FS weekly highlights—4 April 2019

In this issue

 

No-deal Brexit announcements
Brexit news
Brexit legislation
UK regulator updates
European regulator updates
European System of Financial Supervision
International regulator updates
Authorisation, approval and supervision
Prudential requirements
Risk management and controls
Financial crime
Claims management
Consumer protection
Enforcement and redress
Competition in financial services
Markets and trading
MiFID II
Regulation of capital markets
Regulation of derivatives
Investment funds and asset management
Banks and mutuals
Consumer credit, mortgage and home finance
Consumer access to financial services
Insurance and pensions
Payment services and systems
FinTech and virtual currencies
Sustainable finance
Dates for your diary

 

No-deal Brexit announcements

 

FCA publishes final no-deal Brexit rules and guidance

The Financial Conduct Authority (FCA) published its final instruments and guidance that will apply in the event the UK leaves the EU without a deal or an implementation period. The package of documents published contains the majority of the final instruments and guidance, following the February 2019 publication of the FCA’s Policy Statement PS19/5 with near-final instruments. The FCA and Prudential Regulation Authority (PRA) also confirmed that they extended the notification window for firms who wish to enter the temporary permissions regime until the end of 11 April 2019.

European Commission adopts EMIR Delegated Regulations to prepare for no-deal Brexit

The European Commission adopted a Delegated Regulation amending Commission Delegated Regulation (EU) 2016/2251, which supplemented Regulation (EU) 648/2012 (the European Market Infrastructure Regulation (EMIR)) with regulatory technical standards (RTS) on risk mitigation techniques for uncleared over-the-counter (OTC) derivative contracts (C(2019) 2530 final) and a Delegated Regulation amending RTS on the clearing obligation under EMIR to extend the dates of deferred application of the clearing obligation for certain OTC derivatives contracts (C(2019) 2533 final).

ECON recommends no objection to EMIR Delegated Regulations preparing for no-deal Brexit

The European Parliament’s Economic and Monetary Affairs Committee (ECON) voted to recommend that the Parliament raise no objections to two delegated regulations (C(2019)02530 and C(2019)02533) adopted by the European Commission on 28 March 2018 in order to extend the current exemptions from the clearing and margin requirements under EMIR in light of the extension to the UK’s exit from the EU.

ESAs call for policy actions in face of no-deal Brexit and asset price volatility risks

The Joint Committee of the European Supervisory Authorities (ESAs) published a report on risks and vulnerabilities in the EU financial system for Spring 2019, highlighting the risks of a no-deal Brexit and asset price volatility. The report says that in light of the ongoing uncertainties, especially those around Brexit, supervisory vigilance and co-operation across all sectors remains key, and it calls for a number of policy actions.

ESMA updates on its preparations for a possible no-deal Brexit scenario on 12 April 2019

The European Securities and Markets Authority (ESMA) published a statement updating on its preparations for a no-deal Brexit scenario in view of recent developments on timing. ESMA initiated a systematic analysis of the potential impact of a no-deal Brexit for European securities markets and for ESMA as an organisation, and was preparing for that scenario happening on 29 March 2019. In terms of ESMA’s previously published measures and actions, including public statements, issued on the basis of a no-deal Brexit scenario, ESMA wants to highlight that any reference to 29 March 2019 in previous statements should now be read as 12 April 2019.

OBIE provides guidance to EEA Open Banking participants regarding the temporary permissions regime

The Open Banking Implementation Entity (OBIE) provided guidance to EEA participants in order to assist them with remaining part of the Open Banking system in the event of no implementation period when the UK withdraws from the EU. 

 

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Brexit news

 

FCA and SEC sign updated co-operation MoUs

The FCA and the US Securities and Exchange Commission (SEC) signed updated memoranda of understanding (MOUs) to ensure the continued ability to co-operate and consult with each other regarding the effective and efficient oversight of regulated entities across national borders after Brexit. The MOUs will come into force on the date EU legislation is no longer directly effective in the UK. At a meeting in London, FCA CEO Andrew Bailey and SEC chair Jay Clayton also discussed risks posed by jurisdictional share trading obligations, which could increase market fragmentation and impose unnecessary costs on investors.

