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The European Securities and Markets Authority (ESMA) issued a
further statement on the impact of a no-deal Brexit on the trading obligation for shares (STO) under Article 23 of Regulation (EU) 600/2014 (the Markets in Financial Instruments Regulation (MiFIR)) in the absence of an equivalence decision
in respect of the UK by the Commission, in which it says that it proposes to take an approach to the STO based only on the ISIN of the share in question. In its response, the Financial Conduct Authority (FCA) stated that, in its view, the ISIN that a share carries does not and should not determine the scope of the STO, and that ESMA’s approach will not mitigate the risk of disruption from potentially
conflicting EU27 and UK STOs.
The FCA confirmed the deadline for notifications for the
temporary permissions regime (TPR) will be extended to the end of 30 October 2019. The deadline for applying to the trade repository and credit ratings agencies (CRA) regime was also extended to the same date. For EEA payment services and e-money
firms, the notification window for temporary permission is closed, but it will open again under the relevant HM Treasury regulations on 31 July 2019 and end on 30 October 2019.
The Prime Minister, Theresa May, announced that she is to resign
as leader of the Conservative and Unionist Party on 7 June 2019 so that a successor can be chosen. In a Downing Street statement, May said that she agreed with the Party Chairman and the Chairman of the 1922 Committee that the process for electing
a new leader for the party should begin in the following week. In her statement, she expressed her ‘deep regret’ that she was unable ‘to deliver Brexit’, and that her successor ‘to seek a way forward that honours the
result of the referendum…will have to find consensus in parliament where I have not’.
The chancellor of the exchequer, Philip Hammond MP, hosted a meeting of the Financial
and Professional Services’ Business Council on 22 May 2019, with the prime minister Theresa May joining the meeting. They discussed a number of opportunities and policy ideas for the sector post-Brexit. Topics discussed included short-term actions
and longer-term initiatives in areas of growth, competitiveness and regulation post-Brexit.
The Department for Business, Energy & Industrial Strategy (BEIS) published new guidance for stakeholders on how companies can ensure they comply with accounting and reporting requirements, and how auditing professionals should prepare, for if the UK leaves the EU without a deal in place.
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The chief executive officer of the Prudential Regulation Authority (PRA), Sam Woods, gave a speech before the Building Societies Association (BSA) in London about the PRA’s efforts to ‘scan the horizon’ to identify problems in the financial system. Mr Woods gave examples of issues the PRA
looks for and warned that, unless the PRA keeps questioning firms and itself about worrying developments in the markets, the work it is doing to make the financial system safer could be reversed.
The Financial Reporting Council (FRC) published its
Plan and Budget for 2019/20. Outlined in the budget is the government’s intention that the FRC transition into a new regulator called the Audit, Reporting and Governance Authority (ARGA). This transition will progress alongside the ongoing audit
The European Banking Authority (EBA) published its annual report for 2018, setting put work achieved
and its aims for the year ahead. The report highlights the EBA’s role in the development and maintenance of the Single Rulebook. In particular, it says the EBA increased its monitoring role on key parts of the prudential framework such as capital,
liquidity, securitisation and models with the aim of strengthening supervisory convergence and integrity.
The European Central Bank (ECB) published the latest issue of the twice-yearly Financial
Stability Review, which provides an overview of potential risks to financial stability in the euro area. The report says challenges to financial stability increased amid downside risks to the economic outlook. After spiking in December, tensions in
global financial markets subsided in the first months of 2019, the report finds, but conditions in the corporate bond and leveraged loans market worsened.
The ECB published a speech by a member of its executive board, Yves Mersch,
in which he argues that price stability is the best contribution the ECB can make to achieving sustainable growth, and that it delivered on this by maintaining an average inflation rate of below, but close to, 2% since the launch of the euro.
The Bank of England (BoE) announced that
it will continue to offer indexed long-term repo operations on a weekly basis until the end of November 2019. It says this is a precautionary step to provide additional flexibility in the BoE’s provision of liquidity insurance over the coming
The Council of the European Union published a corrigendum to the text of Regulation
(EU) 575/2013(the Capital Requirements Regulation (CRR)). The corrigendum corrects errors in all language versions of the CRR published in the Official Journal of the EU in June 2013. The English language part of the corrigendum starts on page
24 and amends a cross reference (in Article 92a(3) of the CRR) to Article 45d(3) of Directive 2014/59/EU (the Bank Recovery and Resolution Directive (BRRD)), replacing it with a cross reference to Article 45d(4) of the BRRD.
The Financial Stability Board (FSB) is seeking feedback
from stakeholders as part of its evaluation of the effects of the ‘too big to fail’ (TBTF) reforms for banks that were agreed by the G20 in the aftermath of the global financial crisis. The evaluation will assess whether the implemented
reforms are reducing the systemic and moral hazard risks associated with systemically important banks (SIBs). It will also examine the broader effects of the reforms to address TBTF for SIBs on the overall functioning of the financial system.
Feedback is sought by 21 June 2019.
