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The Treasury Committee launched an inquiry into the future of UK financial services after the Brexit transition period ends. It will examine how financial services regulations should be set and scrutinised by Parliament, as EU directives will cease
to govern new rules and regulations. It will also consider how regulators are funded and the extent to which financial services regulation should be consumer-focused.
Sources: Future of Financial Services inquiry launched and
Call for evidence.
The International Trade Committee issued its report on the new UK trade deal with Japan, which is due to take effect when the transitional arrangements governing UK–Japan trade (under the existing Japan–EU Economic Partnership Agreement)
comes to an end at the end of the Brexit transition period. The Committee’s report on the UK–Japan Comprehensive Economic Partnership Agreement (CEPA) provides background on the agreement and the Committee’s role in scrutinising
it. It then examines various provisions of the agreement, including but not limited to: trade in goods, technical barriers to trade, trade in services, digital data, investment, intellectual property, customs and trade facilitation, anti-corruption,
and agreement implementation and government. The Committee welcomes the agreement, which is intended to provide continuity and certainty to UK businesses involved in trade with Japan under the transitional arrangements.
Source: International Trade Committee—Second Report of Session 2019-21: UK-Japan Comprehensive Economic Partnership Agreement and
Scrutiny of international agreements: UK-Japan Comprehensive Economic Partnership Agreement.
The European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) (the European Supervisory Authorities (ESAs)) have published a final report setting out
proposed regulatory technical standards (RTS) to amend the Commission Delegated Regulation on bilateral margin requirements under the European Market Infrastructure Regulation (EU) 648/2012 (EMIR). The proposals address potential issues
arising as a result of the UK’s withdrawal from the EU.
Sources: ESMA: ESAs propose to adapt the EMIR implementation timelines for intragroup transactions, equity options and novations to EU counterparties,
EBA press release and EIOPA press release.
For further information, see: Quick Look Brexit Financial Services Legislation Status Guide—EMIR and
Impact of Brexit: EMIR—quick guide.
The European Scrutiny Committee published a report in the Twenty-ninth Report of Parliamentary Session 2019–21 on the EU financial services reform agenda set out in the European Commission’s Capital Markets Union Action Plan and its Digital
Finance Strategy for the EU. The report notes that these EU documents are politically important because they set out the Commission’s agenda for EU financial services reform over the coming years, which could have significant economic and
financial stability implications for the UK as a major EU trading partner. The report therefore draws the Commission’s reform plans to the attention of the Committee on the Future Relationship with the EU and the Treasury Committee.
Source: UK Parliament—Twenty-ninth Report of Session 2019–21—Documents to be reported to the House as legally and/or politically important: HMT EU financial services reform agenda.
ESMA released a public statement clarifying the application of the EU derivatives trading obligation (DTO) following the end of the UK’s transition from the EU on 31 December 2020. The DTO will continue applying without changes after the end
of the transition period. ESMA considers that the continued application of the DTO would not create risks to the stability of the financial system.
Source: ESMA sets out its final view on the derivatives trading obligation (DTO).
For further information, see: The impact of Brexit on the MiFID II regime.
The European Central Bank (ECB) published an interview with Yves Mersch, a member of its executive board and vice-chair of its supervisory board, in which he discusses the impact of coronavirus (COVID-19) and the end of the Brexit implementation period
on the financial sector.
Source: Financial Times interview with Yves Mersch, member of the executive board and vice-chair of the supervisory board of the ECB.
The Financial Conduct Authority (FCA) updated its webpage on securitisation to add a new section on simple, transparent and standardised (STS) notifications, along with links to onshored UK STS notification templates and related instructions. From
the end of the Brexit transition period, the responsibility for maintaining a list of STS securitisations will be transferred by the onshored Securitisation Regulation (EU) 2017/2402 from ESMA to the FCA.
Source: FCA webpage update: Securitisation—STS notifications.
For further information, see: Quick Look Brexit Financial Services Legislation Status Guide—Securitisation Regulation and
Impact of Brexit: Securitisation Regulation—quick guide.
The FCA updated its SFTR and EMIR reporting obligation webpages to reflect the UK SFTR and EMIR validation rules and new links to notes highlighting the FCA’s expectations of firms in relation to their UK SFTR and EMIR reporting requirements
immediately following the end of the transition period.
Sources: SFTR reporting obligation and EMIR reporting obligation.
For further information, see: Impact of Brexit: SFTR—quick guide and Quick Look Brexit Financial Services Legislation Status Guide—SFTR.
The International Swaps and Derivatives Association (ISDA) responded to a joint Bank of England (BoE) and Prudential Regulation Authority (PRA) consultation paper on the UK withdrawal from the EU and changes before the end of the transition period.
ISDA has asked the PRA to ‘retain the existing scope of qualifying indices for the purposes of detailed rules on liquidity horizons in the new market risk rules on the Fundamental Review of the Trading Book’. Additionally, the response
calls for the PRA to clarify the position regarding UK phase-in of phases five and six of the initial market requirements in relation to the binding technical standard on the risk-mitigation techniques.
Source: ISDA Response to PRA Consultation on Withdrawal from the EU.
For further information, see: Impact of Brexit: CRR and prudential regulation—quick guide.
The economic secretary to the Treasury, John Glen, delivered a speech at TheCityUK’s annual conference, where he discussed Brexit, fintech, input VAT on financial services exports, green investment and regulatory reform.
