer protection

 

 

Deadline for responses to the FCA’s ‘GC20/3: Guidance consultation and feedback statement for firms on the fair treatment of vulnerable customers’.

 

 

30 September 2020

 

 

 

Conduct requirements

 

 

 

The FCA’s modification to COBS 13 Annex 2 1.9R is valid until 30 September 2020.

 

 

30 September 2020

 

 

 

Investment funds and asset management

 

 

 

Deadline for responses to survey for the joint Bank of England and FCA review of liquidity mismatch in open-ended funds.

 

 

 

30 September 2020

 

 

Investment funds and asset management

 

 

ESMA’s guidelines on liquidity stress testing in UCITS and AIFs will become applicable on this date.

 

 

 

30 September 2020

 

 

Regulation of insurance


Brexit

 

 

Deadline for responses to the PRA’s consultation on setting out its proposed approach to the publication of Solvency II technical information (TI) after the end of the Brexit transition period.

 

 

30 September 2020

 

 

Payment services and systems

 

 

Deadline for responses to the Lending Standards Board’s consultation on its review of the Contingent Reimbursement Model Code.

 

 

30 September 2020

 

 

Fintech and cryptoassets

 

 

Deadline for responses to the EBA’s two RegTech industry surveys seeking feedback from financial institutions and ICT third-party providers.

 

 

1 October 2020

 

 

Regulation of capital markets

 

 

Deadline for responses to FCA consultation paper ‘CP20/8: High-risk investments: Marketing speculative illiquid securities (including speculative mini-bonds) to retail investors’.

 

 

1 October 2020

 

 

 

Regulation of capital markets

 

 

 

Deadline for responses to FCA consultation paper ‘CP20/5: Open-ended Investment Companies—Proposals for a more proportionate Listing regime’.

 

 

 

1 October 2020

 

 

 

Risk management and controls

 

 

 

Deadline for feedback to IOSCO’s proposed updates to its principles for regulated entities that outsource tasks to service providers is 1 October 2020.

 

 

 

1 October 2020

 

 

 

UK, EU and international regulators and bodies

 

 

 

Nikhil Rathi becomes permanent chief executive of the FCA.

 

 

 

1 October 2020

 

 

 

Risk management and controls

 

 

 

Deadline for responses to the FCA’s and BoE’s co-ordinated consultation papers (BoE/FCA) on requirements to strengthen operational resilience in the financial services sector.

 

 

 

1 October 2020

 

 

 

Prudential requirements

 

 

 

Responses to the qualitative section of the EBA’s questionnaire on its study of cost of compliance with supervisory reporting are expected by this date.

 

 

 

1 October 2020

 

 

 

Sustainable finance

 

 

 

Deadline for responses to FCA consultation paper ‘CP20/3: Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations’.

 

 

 

1 October 2020

 

 

 

Consumer credit, mortgage and home finance

 

 

 

Deadline for responses to the FCA’s call for input ‘Open Finance.

 

 

 

1 October 2020

 

 

Banks and mutuals

 

 

Deadline for responses to the ECB’s consultation on a guide that aims to clarify its supervisory approach to consolidation projects involving euro area banks.

 

 

1 October 2020

 

 

Banks and mutuals

 

 

Deadline for responses to the EBA’s questionnaire looking for ways to optimise supervisory reporting requirements and reduce reporting costs for institutions, especially smaller ones.

 

 

1 October 2020

 

 

Markets and trading

 

 

Deadline for responses to FCA call for input on a review on data in wholesale markets.

 

 

1 October 2020

 

 

Consumer protection

 

 

Deadline for responses to FCA consultation paper ‘CP20/1: Introducing a Single Easy Access Rate for cash savings’.

 

 

1 October 2020

 

 

Conduct requirements

 

 

Part 1 of the annex to the Mortgages (Regulatory Reporting) Instrument 2019 (FCA 2019/88) comes into force on this date.

 

 

1 October 2020

 

 

 

Conduct requirements

 

 

Part 2 of Annex A and Part 2 of Annex C of Handbook Administration (No 53) Instrument 2020 comes into force on this date.

 

 

1 October 2020

 

 

 

Conduct requirements

 

 

 

The FCA’s Conduct of Business Sourcebook (Pension Transfers) (No 3) Instrument 2020 comes into force on this date.

 

 


 

Back to top of page

Related Articles:
Latest Articles:
About the author:
Prior to joining LexisNexis in 2016 as a paralegal, Lauren was an adjudicator at the Financial Ombudsman Service. There she resolved consumers’ complaints, and gained knowledge about a wide variety of financial products. Before this she studied Law at Nottingham Trent University.