The Bank for International Settlements (BIS) published an executive summary of the key attributes
of effective resolution regimes for financial institutions published by the Financial Stability Board in October 2014. The key attributes are a core element of the policy measures adopted by the G20 in the wake of the Great Financial Crisis to
address the problem of financial institutions that are TBTF.
ESMA is consulting on proposed amendments
to the main indices and recognised exchanges under the CRR. ESMA considers it necessary to introduce amendments to the implementing technical standard (ITS) to ensure that the most updated list of main indices and recognised exchanges is incorporated
into the legislative text. Feedback is sought by 5 July 2019.
The EBA published its opinion addressed to
the European Commission in which it concluded that the supervisory and regulatory framework applicable to credit institutions in Argentina can be regarded as equivalent to that applied in the EU. The opinion follows its assessment of non-EU countries'
equivalence with the EU prudential supervision and regulatory requirements.
The Loan Market Association (LMA) announced that it could not support the proposals of the EBA contained in the consultation paper
on draft guidelines on credit risk mitigation for institutions applying the internal ratings-based approach with own estimates of loss given default (consultation paper).
As part of its ‘5 Conduct Questions’ programme to drive cultural change in wholesale banks, the FCA published a
report, ‘Progress and challenges’, giving feedback for 2018/19 on firms’ efforts to improve their policies, processes, training and identification of conduct risk. The report covers supervisory activity and discussions with a
sample of about 50 firms, but the FCA says its findings are relevant for all firms in the financial sector, wholesale or otherwise.
The economic secretary to the Treasury, John Glen MP, wrote a letter to the chair of the House of Lords European Union Committee, Lord Boswell of Aynho, providing further clarification regarding the changes to the remuneration policy in the EU banking package proposals,
which were cleared from scrutiny on 8 May 2019. Mr Glen focuses in particular on the impact of the changes on the UK’s competitiveness.
The boss of Lloyds Banking Group PLC is being called before members of Parliament to explain pension contributions paid to the bank’s top executives, lawmakers announced on 23 May 2019, after the lender was accused of ‘boundless
greed’. The House of Commons Work and Pensions committee and the Business, Energy and Industrial Strategy committee both invited Lloyds chief executive António Horta-Osório to answer questions on the size of its executive pension
payments ahead of the summer recess—which will break in July. The head of the bank’s remuneration committee Stuart Sinclair was also asked to appear.
The FSB published a progress report on its work developing
effective practices for financial institutions’ response to and recovery from a cyber incident. The report, delivered to the G20 finance ministers and central bank governors ahead of their meetings in Fukuoka on 8-9 June 2019, summarises
the work to date of the FSB’s dedicated working group on cyber incident response and recovery and its workplan for developing practices to mitigate the implications of cyber incidents on financial stability.
The BIS published a speech by its general manager, Agustín Carstens, on ‘Cybersecurity: co-ordinating
efforts to protect the financial sector in the global economy’, delivered on 10 May 2019. Mr Carstens warned that international law on cybersecurity is fragmented. With differing domestic laws and regulations, there is uncertainty in establishing
which jurisdictions are responsible for what, and ambiguity regarding evidential standards.
Insurance Europe’s president, Andreas Brandstetter, CEO and chairman of UNIQA Insurance Group, called on policymakers to help insurers refine the protection they offer against cyber-attacks, which are increasing in both frequency and severity. According to Mr Brandstetter, one of the
main barriers to the development of the cyber insurance market is the lack of data on cyber risks.
HM Treasury’s Office of Financial Sanctions Implementation (OFSI) issued a
monetary penalty of £10,000 against Travelex (UK) Ltd under s146 of the Policing and Crime Act 2017 for contravention of the EU Egypt financial sanctions regime. The breach is linked to a monetary penalty issued against Raphaels Bank on 21 January 2019.
The Dutch Fiscal Information and Investigation Service—with Europol and the Luxembourg authorities—seized six servers belonging to cryptocurrency laundering service bestmixer.io. The service mixed potentially identifiable cryptocurrency funds with other funds to obscure their original sources.
The ongoing investigation found many mixed cryptocurrencies on the site were of criminal origin or destination. The service enjoyed a turnover of at least $200m since starting in May 2018.
The National Crime Agency obtained three
unexplained wealth orders (UWOs) against three residential properties in prime London locations, all believed to be linked to a politically exposed person who is involved in serious crime. All properties are held by offshore companies and their
combined value exceeds £80m.
UK Finance reported that a former bank branch staff member from Essex
who tried to defraud the bank of over £16,000 was sentenced at Inner London Crown Court. Mohammed Rafiq, 32, along with accomplice Yasir Ali, 29 were found guilty of conspiracy to defraud on 24 May 2019. The criminal activity was identified
by bank investigators and referred to the Dedicated Card and Payment Unit, a specialist police unit sponsored by the banking industry. All victims were fully refunded.