Source: The economic secretary’s keynote speech to TheCityUK 2020 Conference.
For further information on the effects of COVID-19 on financial services, see: Coronavirus (COVID-19)—key developments for financial services lawyers and
Coronavirus (COVID-19)—key financial services issues.
The Bank for International Settlements (BIS) published an interview with its general manager, Agustín Carstens, in which he discussed global central banks’ response to the coronavirus (COVID-19) pandemic.
Source: Interview with Agustín Carstens.
The BIS published a working paper looking at the implications of the coronavirus (COVID-19) pandemic on central bank statistics. The authors argue that data gaps and limits to the use of standard data show the need for more timely, frequent and well-documented
indicators to guide policy.
Source: Implications of COVID-19 for official statistics: a central banking perspective.
The ECB published the slides of a presentation on the challenges posed by the coronavirus (COVID-19) pandemic, delivered by ECB Supervisory Board member Edouard Fernandez-Bollo. The presentation outlines the ECB’s response to COVID-19, and also
discusses the EU’s new regulatory framework for investment firms.
Source: Facing up to the challenges posed by COVID-19 and Brexit: Hearing from the ECB.
The BoE published an article on the use of cash during the coronavirus (COVID-19) pandemic. It discusses changing shopping and payment behaviours; the risk of transmission via banknotes; access to cash; and strategic decisions around payment technologies.
Source: Cash in the time of COVID.
The FCA updated the webpage for its ‘digital sandbox pilot’, which aims to provide enhanced support to innovative firms tackling challenges caused by the coronavirus (COVID-19) pandemic. On its updated page the FCA provides details of
the organisations chosen to take part in the pilot, along with an explanation of the criteria against which they were selected and how the pilot will be assessed.
Source: FCA webpage update: The Digital Sandbox Pilot.
The chair of the European Systemic Risk Board (ESRB), Christine Lagarde, has delivered an introductory statement at a hearing of the European Parliament’s Committee on Economic and Monetary Affairs (ECON). Lagarde set out a brief overview of
the ESRB’s actions in response to the coronavirus (COVID-19) pandemic, and discussed insurers’ liquidity risk issues and the deteriorating quality of bank assets.
Source: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament.
The Financial Action Task Force (FATF) published a statement following the G20 Finance Ministers and Central Bank Governors meeting held on 21–22 November 2020. The FATF reaffirmed the organisation’s commitment to working with the G20
to ensure a ‘strong, sustainable economic recovery’ from the coronavirus (COVID-19) pandemic. The FATF highlighted that it is ‘critical’ for jurisdictions to continue to ‘actively identify, assess, and understand
how criminals and terrorists can exploit the COVID-19 pandemic’.
Source: G20 Leaders support the FATF’s work to address money laundering and terrorist financing risks.
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ESMA launched a consultation on supervisory fees for data reporting services providers (DRSPs). ESMA also launched a consultation on criteria to identify authorised reporting mechanisms (ARMs) and approved publications arrangements (APAs) (two types of
DRSPs) that, by way of derogation from the Markets in Financial Instruments Regulation (EU) 600/2014 (MiFIR) on account of their limited relevance for the internal market, will be exempt from direct EU supervision from January 2022. The
consultations close on 4 January 2021.
Sources: ESMA consults on supervisory fees for date reporting services providers,
Consultation paper: ESMA fees for DRSP, ESMA consults on derogation criteria for data reporting services providers and
Consultation paper: ESMA advice on the criteria for DRSP.
The UK parliament has published a written statement made by John Glen MP, the economic secretary to the Treasury, regarding the independent investigation into the regulation of London Capital & Finance plc (LC&F) by the FCA. According to Glen,
Dame Elizabeth Gloster, who led the investigation, delivered her final report to the FCA on 23 November 2020.
Source: UK Parliament financial services update: Statement made by John Glen on 24 November 2020.
The Council of the EU published a document from the Presidency setting out the state of play of legislative proposals in the field of financial services.
Source: Progress on financial services legislative files.
HM Treasury and the Department for Business, Energy and Industrial Strategy (BEIS) wrote a joint letter commissioning the City of London Corporation to establish a taskforce to boost socio-economic diversity at senior levels in UK financial and professional
services. The taskforce is intended to engage employers and encourage action through raising the profile of socio-economic diversity, with the ultimate aim of ‘equity of progression—where high performance is valued over fit’.
Sources: Socio-economic diversity taskforce in financial and professional services, TheCityUK adds support to new social mobility taskforce and New taskforce to boost socio-economic diversity in UK financial and professional services sectors.
HM Treasury, the BoE and the FCA announced that they will be convening an industry working group to facilitate investment in productive finance—ie investment that expands productive capacity, furthers sustainable growth and can make an important
contribution to the real economy. Examples of this include plant and equipment (which can help businesses achieve scale), research and development (which improves the knowledge economy), technologies (for example, green technology), infrastructure
and unlisted equities related to these sectors.
Sources: Treasury, Bank of England and FCA convene working group to facilitate investment in productive finance and
Her Majesty’s Treasury, Bank of England and Financial Conduct Authority convene working group to facilitate investment in productive finance.