FCA publishes policy statement on recovering costs of regulating credit rating agencies, trade repositories and securitisation repositories post-Brexit

The FCA published a policy statement PS19/10 on recovering the costs of regulating credit rating agencies (CRAs), trade repositories (TRs) and securitisation repositories (SRs) after the UK leaves the European Union and the FCA becomes their regulatory authority in the UK. It sets out the FCA’s final requirements and guidance and feedback to responses received to relevant consultation papers. The new rules will come into effect on the day the UK leaves the EU. As firms convert to the FCA regulatory regime or register with the FCA, they will provide the FCA with the turnover data it needs to calculate their fee rates.

Commons committee clears financial services proposals from scrutiny but raises concerns about Brexit

The House of Commons European Scrutiny Committee decided to clear from scrutiny the European Commission’s 2017 proposal to amend EMIR (Refit) proposal, its 2017 proposals on the prudential framework for investment firms and its 2018 proposals on covered bonds. However, it raised a number of issues created by Brexit with respect to the impact EU financial services legislation will have in the UK beyond ‘exit day’.

Lords EU financial affairs sub-committee to hear evidence on Brexit relocations

The House of Lords EU financial affairs sub-committee is to discuss with experts the impact of Brexit and the movement of financial services firms, in a one-off evidence session on 3 April 2019. The committee will take evidence from Andrew Pilgrim, an associate partner at EY specialising in government financial services, and William Wright, the managing director of New Financial.

FMLC identifies legal uncertainties in draft securitisation onshoring SI

The Financial Markets Law Committee (FMLC) published a paper in its Onshoring Statutory Instruments Comment Series on the draft Securitisation Amendment (EU Exit) Regulations 2019. In the paper, the FMLC highlights legal uncertainties arising from the draft SI related to EU legislative references, including cross-references to EU Directives; the geographical scope of the onshored securitisation regime, particularly with respect to simple, transparent and standardised securitisations and the risk retention requirement; due diligence requirements for institutional investors; and transitional provisions and guidelines for the UK securitisation regime.

Association for Financial Markets in Europe updates wording equity selling restrictions for Brexit

The Association for Financial Markets in Europe (AFME) published model selling restriction wording for use in equity offerings either following a no deal Brexit or in a scenario where a deal is agreed with a transitional period. 

 

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Brexit legislation

 

Official Listing of Securities, Prospectus and Transparency (Amendment etc) (EU Exit) Regulations 2019

SI 2019/707: This enactment is made in exercise of legislative powers under the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. This enactment amends and revokes provisions of UK primary legislation and retained direct EU legislation relating to the official listing of securities and prospectus and transparency requirements in order to address deficiencies which arise from the UK leaving the EU. This instrument will therefore act to ensure that the UK’s listing regime and transparency framework continue to operate as intended in the UK once the UK leaves the EU. It comes into force on exit day (updated from draft on 27 March 2019).

Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019

SI 2019/710: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for Brexit. This enactment addresses deficiencies in UK domestic law and retained EU law arising from the UK’s withdrawal from the EU, in line with the approach taken in other financial services EU exit instruments under the 2018 Act and revokes a number of pieces of retained EU law and UK domestic law. Regulation 38 comes into force on the day before the day on which exit day falls. Regulations 1 and 13–24 come into force immediately before exit day. The remaining provisions come into force on exit day (updated from draft on 27 March 2019).

European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) Regulations 2019

SI 2019/718: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for Brexit. This enactment amends the definition of ‘exit day’ in section 20(1) of the 2018 Act from 29 March 2019 at 11pm to 22 May 2019 at 11pm, if the negotiated Withdrawal Agreement is approved by the House of Commons by 11pm on 29 March 2019, or to 12 April 2019 at 11pm if the negotiated withdrawal agreement is not approved by the House of Commons by 11pm on 29 March 2019 and consequently amends section 20(2) of the 2018 Act. Amending the definition of exit day will ensure the correct functioning of the domestic statute book and avoid a discrepancy between UK law and EU law on 29 March 2019 at 11pm. It comes into force immediately after 12:40 pm on 28 March 2019 (updated from draft on 28 March 2019). 

 

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UK regulator updates

 

FCA publishes MoU with SRA on exchange of information, communications and investigative assistance

The FCA published an MoU, dated 13 March 2019, between the FCA and the Solicitors Regulation Authority (SRA). The purpose of the MoU is to establish a formal basis for co-operation, including in the areas of exchanging information, communications and investigative assistance. The MoU took effect on 13 March 2019, when it was signed by both parties.