The FCA published an undertaking from Capital Financial Management
Limited regarding potentially unfair terms in its debt management contract. The undertaking was provided under the Consumer Rights Act 2015 and the Unfair Terms in Consumer Contracts Regulations 1999.
An independent investigation into the circumstances surrounding the collapse of investment firm London Capital & Finance (LCF) and the supervision of the firm by the FCA was formally launched. Dame Elizabeth Gloster will lead the investigation. The findings will be reported to HM Treasury, which will also review the regulation and marketing of the kinds of retail investment
products issued by LCF. The chair of the Treasury Committee, Nicky Morgan MP, welcomed HM Treasury’s decision to direct the FCA to commission an independent investigation. However, she warned that the matter ‘cannot be kicked into the long grass’.
The FCA announced that, on 24 May 2019, following FCA action, Lendy Ltd, a regulated
peer-to-peer (P2P) firm, appointed Damian Webb, Phillip Rodney Sykes and Mark John Wilson of RSM Restructuring Advisory LLP as administrators. The same administrators were appointed for two further related, but unregulated, firms: Lendy Provision
Reserve Ltd, and Saving Stream Security Holding Limited. These appointments were made by the firms, in respect of Lendy Ltd, with the consent of the FCA.
The FCA announced that LAMP Insurance Company Limited (LAMP)
applied for liquidation. Authorised and regulated by the Gibraltar Financial Services Commission (GFSC), it operates in the UK on a freedom of services basis, which means that some customers based in the UK may be registered with the firm.
As lead regulator, GFSC confirmed insurance policies are still valid, but any claims arising under these policies will not be paid at this time.
The FCA announced that Loot Financial Services Limited entered administration.
The FCA is acting to ensure that customer funds are safeguarded and that customers are given sufficient information on how to access their funds.
The Financial Services Compensation Scheme (FSCS) announced that
it is in the process of issuing premium refund payments totalling £6.9m to 9,000 commercial taxi policyholders insured by Alpha Insurance and sold through the Alpha MGA broker, Capital Underwriting Agency Ltd. The FSCS says Alpha commercial
taxi policyholders who do not receive a cheque payment inside the next 21 days should contact it.
The European Commission published its
reply to the European Supervisory Authorities (ESAs)’ 19 July 2018 letter requesting detailed public guidance on which types of products, in particular bonds, fall within the scope of the PRIIPs Regulation. The Commission states that
this assessment should be made on a case-by-case basis, and that it is neither feasible nor prudent to agree ex-ante and in abstract terms whether some categories of bonds fall under the PRIIPs Regulation or not.
ESMA launched a consultation on its
proposed guidelines for reporting under Articles 4 and 12 of Regulation (EU) 2015/2365 (the Securities Financing Transactions Regulation (SFTR)). The guidelines, which relate to the securities financing transaction reporting
obligation under Article 4 and the trade repository obligations under Article 12 of the SFTR, are intended to complement the SFTR technical standards and to ensure the consistent implementation of the new SFTR rules. The consultation closes
on 29 July 2019.
ESMA launched a consultation
on guidelines on periodic information and notification of material changes to be submitted to ESMA by trade repositories. The guidelines clarify the format and frequency of the different categories of information that ESMA expects to receive
in its role as supervisor of trade repositories registered under Regulation (EU) 648/2012 (the European Market Infrastructure Regulation (EMIR)) and/or the SFTR. The consultation closes on 27 August 2019.
The FSB published a report setting out the conclusions
from its thematic peer review of the implementation of the legal entity identifier (LEI). The LEI, a 20-character alpha-numeric code, was introduced after the financial crisis to be adopted globally, to uniquely identify legally distinct entities
that engage in financial transactions. The report examines the progress to date in implementing the LEI to meet the G20’s objective of supporting authorities and market participants in identifying and managing financial risks, and makes
recommendations to promote further LEI adoption.
ESMA updated its Q&As on Regulation (EU)
2016/1011 (the Benchmarks Regulation (BMR)). The Q&As promote common supervisory approaches and practices in the application of the BMR.
ESMA registered Inbonis SA as a CRA under Regulation (EC) No 1060/2009 (the
CRA Regulation). Inbonis SA is based in Madrid, Spain, and intends to issue corporate ratings on corporate issuers not considered a financial institution or insurance undertaking. The registration takes effect from 27 May 2019.
The London Stock Exchange (LSE) published two
guidance notes as part of its Inside AIM newsletter, which look at staffing of nominated advisers (Nomads) and the use of the AIM Designated Market route to admission.
ESMA published an opinion, dated 27 May 2019,
on how to calculate market size for the purposes of determining whether an activity is ‘ancillary’ and therefore outside the scope of Directive 2014/65/EU (the recast Markets in Financial Instruments Directive (MiFID
ESMA launched a call for evidence
on position limits and position management in commodity derivatives. It comes in the context of the reviews ESMA must perform under MiFID II, together with the European Commission. ESMA is seeking stakeholders’ input to develop an informed
view of the issues to be considered and addressed. Feedback is sought by 5 July 2019.