ESMA published the 18th edition of its newsletter, highlighting key ESMA publications on Wirecard, the share trading obligation (STO) and the derivatives trading obligation (DTO) and the first statistical report on EU securities markets. The issue
also discusses ESMA’s 2021 Work Programme, its annual public statement on European common enforcement priorities, and its consultation on the Taxonomy Regulation.
Source: ESMA Newsletter—No 18.
The FCA published the November 2020 issue of its Regulation Round-up. This edition includes a summary of what firms need to do to prepare for the end of the Brexit implementation period on 31 December 2020. It also provides an overview of firms’
obligations to submit persons data to the Financial Services Register and the extension of deadlines for solo-regulated firms under the Senior Managers & Certification Regime (SM&CR).
Source: Regulation round-up.
The FSB has published a briefing which provides an overview of its work as an institution, its mandate, members and governance arrangements, and oulining its current work.
Source: The FSB: An overview of the work for 2020.
The EU-Japan Joint Financial Regulatory Forum issued a statement following its second meeting, held on 24 November 2020. Participants discussed the impact of the coronavirus (COVID-19) pandemic and regulatory responses, as well as benchmarks, enhanced
co-operation in recovery and resolution and in the insurance sector, and digital finance.
Source: EU-Japan joint financial regulatory forum—Joint statement—November 2020.
The European Parliament voted, at plenary, in favour of recommending Frank Elderson as a member of the ECB executive board. However, the Parliament also expressed its misgivings about gender imbalance on the governing council of the ECB.
Sources: Press release—Frank Elderson recommended as member of European Central Bank executive board and
Texts adopted: Provisional edition P9_TA-PROV(2020)0311 Appointment of Frank Elderson as member of the Executive Board of the European Central Bank European Parliament decision of 24 November 2020 on the Council recommendation on the appointment
of a Member of the executive board of the European Central Bank (N9-0055/2020—C9-0331/2020—2020/0805(NLE)).
The Financial Markets Law Committee (FMLC) published its response to the UK government’s call for evidence on how to improve the UK’s international regulatory co-operation practices. The call for evidence followed a recommendation to the
government by the Organisation for Economic Cooperation and Development (OECD) to ensure more systematic consideration of international regulatory co-operation across government and regulatory bodies. The FMLC draws attention to the complexities
which may arise in co-operation following the UK’s withdrawal from the EU. It also urges the government to prioritise international co-ordination, particularly in light of issues such as the coronavirus (COVID-19) pandemic and the advent
Source: FMLC response to call for evidence: UK’s international regulatory co-operation strategy: 25 November 2020.
The G20 Riyadh Summit published a Leaders Declaration from its 21-22 November 2020 meeting. The summit committed to the FSB principles underpinning the national and international responses to the coronavirus (COVID-19) pandemic, including the need
to act consistently with international standards, and asked the FSB to continue monitoring financial sector vulnerabilities, working on procyclicality and credit worthiness, and co-ordinating on regulatory and supervisory measures.
Source: G20 communique: Financial Services aspects.
The BoE published Green Notice 2020/02, which describes future changes to the submission of statistical data to the Data and Statistics Division (DSD).
Source: Green Notice 2020/02.
The FCA published consultation paper CP20/22 setting out its proposed policy changes to the way it raises fees for 2021/22. The consultation closes on 22 January 2021.
Source: CP20/22: Regulatory fees and levies: policy proposals for 2021/22.
For further information, see: Regulatory fees and levies.
The FCA published a new webpage summarising the benefits of its new data collection platform, RegData, which will replace the existing Gabriel platform. Some firms and their users have already begun to move across to RegData. The FCA explains
that RegData is informed by user feedback, and is faster, easier to use and built with flexible technology, making it possible to fix issues quicker and to make ongoing improvements to user experience.
Source: FCA announces benefits of new data collection platform RegData.
The FCA updated its Financial Services Register webpage to announce that dual-regulated firms Directory Persons data submitted under the Senior Managers and Certification Regime (SM&CR) is now live on the FS Register.
Source: FCA updates Financial Services Register.
The operative part of several judgments in cases brought against Decisions of the ECB made under Article 4(1)(f) and Article 16(1)(c) and (2)(d) of the Single Supervisory Mechanism Regulation (Regulation (EU) 1024/2013) (SSM Regulation) concerning
contributions to the deposit guarantee system or to the single resolution fund by means of irrevocable payment commitment have been published in the Official Journal.
Crédit Agricole and Others v ECB (Case T-144/18)
Confédération nationale du Crédit mutuel and Others v ECB (Case T-145/18)
BPCE and Others v ECB (Case T-146/18)
Arkéa Direct Bank and Others v ECB (Case T-149/18)
The European Commission published a decision confirming that it does not object to an extension of a financial stability measure made by Finansinspektionen, the Swedish Financial Supervisory Authority, under the Capital Requirements Regulation (CRR).
This national measure aims to enhance the resilience of Swedish banks to potential severe downward corrections in residential real estate markets.
Source: Commission Decision of 12.11.2020 not to propose an implementing act to reject the planned extension of the period of application of the national measure notified on 16 September 2020 by Sweden under Article 458(9) in conjunction with Article 458(4) of Regulation (EU) No 575/2013 of the European Parliament and of the Council.