FCA publishes Handbook Notice No. 64

The FCA published Handbook Notice No 64, which includes changes to the FCA Handbook made by the FCA board on 28 February and 28 March 2019, together with feedback on consultation papers that will not get a separate policy statement. The notice also includes changes made by the Board of the Financial Ombudsman Service (FOS) to its rules and standard terms on 6 and 27 March 2019 and approved by the FCA board on 28 March 2019. The Handbook Notice includes details of changes in relation to Brexit, consumer credit, anti-money laundering (AML), the approved persons regime and a number of other topics.

FCA director speaks on effective stewardship

The director of markets and wholesale policy at the FCA, Edwin Schooling Latter, delivered a speech at the London School of Economics on the importance of effective stewardship. While progress is being made towards more effective stewardship, Mr Latter said that the overall evidence on whether and how stewardship is happening is mixed.

PRA Regulatory Digest for March 2019

The PRA published its Regulatory Digest for March 2019. This highlights key regulatory news and publications delivered for the month. The March issue includes updates in relation to Brexit, prudential requirements, liquidity risk management for insurers and a number of other topics.

PSR announces board appointments

The Payment Systems Regulator (PSR) confirmed the appointments of Louise Buckley and Chris Hemsley to its board, and the reappointment of Carole Begent. In addition, Noel Gordon is being reappointed as a non-executive director and Nick Stace, an existing non-executive of the FCA, is joining the PSR board as a non-executive director.

Financial Services and Markets (Insolvency) (Amendment of Miscellaneous Enactments) Regulations 2019

SI 2019/755: Consequential amendments are made to various financial services instruments in consequence of the revocation of the Insolvency Rules 1986 and the coming into force on 6 April 2017 of the Insolvency (England and Wales) Rules 2016 in England and Wales, and the revocation of the Insolvency (Scotland) Rules 1986 and the coming into force on 6 April 2019 of the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 and the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 in Scotland. The Regulations will come into force on 23 April 2019. 

 

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European regulator updates

 

ESAs call for policy actions in face of no-deal Brexit and asset price volatility risks

The Joint Committee of the ESAs published a report on risks and vulnerabilities in the EU financial system for Spring 2019, highlighting the risks of a no-deal Brexit and asset price volatility. The report says that in light of the ongoing uncertainties, especially those around Brexit, supervisory vigilance and co-operation across all sectors remains key, and it calls for a number of policy actions.

ECB vice president Luis de Guindos presents ECB Annual Report 2018 to ECON Committee

The European Central Bank (ECB) vice president, Luis de Guindos, presented the ECB’s annual report 2018 to ECON. In presenting the report, Mr de Guindos outlined the monetary policy decisions taken by the ECB in 2018 and their impact on the euro area economy, the ECB’s more recent monetary policy decisions, and some key issues on the European financial agenda.

MEPs quiz European Commissioner Valdis Dombrovskis for last time in legislature

European Commission vice-president Valdis Dombrovskis appeared before ECON for the last time before the European elections, to answer questions from MEPs. Topics discussed included the effect of Brexit on European financial markets, the risks of banking concentration, the European deposit insurance scheme (EDIS), AML and EU green bonds.

European Parliament signs off 2017 accounts for ESMA and EIOPA

The European Parliament granted the executive directors of ESMA and the European Insurance and Occupational Pensions Authority (EIOPA) discharge in respect of the implementation of their budgets for the financial year 2017, and approved the closure of their accounts for that financial year. Parliament instructed its President to forward the decisions to the executive directors of the two Authorities, the Council, the Commission and the Court of Auditors, and to arrange for their publication in the Official Journal. 

 

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European System of Financial Supervision

 

Final ESFS review package legislation sent to COREPER for approval

The General Secretariat of the Council of the EU circulated an I Item note inviting the Permanent Representatives Committee (COREPER) to approve the final forms of the legislation forming the European System of Financial Supervision (ESFS) review package.

European Commission publishes fact sheet on ESFS review

The European Commission published a fact sheet on the review of the ESFS, entitled ‘Capital markets union: Creating a stronger and more integrated European financial supervisory architecture, including on anti-money laundering’. The fact sheet, published on 1 April 2019, sets out the existing ESFS framework and the rationale for and key features of the proposed changes.