ESMA issued five positive opinions
relating to product intervention measures taken by the national competent authorities (NCAs) of Finland, Lithuania and Spain. In its opinions, ESMA finds that the proposed measures are justified and proportionate and that it is necessary for
NCAs of other Member States to take product intervention measures that are at least as stringent as ESMA’s measures.
ESMA updated its Q&As
on the implementation of investor protection topics under MiFID II and MiFIR. The updated Q&As provides new answers on best execution and information on costs and charges.
Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC (the Transparency Directive) with regard to regulatory technical standards (RTS) on the specification of a single electronic
reporting format was published in
the Official Journal of the EU. The RTS are directly applicable in Member States and specify the single electronic reporting format to be used for the preparation of annual financial reports by issuers under Article 4(7) of the Transparency
Directive. The European Commission also published a Q&A document.
Commission Delegated Regulation (EU) 2019/885 of 5 February 2019 supplementing Regulation (EU) 2017/2402 (the Securitisation Regulation) as regards to RTS specifying information to be provided to a competent authority in an
application for authorisation of a third party assessing simple, transparent and standardised (STS) compliance was published in the Official Journal of the EU.
The European Commission adopted a delegated regulation containing
RTS to specify which underlying exposures in non-asset-backed commercial paper (ABCP) and ABCP securitisation are considered homogenous for the purposes of the Securitisation Regulation. The RTS were developed by the EBA, which carried out
a public consultation ending on 15 March 2018 and published its final draft RTS in July 2018.
The ECB launched a market consultation
on a potential Eurosystem initiative regarding a European mechanism for the issuance and initial distribution of debt securities in the EU. The ECB says there is currently no pan-European, neutral and harmonised channel for issuance that covers
the EU as a single ‘domestic’ market, with issuers forced to use a multiplicity of channels and procedures. The Eurosystem is therefore exploring the possibility of supporting a harmonised system, and the potential business case
for such a service. Feedback is sought by 9 July 2019.
ESMA updated its Q&As on the Securitisation
Regulation to provide clarification on different aspects of the templates contained in ESMA’s draft technical standards on disclosure requirements. In particular, the updated Q&As clarify how several specific fields in the templates
should be completed. A new section was also added to the document with Q&As on ESMA’s draft technical standards on notifications to ESMA of securitisations which meet the STS criteria.
ESMA updated its Q&As on Regulation (EU) No 909/2014 (the Central
Securities Depository Regulation (CSDR)). The new Q&As clarify aspects of the internalised settlement reporting requirements.
The vice-president of the ECB, Luis de Guindos, said that the capital
markets union (CMU) agenda needs to be revamped in order to address the challenges facing Europe, such as Brexit. Speaking in Frankfurt at the inaugural Association for Financial Markets in Europe (AFME) conference on supervision and integration,
he said that more needs to be done to foster sustainable cross-border financial integration and risk-sharing. In a new short paper, AFME also made recommendations on how to achieve an integrated European financial market, which they refer to as a ‘financing union’.
Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019 amending EMIR as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques
for over-the-counter (OTC) derivative contracts not cleared by a central counterparty (CCP), the registration and supervision of trade repositories and the requirements for trade repositories was published in the Official Journal of the EU. The Regulation, which is also known as EMIR REFIT, is intended to improve the existing regulatory framework applying to the OTC derivative
ESMA published three consultation papers
under EMIR 2.2—the review of the regulatory framework for the authorisation and supervision of CCPs established under EMIR. The three consultation papers relate to draft technical advice on tiering, comparable compliance and fees under
EMIR 2.2. The consultations close on 29 July 2019.
ESMA updated its Q&As on the implementation of EMIR. The updated Q&As provide
clarifications on the new framework introduced by Regulation 2019/834 amending EMIR (the so-called EMIR Refit) and amends an existing Q&A on novation.
In anticipation of the 1 September 2020 initial margin (IM) requirements (Phase 5), the International Swaps and Derivatives Association (ISDA) is facilitating a voluntary early disclosure exercise for parties that may exceed the Phase 5 IM threshold in one or more jurisdictions. This is similar to previous ISDA-facilitated multilateral
disclosure exercises for Phases 1, 2, 3 and 4.
ISDA prepared an informational document that summarises and explains the
requirements for calculating the average aggregate notional amount (AANA) for Phase 5 IM requirements in the US between 1 June 2019 and 31 August 2019, for a compliance date of 1 September 2020.
ISDA published proposed
amendments to the 2014 ISDA Credit Derivatives Definitions to address issues relating to narrowly tailored credit events (NTCEs), focusing on the outstanding principal balance definition. The deadline for comments is 17 June 2019.
ISDA published a blog by its CEO, Scott O’Malia on the derivatives sector’s
ongoing preparations for the use of risk-free rates (RFRs) as an alternative to LIBOR and other interbank offered rates (IBORs). Mr O’Malia said ISDA continues to believe the best strategy is to take action early before a cessation
of LIBOR, or before any potential decline in LIBOR liquidity, but also recognises the need for a safety net that will allow derivatives contracts that still reference LIBOR and other IBORs to survive a discontinuation of the underlying
benchmark with the minimum possible disruption.