The EBA published a report on the effects of the unwind mechanism of the liquidity coverage ratio (LCR) over a three-year period, from the end of 2016 to the first quarter of 2020. The EBA says that, overall, the empirical evidence does not support
the hypothesis that the unwind mechanism has a detrimental impact on the business and risk profile of credit institutions.
Source: EBA analyses effect of the unwind mechanism of the liquidity coverage ratio.
The ECB published its latest Financial Stability Review (FSR), which warns that vulnerabilities in the corporate sector are increasing as the coronavirus (COVID-19) pandemic evolves, and their unearthing could test the resilience of euro area banks
in the future. The FSR notes that current extensive policy support is helping euro area corporates and households to cope with the fallout of the pandemic, but risks could arise either from a premature end to measures or from prolonged support.
Sources: ECB review sees increased medium-term vulnerabilities for corporates and banks and
Financial Stability Review November 2020.
The Financial Stability Board (FSB) published a report that examines the potential implications of climate change for financial stability. The report analyses how climate-related risks might be transmitted across, and amplified by, the financial system,
including across borders. It also sets out next steps for the FSB’s work in this area.
Sources: FSB examines financial stability implications of climate change and
The FSB has published an article by its chair, Randal K Quarles, on co-operation and resilience in the global financial system, in which he discusses responses to the coronavirus (COVID-19) pandemic and the lessons to be learned. Quarles said events
had highlighted the need to better understand vulnerabilities in non-bank financial intermediation and strengthen its resilience while preserving its benefits.
Source: Co-operation: the foundation of a resilient global financial system.
Following a joint investigation by the FCA and City of London Police, the FCA charged Richard Jonathan Faithfull with one offence of money laundering, contrary to section 327 of the Proceeds of Crime Act (POCA).
Source: FCA charges Richard Jonathan Faithfull with one offence of money laundering.
The Financial Services Compensation Scheme (FSCS) and the Serious Fraud Office (SFO) signed a memorandum of understanding (MoU) to co-operate more closely in the fight against fraud.
Sources: FSCS and Serious Fraud Office to work together against fraud and
Memorandum of understanding between the Financial Services Compensation Scheme and the Serious Fraud Office.
The National Crime Agency (NCA) published its 2020 Suspicious Activity Report (SAR) Annual Report. The report notes that the UK Financial Intelligence Unit (UKFIU) saw a record number of SARs, 'receiving and processing 573,085, with an 81% increase
in requests for a defence against money laundering or terrorist finance'.
Source: Publication of the 2020 annual report on the Suspicious Activity Reports regime.
SI 2020/1282: This enactment is made in exercise of legislative powers under the United Nations Act 1946, and the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends one
piece of UK primary legislation and one piece of UK secondary legislation in relation to sanctions. It comes into force immediately after the Sanctions (EU Exit) (Miscellaneous Amendments) (No 3) Regulations 2020 have come into force in the
Read the official version of this legislation.
SI 2020/1284: This enactment is made in exercise of legislative powers under the United Nations Act 1946, and the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends one
piece of UK primary legislation and one piece of UK secondary legislation in relation to sanctions. It comes into force on IP completion day.
SI 2020/1286: This enactment is made in exercise of legislative powers under the United Nations Act 1946, and the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends one
piece of UK primary legislation and one piece of UK secondary legislation in relation to sanctions. It comes into force on IP completion day.
SI 2020/1281: Provisions are made to extend the Democratic Republic of the Congo (Sanctions) (EU Exit) Regulations 2019, as amended from time to time, to all British overseas territories (except Bermuda and Gibraltar which implement sanctions
through their own domestic legislation) with the modifications required to enable implementation and enforcement of the sanctions regime by the authorities in those territories. This Order comes into force immediately after both the Sanctions
(EU Exit) (Miscellaneous Amendments) Regulations 2020 and the Sanctions (EU Exit) (Miscellaneous Amendments) (No 3) Regulations 2020 come into force in the UK.
SI 2020/1285: This enactment is made in exercise of legislative powers under the United Nations Act 1946, and the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends one
piece of UK primary legislation and one piece of UK secondary legislation in relation to sanctions. It comes into force on IP completion day.
SI 2020/1287: This enactment is made in exercise of legislative powers under the United Nations Act 1946, and the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment amends one
piece of UK primary legislation and one piece of UK secondary legislation in relation to sanctions. It comes into force on IP completion day.
The European Parliament endorsed a new law, called the Representative Action Directive, that will allow groups of consumers to defend their rights collectively and launch collective action in the EU. The new law will introduce a 'harmonised model for
representative action' in all member states that guarantees consumers are protected against mass harm and ensures appropriate safeguards are in place for traders to help avoid abusive lawsuits. All member states must 'put in place at least one effective
procedural mechanism that allows qualified entities to bring lawsuits to court for the purpose of injunction or redress.' The Representative Action Directive will enter into force 20 days following its publication in the Official Journal of the EU
and Member States will then have 24 months to transpose the directive into their national laws, and a further six months to apply it. The Representative Action Directive will apply to representative actions brought on or after its date of application.
Source: EU consumers will soon be able to defend their rights collectively.
The Financial Services Compensation Scheme (FSCS) published the half-year edition of its Outlook newsletter, in which it explains the factors driving up the levy in 2020/21. As a result of this, the FSCS estimates the Life Distribution and Investment
Intermediation (LDII) class will require £92m of additional funding in the form of a supplementary levy.