ECON endorses political agreement on ESFS proposals

ECON voted to approve the political agreement reached on 21 March 2019 by the Parliament and the Council of the EU on the package of measures proposed by the European Commission in September 2018 to strengthen the ESFS. While the European Fund and Asset Management Association (EFAMA) welcomed the agreement, it said that there were some ‘missed opportunities’. 

 

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International regulator updates

 

FSB chair on FinTech, bail in and the implementation of the resolution standards

The Financial Stability Board (FSB) posted a video of its chair, Randal K Quarles, speaking at a conference in Frankfurt on financial intermediation, regulation and economic policy hosted by the ECB and Journal of Money, Credit and Banking. Mr Quarles discussed possible improvements to the FSB’s structure and operations, and the implementation of the resolution standards.

FSB speech on its role in the future of banking

The FSB published a speech entitled ‘The Financial Stability Board: Beyond the fog of battle’ given by its chair, Randal K Quarles, at the 2019 European Bank Executive Committee Forum held in Brussels. In his speech Mr Quarlesoutlined three factors that he believes are essential to preserving the relevance and vitality of the FSB: engagement, vigilance, and analysis. 

 

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Authorisation, approval and supervision

 

FCA issues final SM&CR rules for claims management companies

The FCA published a policy statement PS19/9 on applying the Senior Managers and Certification Regime (SM&CR) to claims management companies (CMCs). The policy statement includes final rules and responses to feedback on consultation paper CP18/26, which was published in September 2018. In general, the rules set out in PS19/9 will apply from 9 December 2019. If a is firm not authorised by that time, the rules will apply from the date the firm is fully authorised.

IA launches gender pay gap report in the investment management sector

The Investment Association (IA) published a new report regarding the gender pay gap in the investment management industry. The report also considers some of the industry initiatives aimed at narrowing the gap and makes suggestions for monitoring progress. 

 

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Prudential requirements

 

BoE extends weekly indexed long-term repo operations

The Bank of England (BoE) announced that it will continue to offer indexed long-term repo operations on a weekly basis until end-June 2019. This is a precautionary step to provide additional flexibility in the BoE’s provision of liquidity insurance over the coming months. The BoE says it will ‘continue to monitor market conditions carefully and stands ready to take additional action if necessary’.

HMT updates Commons European Scrutiny Committee and Lords EU Committee on bank risk reduction measures package

HM Treasury published letters from the Economic Secretary to the Treasury, John Glen MP, to the Chair of the Commons European Scrutiny Committee, Sir William Cash MP and to the Chair of the Lords EU Committee, Lord Boswell of Aynho, providing updates on the progress of EU negotiations on the bank capital and resolution requirements known as the risk reduction measures package.

Implementing regulation amending CRD IV reporting requirements published in Official Journal

Commission Implementing Regulation (EU) 2019/439 of 15 February 2019 was published in the Official Journal. It amends Implementing Regulation (EU) 2016/2070 with regard to benchmark portfolios, reporting templates and reporting instructions to be applied in the EU for the reporting referred to in Article 78(2) of Directive 2013/36/EU (the fourth Capital Requirements Directive (CRD IV)).

Commission Implementing Decision updating CRR list of equivalent third countries published in OJ

Commission Implementing Decision (EU) 2019/536 of 29 March 2019 amending Implementing Decision 2014/908/EU as regards the lists of third countries and territories whose supervisory and regulatory requirements are considered equivalent for the purposes of the treatment of exposures in accordance with Regulation (EU) 575/2013 (the Capital Requirements Regulation (CRR)), was published in the Official Journal of the EU.

ECON endorses political agreement on prudential framework for investment firms

ECON voted to approve the political agreement reached on 26 February 2019 by the Parliament and the Council of the EU on the European Commission’s December 2017 proposals for a new directive on the prudential supervision of investment firms and a new regulation on the prudential requirements of investment firms. A vote in plenary scheduled for 17 April 2019.

European Commission recognises Argentina as equivalent for credit-risk weighting

The European Commission announced that it recognised Argentina as enjoying requirements equivalent to those of the EU in terms of the prudential and supervisory framework for the purpose of credit-risk weighting. This decision will enable EU banks to apply a more favourable and proportionate capital treatment for exposures to credit institutions and certain public sector entities located in Argentina.