CCP12, the Global Association of CCPs, published a position paper on
‘Best practices to further bolster the resilience of CCPs and global financial markets’. The paper urges policymakers to continue to support the use of global CCP clearing services, due to the systemic risk benefits inherent
to central clearing, and to do everything in their power to avoid taking steps that could undermine the benefits that market users receive from central clearing organisations.
The FCA published Occasional Paper 48, Swing pricing and fragility in
open-end mutual funds, which discusses a recent innovation that changed the way open-end funds are priced. Alternative pricing rules (known as swing or dual pricing) adjust funds’ net asset values to pass on funds’ trading
costs to transacting shareholders.
The Investment Association (IA) published a
report, ‘Shareholder votes on dividend distributions in UK listed companies’, which calls for companies to be more transparent on their approach to paying dividends. The report forms part of an investigation into dividend payment
practices carried out by the IA at the request of the UK government as part of its consultation 'Insolvency and Corporate Governance'.
Following a public consultation, the IA announced that
exchange traded funds (ETFs) can join the IA sectors, meaning savers and their advisers will be able to compare ETFs against the 3,500 funds already in the IA’s 37 fund sectors from the first quarter of 2020. The ETFs will be placed
within the existing IA sectors, which enable comparison between open-ended funds by dividing them into groups of similar funds based on factors such as asset class, investment strategy and geographical region.
The FSB issued progress reports on
implementation of its action plan to assess and address the decline in correspondent banking relationships, and implementation of the FSB’s recommendations on remittance service providers’ access to banking services.
The Committee on Payments and Market Infrastructures (CPMI) published data showing the number of correspondent
banking relationships shrunk by 20% over the past seven years. The data, which tracks the size and scope of the network of relationships, shows a broad-based and global reduction in their number as their geographical focus narrows.
The CPMI says correspondent bank networks are vital for global trade and for migrants who send remittances home, but are slower, more expensive and more opaque than domestic payments.
The EBA published final draft amendments to the ITS on supervisory reporting. The EBA also published the corresponding updated Data Point Model (DPM) and XBRL taxonomy, which include amendments applicable
to common reporting (COREP), liquidity reporting and resolution planning reporting.
The chair of the ECB, Andrea Enria, wrote to
the president of the German Bundestag, Wolfgang Schäuble, setting out some of the ECB’s principles when considering potential bank mergers, including its approach to the concept of ‘badwill’ created in the process.
Mr Schäuble wrote to the ECB in relation to the (now terminated) exploratory merger talks between Deutsche Bank and Commerzbank.
As part of its ‘5 Conduct Questions’ programme to drive cultural change in wholesale banks, the FCA published a
report, ‘Progress and challenges’, giving feedback for 2018/19 on firms’ efforts to improve their policies, processes, training and identification of conduct risk. The report covers supervisory activity and discussions
with a sample of about 50 firms, but the FCA says its findings are relevant for all firms in the financial sector, wholesale or otherwise.
The director for remedies, business and financial analysis at the Competition and Markets Authority (CMA), Colin Garland, wrote to Santander UK Plc regarding the actions taken by the bank in response to a breach of Part 6 the Retail Banking Market Investigation Order 2017. Santander breached the Order
by imposing unarranged overdraft charges on around 20,000 current account customers without first sending them an alert.
The BSA published a report entitled ‘Reinvigorating
communities’, which demonstrates why building societies and credit unions put such an onus on their role in their communities, from providing valued services and skilled employment, to working with and supporting local institutions
and infrastructure such as town centres, and looking after the world more generally.
Advocate General Hogan of the European Court of Justice (ECJ) delivered a
preliminary ruling in which he concluded that Article 16(1) of the Consumer Credit Directive should be interpreted as meaning that, where a consumer makes an early repayment, the reduction to which that consumer is entitled may concern
costs for which the amount does not depend on the duration of the credit agreement. However, a Member State cannot limit this reduction simply to the amount of expenses saved by the credit institution as a result of the early repayment,
nor can a national court interpret its national legislation in that way.
The FCA published a research note
which explores further evidence on choices of ‘dominated’ mortgage products, following on from the FCA’s Occasional Paper No. 33 of May 2018, which found that there was a surprising prevalence of dominated choices
in the UK mortgage market.
The European Insurance and Occupational Pensions Authority (EIOPA) published the
calculation of the ultimate forward rate (UFR) for 2020. For the euro, the applicable UFR as of 1 January 2020 will be 3.75%. The UFR for 2020 is calculated in accordance with the methodology to derive EIOPA’s risk-free interest
rate term structures. The risk-free interest rate term structure underpins the calculation of liabilities by insurance and reinsurance undertakings pursuant to Solvency II.