Sources: FSCS forecasts latest levy position and FSCS Outlook.
The FSCS’s policy manager, Josh Rendall, gave an update on the work the FSCS is doing with the FCA and the financial services industry to share intelligence and to help prevent future detriment to consumers and drive better outcomes for
Source: Prevention is better than cure: an update on our Prevent work.
The FCA published a webpage setting out options for investment managers on how to report income for FSCS levy calculations.
Source: Options for reporting income for FSCS levy calculations.
The FCA published correspondence with the Financial Ombudsman Service (FOS), in which the FOS confirms the approach to complaints set out in correspondence with the FCA in April 2020.
Sources: Letter from Sheldon Mills to Financial Ombudsman Service: 16 November 2020 and
Financial Ombudsman Service letter to Sheldon Mills: 17 November 2020.
The Financial Ombudsman Service (FOS) published Ombudsman News 155, covering recently published quarterly data, key trends and the FOS’s annual report and accounts. The issue also contains operational information about the FOS service that
might be helpful for businesses, and sets out its approach to complaints caused or affected by the coronavirus (COVID-19) pandemic.
Source: Ombudsman News 155.
The chair of the Treasury Committee, Mel Stride, wrote to the chief ombudsman and chief executive of the Financial Ombudsman Service, Caroline Wayman, seeking further detail on the work of the FOS following Wayman’s appearance before the
Committee to provide evidence on 9 November 2020.
Source: Correspondence with chief ombudsman and chief executive of FOS relating to Committee session on 9 November.
ESMA issued the official translations of its guidelines on enforcement of financial information.
Source: ESMA publishes translations for guidelines on enforcement of financial information.
The FCA announced that it has fined TFS-ICAP Ltd, an FX options broker, £3.44m for communicating misleading information to clients due to the ‘printing’ of trades. This practice involved brokers communicating to their clients that
a trade had occurred at a particular price and/or quantity when no such trade had actually taken place.
Sources: FCA fines TFS-ICAP £3.44m for market misconduct and
The FCA announced that Stephen Allen has pleaded not guilty by video link at Southwark Crown Court to the FCA’s charge that he conspired with Renwick Haddow to pervert the course of justice. Allen was granted unconditional bail by HHJ Hehir
pending a trial listed to take place on 25 October 2021.
Source: Stephen Allen pleads not guilty to conspiracy to pervert the course of justice.
The Competition and Markets Authority (CMA) fined ComparetheMarket £17.9m for using clauses in contracts with home insurers that breached competition law. A CMA investigation concluded that the price comparison website ComparetheMarket breached
competition law between December 2015 and December 2017 by imposing most favoured nation clauses on sellers of home insurance using its platform. The clauses prohibited home insurers from offering lower prices on other comparison websites.
Source: CMA fines ComparetheMarket £17.9m for competition law breach .
The European Parliament’s Economic and Monetary Affairs Committee (ECON) tabled a report which sets out revisions to the proposed regulation amending Regulation (EU) 2016/1011 (the Benchmarks Regulation) in relation to the exemption
of certain third-country foreign exchange benchmarks and the designation of replacement benchmarks for LIBOR.
Source: Report 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 (COM(2020)0337—C9 0209/2020—2020/0154(COD)).
For further information, see: Benchmarks Regulation—essentials.
The ECB Working Group on Euro Risk-Free Rates launched two public consultations on the topic of fallback rates to EURIBOR. One consultation seeks views on fallback rates based on the euro short-term rate (€STR) and spread adjustment methodologies
in order to produce the most suitable EURIBOR fallback measures per asset class. The other seeks views on potential events that could trigger such fallback measures. Responses are sought by 15 January 2021.
Source: Working Group on Euro Risk-Free Rates launches two public consultations on fallbacks to EURIBOR.
The FCA updated its ‘Conduct risk during LIBOR’ webpage by publishing two new key Q&As for firms on conduct risk arising from LIBOR transition, under the section headed ‘Replacing LIBOR with alternative rates in existing
Source: Conduct risk during LIBOR transition.
For further information, see: LIBOR transition.
The FSB published a progress report on implementation of reforms to major interest rate benchmarks, with a roadmap setting out a timetable of actions for financial and non-financial sector firms to take in order to ensure a smooth LIBOR transition
Source: FSB sets out progress on interest rate benchmark reform.
ISDA and 13 other trade associations published a paper requesting that the Benchmarks Regulation third-country benchmarks regime transition period be extended to end-2025. The European Parliament and the Council of the EU are in final negotiations
on a revision of the Benchmarks Regulation, with the Council supporting an extension to end-2025 in its version of the draft text. The associations believe this extension is urgently needed to prevent placing EU firms at a competitive disadvantage
in global markets and to allow policy makers to conduct a comprehensive review of the current third-country regime under the Benchmarks Regulation.
Source: Joint trade associations paper requesting an extension of the third-country benchmarks transition period.
Commission Delegated Regulation (EU) 2020/1732 of 18 September 2020 supplementing Regulation (EU) 2017/2402 (the Securitisation Regulation) with regard to fees charged by the European Securities and Markets Authority to securitisation
repositories has been published in the Official Journal.