ESRB recommends EU-wide reciprocation of Sweden’s 25% floor for average risk weights for mortgage portfolios

The European Systemic Risk Board (ESRB) issued a press release saying that on 15 January 2019 it adopted a Recommendation for the EU-wide reciprocation of Sweden’s 25% floor for average risk weights applied by banks using the internal ratings-based approach to the portfolio of retail exposures to obligors residing in Sweden secured by immovable property. This Recommendation was published in the Official Journal of the European Union on 20 March 2019. 

 

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Risk management and controls

 

Employment Appeal Tribunal considers dismissal of banker considered not ‘fit and proper’

The Employment Appeal Tribunal (EAT) published its judgment in Mr M S Radia v Jefferies International Ltd, UKEAT/0123/18/JOJ, in which it considered an appeal by a former investment banker who was challenging a decision by the Employment Tribunal (ET) that his dismissal by Jefferies International Limited was not unfair. Mr Radia was dismissed due to findings in an earlier decision by the ET about his credibility, which Jefferies decided meant that he could no longer be seen as a fit and proper person in accordance with the FCA Handbook.

London banker loses whistleblower retaliation claims

A London employment tribunal dismissed a former Mizuho Bank Ltd executive’s whistleblower retaliation complaints and upheld his firing for stealing from a colleague, saying it was satisfied that his disclosures didn’t play a part in the bank’s decision. Former executive Marius Caracota sued the Japanese bank for unfair dismissal, claiming that what he said was an inadvertent theft was used by higher ups as a pretext for his dismissal after he complained about bullying at the bank and his lack of registration with the UK’s FCA. But the three-member employment tribunal sided with the bank, saying that Caracota lost his job because he took an unidentified item belonging to a colleague.

BSB publishes 2018 annual review of banking culture

The Banking Standards Board (BSB) released its annual review for 2018/2019. It includes the results of the third annual BSB assessment, an exercise designed to inform, support and challenge banks and building societies committed to managing their cultures and raise standards of behaviour and competence across the sector. 

 

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Financial crime

 

Senior bankers sentenced for rigging EURIBOR rate

The Serious Fraud Office (SFO) announced that Carlo Palombo, former Barclays vice president of euro rates, and Colin Bermingham, former managing director at Barclays, were sentenced at Southwark Crown Court to a total of nine years imprisonment for manipulating the Euro interbank offered rate (EURIBOR). Palombo was sentenced to four years and Bermingham was sentenced to five years. The bankers conspired at the height of the financial crisis with former principal trader at Deutsche Bank, Christian Bittar, and former Barclays director, Phillipe Moryoussef, to submit false or misleading EURIBOR submissions to change the published rate and benefit their positions.

EBA creates a central location for information on AMLD4 administrative sanctions and measures

The European Banking Authority (EBA) announced that it centralised, on its website, various links to national competent authorities (NCAs)’ websites for users to access information on sanctions and administrative measures that NCAs imposed for breaches of AML and counter-terrorist financing obligations.

European Parliament adopts TAX3 report on financial crimes, tax evasion and tax avoidance

The European Parliament adopted the report of the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) with recommendations for an EU financial police force and financial intelligence unit. TAX3 was established by the European Parliament on 1 March 2018, with a mandate to report and make recommendations on how to fight financial and tax crimes at an EU and global level. The recommendations range from overhauling the system to deal with financial crimes, tax evasion and tax avoidance, notably by improving cooperation in all areas between the multitude of authorities involved, to setting up new bodies at EU and global levels.

UN unanimously adopts resolution for Member States to combat terrorism

The United Nations Security Council unanimously adopted a resolution calling on all Member States to combat and criminalise the financing of terrorists and their activities. Resolution 2462 (2019), under chapter seven of the United Nations Charter, reaffirms its resolution 1373 (2001), that was adopted after the 11 September 2011 attacks in the US, and requires all states to prevent the financing of terrorist acts and refrain from providing support to those involved in them. 

 

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Claims management

 

Financial Guidance and Claims Act 2018 (Commencement No 6) Regulations 2019

SI 2019/743: Certain provisions of the Financial Guidance and Claims Act 2018 will come into force in the UK on 29 March 2019. The commenced provisions relate to the power of the FCA to make rules restricting charges for claims management services among other things.

FCA regulates claims management companies from 1 April 2019

The FCA issued a press release reminding CMCs and those who use them that the FCA is responsible for regulating CMCs from 1 April 2019. All CMCs in England, Scotland and Wales must now demonstrate they meet and maintain minimum standards set by the FCA. All existing and new CMCs need to apply to the FCA for authorisation.