The BIS published an executive summary of the Common Framework for the Supervision of Internationally
Active Insurance Groups (ComFrame) drawn up by the International Association of Insurance Supervisors. ComFrame is effectively an insurance-specific response to regulatory and supervisory gaps identified from the Great Financial Crisis
Insurance Europe’s president, Andreas Brandstetter, CEO and chairman of UNIQA Insurance Group, said that European policymakers must act to ensure insurers can fully contribute towards a sustainable Europe. Speaking at the 11th International Insurance in Bucharest, he also
called on policymakers to help insurers refine the protection they offer against cyber-attacks, which are increasing in both frequency and severity.
On 29 May 2019, a number of documents relating to Case AT.40049—Mastercard II, including a summary of the Commission decision of 22 January 2019 imposing a fine of €570,566,000m (including a 10% reduction for co-operation) for obstructing merchant’s access
to cross-border card payment services, were published in the Official Journal. The Commission found that Mastercard's cross-border rules prevented banks from offering lower interchange fees to retailers based in another EEA Member
State, where interchange fees may be higher. This meant that retailers could not benefit from lower fees elsewhere, competition between banks cross-border was restricted, and the Single Market was segmented artificially. The Commission
found that this conduct violated Art 101 TFEU.
The European Payments Council (EPC) is consulting on
draft mobile initiated Single Euro Payments Area (SEPA) credit transfer (MSCT) interoperability implementation guidelines (including SEPA credit transfer (SCT) instant). The EPC says the guidelines aim to contribute to a competitive
MSCT market by providing stakeholders with an insight into the different service, technical and security aspects involved. It says the document could also serve as a reference basis for making certain implementation choices. Feedback
is sought by 24 August 2019.
The EPC launched a
three-month public consultation on possible modifications to the SEPA Proxy Lookup (SPL) Scheme Rulebook 2019. The EPC received a total of 18 requests for possible changes to the next version of the SPL Scheme Rulebook. Feedback is
sought by 26 August 2019.
The EPC published version
1.4 of its clarification paper on the SCT and SEPA instant credit transfer (SCT Inst) rulebooks, as well as version 1.2 of its clarification paper on the SEPA direct debit (SDD) core and business-to-business (B2B) rulebooks.
The PSR and UK Finance
welcomed the launch of a new industry code, developed by consumer groups and the industry, which is intended to provide improved protection for people who fall victim to APP scams. Under the code, if a person falls victim
to an APP scam and notifies their bank, the bank (if it is signed up to the code) will decide whether to reimburse that customer within 15 working days. The code came into force on 28 May 2019.
The US Securities and Exchange Commission (SEC) awarded over $4.5m to a whistleblower, whose
leak led to an internal investigation by their company and subsequently the reporting of the alleged wrongdoing to the SEC. This is the first time a claimant was rewarded under this provision of the whistleblower rules. The provision
was designed to incentivise internal reporting by those aware of ongoing malpractice. The SEC awarded approximately a total of $381m to 62 individuals since the first award in 2012.
The Financial Industry Regulatory Authority (FINRA) proposed amending the relevant
rules of the FINRA Code of Arbitration Procedure for Industry Disputes and the FINRA Code of Arbitration Procedure for Customer Disputes to extend time periods for non-parties to respond to subpoenas and other orders, and to make
related changes to enhance the discovery process for users.
HM Treasury announced that the UK and the US established the Financial Innovation Partnership to further collaboration between the US Department of the Treasury and HM Treasury. The
partnership aims to build on and deepen bilateral engagement on emerging trends in financial services innovation. This will include encouraging collaboration in the private sector, sharing information and expertise about regulatory
practices, and promoting growth and innovation.
The FCA published a call for input in relation to
its research into how a cross-sector sandbox involving multiple regulatory agencies could be established. The FCA sees this as a potential mechanism for regulators to collaborate to address some of the issues arising as a result
of emerging technologies. Feedback is sought by 30 August 2019.
IOSCO published a consultation report on issues, risks and regulatory considerations
relating to crypto-asset trading platforms. The report sets out issues and risks identified to date that are associated with the trading of crypto-assets on CTPs, describes key considerations relating to each of those issues and
risks, and provides related toolkits that are useful for each key consideration. The consultation closes on 29 July 2019.
The Dutch Fiscal Information and Investigation Service—with Europol and the Luxembourg authorities—seized six servers belonging to cryptocurrency laundering service bestmixer.io. The service mixed potentially identifiable cryptocurrency funds with other funds to obscure
their original sources. The ongoing investigation found many mixed cryptocurrencies on the site were of a criminal origin or destination. The service enjoyed a turnover of at least $200m since starting in May 2018.
The LMA published the results of its fintech survey, which was conducted with
LMA members to better understand how they are using or planning to adopt new financial and legal technology. The survey illustrates what LMA members are doing in the fintech space, as well as their views about loan market technology
The European Commission announced that the technical expert group (TEG)
on sustainable finance will publish three new reports in June 2019. The Commission is also planning to organise a stakeholder dialogue on sustainable finance on 24 June 2019, at which it will publicly launch new guidelines for
companies on how to report climate-related information.