Source: Commission Delegated Regulation (EU) 2020/1732 of 18 September 2020 supplementing Regulation (EU) 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
The EBA published a report on significant risk transfer (SRT) in securitisation transactions, which includes a set of detailed recommendations to the European Commission on the harmonisation of practices and processes applicable to the SRT assessment.
The EBA proposals aim to enhance the efficiency, consistency and predictability of the supervisory SRT assessment within the current securitisation framework.
Source: The EBA calls on the European Commission to harmonise the significant risk transfer assessment in securitisation.
The European Parliament’s Economic and Monetary Affairs Committee (ECON) has tabled a report which sets out revisions to the proposed regulation amending the Prospectus Regulation which was included in the European Commission’s capital
markets recovery package.
Source: Report on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) 2017/1129 as regards the EU Recovery prospectus and targeted adjustments for financial intermediaries to help the recovery from the COVID-19 pandemic (COM(2020)0281—C9 0206/2020—2020/0155(COD)).
In preparation for the Brexit transition period coming to an end, HM Treasury launched a call for evidence to review the UK's listing regime. The review forms part of the UK's plan to consolidate its position as a leading global financial centre
with its objective to propose reforms that will enhance the attractiveness of the UK listings regime for capital raising. The review follows from the Chancellor's speech on 9 November 2020 in which he announced his intention to review the
regime. The review particularly welcomes comments on free float requirements, dual class share structures, track record requirements, prospectuses and dual and secondary listings. The call for evidence closes on 5 January 2021.
Source: Policy paper Call for Evidence – UK Listings Review.
The International Organization of Securities Commissions (IOSCO) issued a press release setting out details of its 45th Annual Meeting, which took place online from 9 to 18 November. The meeting discussed the impact of coronavirus (COVID-19) on
capital markets and other priority issues facing securities market regulators and supervisors. Some 480 members from 159 jurisdictions participated in the event.
Source: IOSCO Annual Meeting addresses the impact of COVID 19 and other critical matters on securities markets.
The Agency for the Co-operation of Energy Regulators (ACER) published updated guidance on the application of Regulation (EU) 1227/2011 on wholesale energy market integrity and transparency (REMIT).
Source: ACER guidance on the application of REMIT—Updated 5th edition.
The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published a draft recommendation regarding the European Commission’s proposed regulation on a framework for the recovery and resolution of central counterparties
(CCPs). The co-rapporteurs propose that ECON recommend that the European Parliament plenary confirms the position of the Council of the EU at first reading, without amending it.
Source: Draft recommendation for second reading on the Council position at first reading with a view to the adoption of a regulation of the European Parliament and of the Council on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132.
The European Commission published a communication to the European Parliament on the position of the Council on the draft regulation on a framework for the recovery and resolution of central counterparties (CCPs).
Source: Communication from the Commission to the European Parliament pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council on the adoption of 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.
ISDA reported that the latest data from the Bank for International Settlements over-the-counter (OTC) derivatives statistics has highlighted a significant increase in the gross market value and credit exposure of OTC derivatives during the first half
of 2020. The increase is said to be a result of the surge in gross market value of interest rate derivatives following the implementation of central bank measures to support economic activity in response to the ongoing coronavirus (COVID-19) pandemic.
Notably, the gross market value of OTC derivatives contracts during the first half of 2020 was 28.4% higher compared with the mid way point of 2019, and 33.5% higher versus year-end 2019. Additionally, gross credit exposure increased by 20.3%
compared to mid-tear 2019 ad by 35.7% versus year-end 2019.
Source: Key Trends in the Size and Composition of OTC Derivatives Markets in the First Half of 2020.
The EBA, EIOPA and ESMA (the European Supervisory Authorities (ESAs)) published a final report setting out proposed regulatory technical standards (RTS) to amend the Commission Delegated Regulation on bilateral margin requirements under the European
Market Infrastructure Regulation (EU) 648/2012 (EMIR). The proposals address potential issues arising as a result of the UK’s withdrawal from the EU.
ISDA published its response to the Canadian Securities Administrators (CSA) with respect to the CSA’s proposed amendments to National Instrument 94-101, Mandatory central counterparty clearing of derivatives. In its response, ISDA asks the CSA
to allow more time for implementation and to remove the requirement that affiliated parties have a formal written agreement governing the intragroup trading relationship.
Source: ISDA’s response to proposed amendments to the CSA’s National Instrument 94-101.
The Investment Association published a report, Investing with purpose: Placing stewardship at the heart of sustainable growth, produced by the HM Treasury-led Asset Management Taskforce, which sets out proposals to help market participants such
as investment managers and asset owners expand their stewardship activity across different asset classes, including bonds. The report, which aims to promote sustainable growth, also proposes the creation of a Council of UK Pension Schemes
to support higher standards of pension stewardship.
Source: Investment managers place stewardship at the heart of sustainable growth.
The International Organization of Securities Commissions (IOSCO) published a diagnostic report analysing the events that occurred in the Money Market Funds (MMFs) sector during the coronavirus (COVID-19) market turmoil in March 2020. Simultaneously,
IOSCO published a thematic review assessing the implementation of selected IOSCO recommendations issued in 2012 to strengthen the resilience of MMFs globally.
Sources: IOSCO reviews money market funds recommendations and events arising from the March 2020 market turmoil,
Thematic review on consistency in implementation of Money Market Funds reforms: Final Report and Money Market Funds during the March-April episode thematic note.