FCA issues final SM&CR rules for claims management companies

The FCA published a policy statement PS19/9 on applying the SM&CR to CMCs. The policy statement includes final rules and responses to feedback on consultation paper CP18/26, which was published in September 2018. In general, the rules set out in PS19/9 will apply from 9 December 2019. If a firm is not authorised by that time, the rules will apply from the date the firm is fully authorised. 

 

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Consumer proetction

 

EU set to update and reinforce its consumer protection laws

EU Member States’ ambassadors—meeting in COREPER— approved a deal between the Romanian presidency and the European Parliament on a draft Directive that aims to amend four existing EU directives that protect consumers’ interests. The draft Directive looks to amend the Unfair Commercial Practices Directive 2005/29/EC, the Consumer Rights Directive 2011/83/EU, the Unfair Contract Terms Directive 93/13/EEC and the Price Indication Directive 98/6/EC. After the standard legal and linguistic scrutiny, the text will be adopted by the European Parliament and Council and Member States will be given 24 months from the entry into force of the Directive to transpose it into national law.

Political agreement reached on new EU consumer protection rules

The European Parliament and the Council of the EU reached a provisional agreement on stronger and better enforced consumer protection rules, which will increase transparency for consumers when buying online and introduce effective penalties and clear rules to tackle the issue of dual quality of products in the EU. The new rules were proposed in April 2018 by the European Commission, which welcomed the political agreement, as part of the ‘New deal for consumers’. The provisional agreement will now need to be formally adopted by both the European Parliament and the Council of the EU. 

 

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Enforcement and redress

 

FCA fines Goldman Sachs International £34.3m for transaction reporting failures

The FCA fined Goldman Sachs International (GSI) £34,344,700 for failing to provide accurate and timely reporting relating to 220.2 million transaction reports between November 2007 and March 2017. The FCA’s rules on transaction reporting during the relevant period were based on the EU Markets in Financial Instruments Directive (2004/39/EC) (MiFID). The recast Markets in Financial Instruments Directive (2014/65/EU) (MiFID II), which replaced MiFID, took effect from 3 January 2018 and extended transaction reporting requirements to include additional instruments. According to the FCA, GSI failed to ensure it provided complete, accurate and timely information in relation to approximately 213.6m reportable transactions. It also erroneously reported 6.6m transactions to the FCA which were not, in fact, reportable.

ESMA fines Fitch Group companies €5,132,500 for breaches of conflict of interest requirements

ESMA, the supervisor of EU CRAs, fined three CRAs belonging to the Fitch Group a total of €5,132,500. The fines relate to a series of infringements where the CRAs negligently failed to comply with requirements of the CRA Regulation relating to conflicts of interest that entered into force on 20 June 2013.

FCA announces independent investigation into the failure of London Capital & Finance

The FCA announced that there should be an investigation by an independent person into the issues raised by the failure of London Capital & Finance (LC&F). The decision was taken at the FCA’s board meeting on 28 March 2019. The FCA says the investigation should ask whether the existing regulatory system adequately protects retail purchasers of mini-bonds from unacceptable levels of harm, and should look at the FCA’s supervision of LC&F.

Treasury Committee publishes correspondence with FCA on investigation into LC&F

The chair of the Treasury Committee, Nicky Morgan MP, welcomed the confirmation that there will be an independent investigation into LC&F. This follows a decision by the FCA board that there should be an investigation into the issues raised by LC&F’s failure, and confirmation that HM Treasury would use its power to ensure the FCA conducts such an investigation. The Treasury Committee published correspondence between the FCA and Ms Morgan (Charles Randell to Nicky Morgan 1 April 2019 and  Charles Randell to Nicky Morgan 2 April 2019), and between the FCA and HM Treasury (John Glen to Charles Randell 1 April 2019), relating to the investigation.

FCA issues warning on Innovative Finance ISAs

The FCA issued a warning about Innovative Finance ISAs (IFISAs), which it says are high-risk, with the money ultimately being invested in products like mini-bonds or peer-2-peer investments. The FCA says there is evidence that IFISAs are being promoted alongside cash ISAs, and that they may not be protected by the Financial Service Compensation Scheme, so customers could lose the money invested or find it hard to get back.