The board of supervisors of ESMA established a
Co-ordination Network on Sustainability (CNS) to foster the co-ordination of NCAs work in this area. The CNS will be responsible for the development of policy with a strategic view on issues related to integrating sustainability
considerations into financial regulation.
The European Commission’s joint research centre published presentation
materials from a webinar that was held on 21 May 2019 regarding the EU Ecolabel criteria for financial products. The webinar was presented at the first meeting of a sub-group that will be focused on criterion 1.1: green investment
portfolio thresholds. A work plan and milestones for the project were also discussed.
Insurance Europe’s president, Andreas Brandstetter, CEO and chairman of UNIQA Insurance Group, said that European policymakers must act to ensure insurers can fully contribute towards a sustainable Europe. According to Mr Brandstetter, policymakers must take action to
ensure prudential capital requirements reflect the real risks insurers face, provide a clear taxonomy that avoids greenwashing and ensure conduct rules give consumers real choice over environmental, social and governance (ESG)
and non-ESG investment products.
The Islamic Financial Services Board (IFSB) published an exposure draft on core
principles for effective Islamic deposit insurance systems (CPIDIS). The main objective of the CPIDIS is to provide a set of core principles for the development and implementation of an effective Islamic deposit insurance system
(IDIS), taking into consideration the specificities of Islamic banks, while complementing the existing international standards. The deadline for comments is 5 July 2019.
30 May 2019
UK regulator updates
The FCA is due to hold its May board meeting on this date.
The EBA will close it’s
premises at One Canada Square, Canary Wharf, London on 31 May 2019.
The deadline for responses to the United Nations Environment Programme Finance Initiative (UNEP FI) consultation on their ‘Principles for Responsible Banking’ is 31 May 2019.
Markets and trading
ESMA will publish the
annual calculation of the large in scale (LIS) and size specific to the instruments (SSTI) thresholds for bonds (on a per ISIN basis) through the Financial Instruments Transparency System (FITRS) in the XML files
and through the Register web interface starting on 30 April 2019. ESMA will then publish until 31 May 2019 two records with this type of calculation for each ISIN (the one applicable until that date, and the one
applicable starting on 1 June).
The deadline for feedback to the ICE Benchmark
Administration Limited’s US Dollar ICE Bank Yield Index is 31 May 2019.
The deadline for responses to the PRA’s request for technical input, prior to the formal announcement of its three month insurance stress test for the largest UK regulated life and general insurers, is 31 May 2019.
Proposed nominations to
the EPC’s ad-hoc multi-stakeholder group (MSG) on mobile initiated SCT, including instant transfers (MSG MSCT), are due by 31 May 2019.
The deadline for feedback to NEX Exchange’s consultation
paper setting out proposed changes to the NEX Exchange Growth Market Rules for Issuers is 31 May 2019.
Directive (EU) 2019/713 on
combating fraud and counterfeiting of non-cash means of payment and replacing Council Framework Decision 2001/413/JHA will enter into force on 31 May 2019.
The hearing date for the Supreme Court of Gibraltar to appoint
the Official Receiver and place LAMP into liquidation is 31 May 2019.
Regulation of derivatives
The deadline for submission
of data as part of ISDA’s voluntary early disclosure exercise for parties which expect they may exceed the Phase 5 IM threshold in one or more jurisdictions is 31 May 2019.
As part of its follow up work to
Supervisory Statement 4/17 'Cyber insurance underwriting risk' (SS4/17) the PRA will carry out sample deep-dive reviews in to other firms (not necessarily those in its initial sample) in H2 2019 to assess how these
firms are meeting the expectations set out in SS4/17.
The BoE’s Working Group on Sterling Risk-Free Reference Rates anticipates that Term Sterling Overnight Index Average reference rates could be available in the second half of 2019.
As part of it’s targeted review of internal models (TRIM) the ECB expects to complete it’s on-site investigations in H2 2019.
Risk management and controls
The ESAs will start a
joint market monitoring activity in relation to cloud outsourcing in the financial sector in H2 2019.
The FSB will issue its draft report
in relation to its evaluation of the effects of financial regulatory reforms on the provision of financing to small and medium size enterprises (SMEs) (which is part of the FSB’s broader examination of the
effects of the G20s programme of post-crisis reforms on financial intermediation) in June 2019.
The Financial Action Task Force (FATF) will hold a plenary session in the United States in June 2019. By this time the FATF plans to:—complete its digital identity project
—address by June 2019 challenges in investigations and confiscation of cases where criminals exploit virtual assets for money laundering and terrorist financing
—update by June 2019 its 2015
Risk-based Approach Guidance on Virtual Currencies
—will review Brazilian legislation (which seeks to address deficiencies identified by the FATF’s mutual evaluation report and bring the country into compliance with FATF standards)
and consider next steps in June 2019
—if by June 2019,
Iran does not enact remaining legislation in line with the FATF’s standards, then the FATF will require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran
—publish guidance on terrorist financing risk
assessments in June 2019, and
on the Risk-based Approach for Lawyers, Accountants, and Trust and Companies Service Providers (TCSPs) by June 2019
The European Commission is expected to publish an extensive report on the appropriateness of the current distribution of anti money laundering supervision in June 2019.