The European Fund and Asset Management Association (EFAMA) published a report, ‘European MMFs in the COVID-19 market turmoil: Evidence, experience and tentative considerations around eventual future reforms’, which finds that EU money
market funds (MMFs) fared well throughout the coronavirus (COVID-19) market events of March 2020—the first true ‘stress-test’ for EU MMFs following the introduction of the EU Money Market Fund Regulation (EU) 2017/1131 (MMFR)
Source: EFAMA report invalidates notion that central bank interventions ‘bailed-out’ MMFs.
EFAMA published an education guide on exchange traded products (ETP) for European investors. The guide explains the main differences between exchange traded funds (ETFs), exchange-traded notes (ETNs) and exchange-traded commodities (ETCs) listed
across European markets in terms of structural set-up, risk management and applicable EU regulatory requirements.
Source: EFAMA's guide demystifies ETPs for European investors.
ESMA published a speech on future challenges for fund managers, by its executive director, Verena Ross, delivered at the Alternative Investment Management Association’s Global Policy & Regulatory Forum. Ross discussed the impact of the
coronavirus (COVID-19) pandemic from an ESMA perspective; delegation, in light of the looming end of the Brexit transitional period; and sustainable finance.
Source: Future challenges for fund managers—Keynote address by Verena Ross at the AIMA forum on 19 November 2020.
The BoE amended its stress testing webpage for UK banks, building societies and insurers to include updated information on the annual concurrent stress test as well as the BoE’s biennial exploratory scenario (BES).
Source: Bank of England: Stress testing.
The EBA published a first assessment of the use of coronavirus (COVID-19) moratoria and public guarantees across the EU banking sector.
Source: Banks report a significant use of COVID-19 moratoria and public guarantees
The All-Party Parliamentary Group (APPG) on Fair Business Banking has published a letter from its co-chair, Kevin Hollinrake, to the governor of the BoE, Andrew Bailey, regarding the rumoured bid for the Cooperative Bank by the US hedge fund, Cerberus.
While Hollinrake acknowledges that such an approach has not yet been confirmed by the bank, he raises his ‘deep concerns’ about the possibility.
Source: Letter to Andrew Bailey (Governor of the Bank of England)—APPG on Fair Business Banking—20/11/2020.
The FCA confirmed updated guidance to firms setting out enhanced support that should be available to consumer credit customers experiencing payment difficulties as a result of coronavirus (COVID-19). The guidance covers users of personal loans, credit
cards, store cards, catalogue credit, rent to own, buy now pay later, pawnbroking, motor finance and high-cost short-term credit. It will come into force on 25 November 2020, but the FCA encourages firms that are able to start providing this enhanced
support sooner to do so.
Source: FCA confirms support for consumer credit customers impacted by coronavirus.
For further information, see: Coronavirus (COVID-19)—implications for consumer credit, overdrafts and mortgages.
The FCA published a letter to boards of credit reference agencies (CRAs) and credit information service providers (CISPs) which sets out the FCA’s view of the key risks of harm CRAs and CISPs could pose to their customers and the markets in
which they operate. The letter also outlines the regulator’s expectations of CRAs and CISPs, including how firms should be mitigating these key risks, and describes the FCA supervisory strategy and programme of work to ensure that firms
are meeting the regulator’s expectations and harms are being remedied.
Source: Portfolio letter: Credit reference agencies and credit information service providers.
HM Treasury and the Department for Work and Pensions published a policy paper entitled Financial Inclusion Report 2019-2020 (the second annual financial inclusion report).
Source: Financial Inclusion Report 2019-2020.
EIOPA is consulting on its statement on supervisory practices and expectations in case of breach of the Solvency Capital Requirement (SCR). The statement aims to promote supervisory convergence in the application of the supervisory ladder, in particular
addressing the recovery plan required in case of breach of the SCR. Responses are sought by 17 February 2021.
Source: EIOPA consults on the application of supervisory ladder.
The FCA’s Supreme Court appeal concerning its test case on non-damage business interruption insurance claims arising out of the coronavirus (COVID-19) lockdown concluded on 19 November 2020. The draft transcripts of the final two days of
the hearing have now been published to the FCA's dedicated business interruption website.
The draft transcript for day 2 can be found here and
the draft transcript for day 1 can be found here.
For further information, see: Coronavirus (COVID-19)—business interruption insurance.
The FCA’s Supreme Court appeal concerning its test case on non-damage business interruption insurance claims arising out of the coronavirus (COVID-19) lockdown concluded on 19 November 2020. Lord Reed advised that the Supreme Court recognises
the importance of the decision for the affected businesses, but was unable to comment whether the decision will be handed down before Christmas 2020 or in January 2021.
Source: Business interruption insurance.
The FCA published a letter addressed to the CEOs of Lloyd’s & London Market Insurers and others, which sets out the FCA’s view of the key risks of harm Lloyd’s & London Market Insurers could pose to their customers and the
markets in which they operate. The letter also outlines the regulator’s expectations of Lloyd’s & London Market Insurers, including how firms should be mitigating these key risks, and asks CEOs to consider the degree to which their
firms present such risks and their strategies for mitigating them.
Source: Portfolio letter: Lloyd’s & London Market Insurers and others.