McKendrick v Financial Conduct Authority

Practice – Contempt of Court. The appellant's contempt of court in breaching a Worldwide freezing orders designed to provide payment to investors by the FCA was plainly so serious that no sanction other than a significant term of imprisonment could be justified. The sentence of six months was imposed as punishment for the past breaches, taking into account the admissions made (not at the earliest opportunity) by the appellant. The Court of Appeal, Civil Division, held that on that basis, it could not be said that a term of six months was outside the range reasonably open to the judge.

PRA and FCA issue final rules on FSCS management expenses levy limit

The PRA issued policy statement PS10/19, which follows consultation paper CP2/19 and sets out the final rules for the Financial Services Compensation Scheme (FSCS) management expenses levy limit for 2019/2020. The PRA says it received no responses to the CP that were relevant to the proposals consulted upon and is implementing them as consulted. The FCA also made changes to the FCA Handbook.

FSCS announces higher protection limits of £85,000 for some products and services

The Financial Services Compensation Scheme (FSCS) announced that the limits on the financial protection it offers for some products and services is being raised to £85,000 from 1 April 2019. The announcement follows an FCA consultation (CP18/11) on the FSCS’s funding arrangements. An increased protection limit of £85,000 applied to deposits in banks, building societies and credit unions since 30 January 2017. As of 1 April 2019, the higher limits also cover investments, mortgage advice, life and pensions advice, debt management and long-term care insurance.

FSCS extends CRL Management replacement insurer deadline

The FSCS is giving CRL Management a further two weeks to find an alternative insurer to provide replacement cover for Alpha latent defect and structural damage insurance policyholders whose policies terminated last August. The extension aims to secure a better outcome for customers of CRL Management.

APPG on Fair Banking asks Treasury Committee to investigate forged bank signature claims

The co-chair of the all-party Parliamentary group on Fair Business Banking, Kevin Hollinrake MP, wrote to the Treasury Committee urging it to undertake an immediate enquiry into the alleged forgery of signatures on bank court documents in cases. It asked the committee to hear evidence from Lloyds Banking Group CEO António Horta-Osório, saying the bank's actions were in danger of ‘repeating the same conduct it displayed towards the customers who first notified the bank of the HBOS reading fraud’. 

 

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Competition in financial services

 

CMA issues Directions to five banks which have delayed in delivering the Open Banking programme

The Competition and Markets Authority (CMA) issued Directions to five banks in respect of the Retail Banking Market Investigation Order 2017. These Directions relate to delays in delivering certain aspects of the Open Banking programme, in particular with regard to mobile app functionality. The Trustee of OBIE also issued a statement in relation to the Directions.

CMA market investigation: Funeral director and crematoria services markets referred for in-depth market investigation

The CMA announced it launched an in-depth phase 2 market investigation into the supply of services by funeral directors at the point of need and the supply of crematoria services. This follows its market study launched in June 2018 and the publication of its interim report in November 2018, which found problems with the funerals market resulting in above-inflation price rises for well over a decade, for both funeral director services and crematoria services. The CMA believes the scale of these price rises cannot be justified by cost increases or quality improvements. The CMA also published the final report of its funerals market study, the terms of reference for the CMA’s market investigation and announced the appointment of the inquiry group. 

 

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Markets and trading

 

Council of the EU I/A Item note on Commission Delegated Regulations extending EMIR deadlines

The Council of the EU circulated an I/A Item note inviting the COREPER to confirm that it does not objection to two Commission Delegated Regulations supplementing EMIR which were adopted by the Commission on 28 March 2019.

ESMA provides guidance on the new EMIR Refit regime for the clearing obligation

ESMA published a statement on the implementation of the EMIR Refit regime for the clearing obligation for financial and non-financial counterparties. The statement is addressed to all financial and non-financial counterparties subject to EMIR. It provides guidance on when they need to determine whether they are subject to the clearing obligation under the new regime introduced by Refit, and equally when they need to notify ESMA and their relevant competent authority that they are indeed subject to the clearing obligation, ie on the day the Refit text enters into force.

ESMA publishes official translations of guidelines on position calculation by TRs

ESMA issued the official translations of its guidelines on position calculation by TRs under EMIR, which came into effect on 3 December 2018. The purpose of the guidelines is to set up a framework for TRs to calculate positions in derivatives in a harmonised and consistent manner in accordance with Article 80(4) of EMIR.