The work of the FSB’s Task Force on Climate-related Financial Disclosures, which published a status report in September 2018 on companies’ adoption of its recommendations, will publish a further status report in June 2019.
The European Commission’s TEG on Sustainable Finance expects to complete its reports and make its final recommendations on taxonomy, carbon benchmarks, and green bonds, by June 2019.
The FSB, FATF, Global Partnership for Financial Inclusion (GPFI), IMF and World Bank are monitoring the take-up of the FSB’s March 2018 recommendations on remittance service providers’ access to banking
services and will report to
the G20 in June 2019 on actions taken.
The FCA’s credit information market study will
be delayed until June 2019. However, the FCA does expect to publish
feedback in the form of Policy Statements to its high-cost credit review in June 2019, particularly in relation to overdrafts and ‘buy now pay later’ offers.
The Eurogroup intends to prepare amendments to the European Supervisory Mechanism Treaty and European deposit insurance scheme (in relation to the package of reform measures agreed upon in December 2018) by June 2019 .
CMA market investigation
Following the CMA’s market investigation into investment consultancy and fiduciary management services the Pensions Regulator plans to engage with industry stakeholders and the CMA to develop guidance to support trustees in complying with the new governance requirements imposed by
the CMA’s order. It plans to consult on the guidance in summer 2019.
Enforcement and redress
An update on the work of the CMA’s loyalty penalty working
group (set up to oversee the implementation of recommendations made by the CMA following the publication of its response to the loyalty penalty super-complaint from the Citizens Advice Bureau) is due in summer 2019.
The FCA expects to feedback on its consultation on general insurance
value measures reporting in H2 of 2019.
The FCA aims to publish its interim MS18/1: General insurance pricing practices market
study report, where appropriate with discussion of potential remedies, in summer 2019.
ESMA expects to
publish a final report on feedback it received to it’s consultation on the liquidity stress test for investment funds in summer 2019.
The FCA is expected to
publish a a policy statement and final Handbook rules on permanent product intervention measures to restrict the sale, marketing and distribution of contracts for difference (CFDs) and CFD-like options sold to retail
clients in Summer 2019.
The transparency requirementsbased
on the results of the annual calculations of the large in scale (LIS) and size specific to the instruments (SSTI) thresholds for bonds shall apply from 1 June 2019 until 31 May 2020.
Phillip R Lane’s appointment to
the Executive Board of the ECB will commence on 1 June 2019 and will last for eight years.
The Professional Indemnity Insurance (Insolvency Exclusions) for Personal Investment Firms Instrument 2018 (FCA 2018/50) comes into force on 1 June 2019.
As per Regulation (EU) 2018/1845 of
the ECB, credit institutions shall notify the ECB, before 1 June 2019, of the exact date on which they will commence applying such the threshold for the assessment of the materiality of a credit obligation.
Commission Implementing Decision (EU) 2018/2047 which
extends the equivalence of the legal and supervisory framework applicable to stock exchanges in Switzerland under MiFID II sets out that this equivalence will expire on 30 June 2019.
Commission Delegated Regulation (EU) 2019/758 supplementing
Directive (EU) 2015/849 (MLD4) with regard to RTS for the minimum action and the type of additional measures credit and financial institutions must take to mitigate money laundering and terrorist financing
risk in certain third countries will enter into force on 3 June 2019.
The EBA will be fully operational in
its new Paris headquarters by 3 June 2019.
Financial Advice Market Review
Retail Distribution Review
The deadline for feedback to the FCA’s call for
input asking for feedback on its proposed approach to reviewing the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR) is 3 June 2019.
The next meeting of the BoE’s Money Markets
Committee’s will take place on 4 June 2019.
The deadline for
responses to the EBA’s consultation on its updated guidelines on harmonised definitions and templates for the reporting of funding plans of credit institutions is 5 June 2019. Responses should be sent to the
EBA via its website.
Liquidity risk management
The deadline for responses to PRA ‘CP4/19: Liquidity risk management for insurers’
is 5 June 2019.
Regulation of capital markets
As part of its annual survey of the repo market the International Capital Markets Association (ICMA) will take a snapshot of repo businesses as at close of business on 5 June 2019.
Bank of England
The deadline for feedback to the PSR’s consultation ‘CP19/4–Confirmation of payee–Response to the first consultation and draft specific direction for further consultation’
is 5 June 2019.
European regulator updates
Regulatory fees and levies
The deadline for feedback
to the ECB’s consultation on proposed changes to the ECB Regulation on supervisory fees is 6 June 2019.
The deadline for applications to be appointed as a
member of the Administrative Board of Review of the ECB is 6 June 2019.
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