The European Commission published for feedback two draft Commission Delegated Regulations supplementing Regulation (EU) 2019/1238 on a pan-European Personal Pension Product (PEPP) (the PEPP Regulation). The feedback period for both draft Delegated
Regulations closes on 18 December 2020.
Sources: COM Delegated Regulation specifying the information referred to in art. 40.9 of the PEPP Regulation and
COM Delegated Regulation specifying the information referred to in art. 65.9 of the PEPP Regulation.
The European Payments Council (EPC) published the results of a poll of professionals working in the payments industry seeking their views on the Q4-2022 level of the share of Single Euro Payments Area (SEPA) Instant Credit Transfer (SCT Inst) volumes.
Source: Results of the EPC poll on future share of SCT Inst volumes.
The Payment Systems Regulator (PSR) published the minutes of a various meetings held by its Access to Cash Working Groups in October 2020. Amongst other things, some of the working groups considered research data presented by Bristol University noting
that, at a macro level, the data set captured good coverage on Access to Cash, and expressing interest in seeing the data nuances at a community level.
The European Commission is launching a call for tenders for the EU blockchain pre-commercial procurement to develop new capabilities for the European Blockchain Service Infrastructure (EBSI). This procurement is done in relation to the work of the European
Blockchain Partnership, a co-operation between the European Commission, all EU Member States, and some countries of the European Economic Area. The call for tenders for the pre-commercial procurement (PCP) is open until 28 January 2021.
Source: Call for tenders: EU blockchain pre-commercial procurement.
The European Commission launched a consultation on criteria for determining which economic activities can qualify as environmentally sustainable under the EU’s Taxonomy. A sustainable economic activity classification system known as the
‘green list’ is being created by Regulation (EU) 2020/852, the Taxonomy Regulation, to introduce a ‘common language’ for investors and businesses to understand when investing in economic activities positively impacting
the climate and environment. To accomplish this, the Commission has introduced two sets of criteria in a draft delegated act, which the Commission seeks feedback on. The feedback period is open for four weeks, closing at midnight (Brussels
time) on Friday 18 December 2020.
Sources: Sustainable finance – EU classification system for green investments and Daily News 20 / 11 / 2020.
EFAMA published its first ESG-focused Market Insights, entitled: ‘Sustainable investment in the European asset management industry: defining and sizing ESG strategies’.
Source: EFAMA publishes report on the level and nature of sustainable investment by the European asset management industry.
The president of the ECB, Christine Lagarde, gave a speech on fostering sustainable growth in Europe, at the European Banking Congress. Lagarde discussed the coronavirus (COVID-19)-related digital transition and the need for innovative new industries,
saying equity finance has been shown to be an important complement to bank finance in allocating resources to new rather than traditional industries. This matters when it comes to green innovations in particular, Lagarde argued, as recent
analysis shows that equity finance helps to reduce an economy’s carbon footprint and to increase the rate of green innovation.
Source: Christine Lagarde: Fostering sustainable growth in Europe.
The FCA published a speech by its director of strategy, Richard Monks, on building trust in sustainable investments, in which he discussed the FCA’s domestic and international work on issuers’ climate-related financial disclosures;
ongoing work with the UK government on implementation of EU regulations; and preparatory work on the assessment of applications to authorise sustainable investment products.
Source: FCA speech: Building trust in sustainable investments.
UK Finance published a blog on the importance of metrics to social impact investing. It discusses the issue of measuring environmental, social, and governance (ESG) impact.
Source: The importance of metrics to social impact investing.
The ECB published an interview with Yves Mersch, a member of its executive board and vice-chair of its supervisory board, in which he discussed the ECB’s work on green and sustainable finance, defining what constitutes a sustainable investment,
non-financial reporting, greenwashing and sustainability ratings.
Source: Interview with Börsen-Zeitung.
The Islamic Financial Services Board (IFSB) published its third set of FAQs on four of its Standards, namely, Guiding principles on corporate governance for institutions offering only Islamic financial services (IIFS) (IFSB-3); Guiding principles on governance
for Islamic collective investment schemes (ICIS) (IFSB-6); the Standard On risk management for Takāful undertakings (IFSB-14); and the Technical note on financial inclusion and Islamic finance (TN-3).
Source: The IFSB publishes FAQs for Standards on Corporate Governance (IFSB-3), Governance for Islamic Collective Investment Schemes (IFSB-6), Risk Management for Takāful Undertakings (IFBS-14) and Financial inclusion (TN-3).
27 November 2020
Deadline for submitting evidence to the Treasury Committee’s economic crime inquiry.
Deadline for responses to the FCA’s consultation paper ‘CP20/20: Our approach to international firms’.
1 December 2020
Payment services and systems
Version 1.2 of each 2019 EPC SEPA payment scheme rulebook is in force from
1 December 2020.
2 December 2020
Consumer credit, mortgage and home finance
The Consumer Credit (Enforcement, Default and Termination Notices) (Coronavirus) (Amendment) Regulations 2020, SI 2020/1248 come into force on 2 December 2020, with firms benefitting from a six-month transitional period from
this date to implement any amendments required.
3 December 2020
Regulation of insurance
The FCA says insurance firms are expected to complete their
reviews of the value of their products in light of the impacts of coronavirus by 3 December 2020.
The Public Bill Committee is expected to report to the House of Commons on the Financial Services Bill by
3 December 2020.
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