ESMA updates MAR Q&As

ESMA updated its Q&A document regarding the implementation of Regulation (EU) 596/2014 (the Market Abuse Regulation (MAR)). The new Q&A document includes new detailed answers on the meaning of 'parent' and 'related undertaking' in Article 17(2) of MAR, and disclosure of inside information concerning emission allowances.

FICC Markets Standards Board issues statement of good practice on conduct risk in market transactions

The Fixed Income, Currencies and Commodities (FICC) Markets Standards Board (FMSB) published ‘Conduct risk in market transactions: Statement of good practice for FICC market participants’. The paper sets out good practice statements for the identification of conduct risks in market transactions using the FMSB’s behavioural cluster analysis methodology. It applies to participants in FICC markets in the execution, management and oversight of market activity.

IBA announces successful transition of LIBOR panel banks to the waterfall methodology

ICE Benchmark Administration (IBA) announced that it successfully completed the transition of London Interbank Offered Rate (LIBOR) panel banks to the waterfall methodology, as set out in the LIBOR Output Statement. The Output Statement sets out a single LIBOR definition and a standardised waterfall methodology for making LIBOR submissions, based on transactions to the greatest extent possible. The transition occurred on a gradual basis to minimise operational and technology risks. 

 

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MiFID II

 

Decision on equivalence for Singapore exchanges and recognised market operators under MiFIR published in Official Journal

Commission Implementing Decision (EU) 2019/541 of 1 April 2019 on the equivalence of the legal and supervisory framework applicable to approved exchanges and recognised market operators in Singapore in accordance with Regulation (EU) No 600/2014 of the European Parliament and of the Council (the Markets in Financial Instruments Regulation (MiFIR)), was published in the Official Journal of the EU.

ESMA issues four positive opinions on national product intervention measures under MiFIR, including FCA binary options ban

ESMA issued four positive opinions relating to national product intervention measures taken by the NCAs of the UK, the Netherlands and Poland. In its opinion, ESMA finds that the proposed measures are justified and proportionate, and that it is necessary for NCAs to take product intervention measures that are at least as stringent as ESMA’s.

ESMA letter to European Commission on MiFID II/MiFIR review reports

The chair of ESMA, Steven Maijoor, wrote a follow-up letter to the director general of the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union at the European Commission, Olivier Guersent, regarding its contribution to a range of MiFID II/MiFIR review reports, setting out ESMA’s proposed timetable for their delivery. The proposed timetable considers the uncertainties introduced by Brexit and aims to ensure that enough experience is gathered on the application of MiFID II/MiFIR before beginning the review of the functioning of the various MiFID II provisions.

ESMA publishes speech on investor protection

The chair of ESMA, Steven Maijoor, gave a speech at the Better Finance 10th Year Anniversary Event in Bucharest. Mr Maijoor focused on the costs and performance of retail investment products as they affect the protection of investors and their participation in capital markets.

ESMA updates its Q&As on MiFID II and MiFIR investor protection and intermediaries

ESMA added new Q&As and updates on the implementation of investor protection topics under MiFID II/MiFIR. The purpose of these Q&As is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR. ESMA will continue to develop this Q&A, adding to the topics already covered and introducing new sections for other MiFID II investor protection areas not yet addressed in this Q&A.

ESMA updates its Q&AS on MiFID II and MiFIR transparency topics

ESMA updated its Q&As regarding market structures and transparency issues under MiFID II and MiFIR. 

 

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Regulation of capital markets

 

European Parliament publishes provisional texts of positions on crowdfunding proposals

The European Parliament published provisional versions of the texts of its positions on the European Commission’s proposals for a regulation on European Crowdfunding Service Providers (ECSP) for Business and a directive amending MiFID II with regard to crowdfunding service providers. The Parliament adopted its positions at first reading on 27 March 2019. The texts make a number of changes to the Commission’s March 2018 proposals.

ECON endorses political agreement on EU covered bond proposals

ECON voted to approve the political agreement reached on 26 February 2019 by the Parliament and the Council of the EU on the European Commission’s March 2018 proposals for a new directive on the issue of covered bonds and covered bond public supervision and to amend the CRR with regard to covered bond exposures. A vote in plenary is scheduled for 18 April 2019.

ESMA publishes final guidelines on disclosure of risk factors in prospectuses

ESMA published its final guidelines on how NCAs should review risk factors, as required by Regulation (EU) 2017/1129 (the Prospectus Regulation). The guidelines aim to encourage more appropriate, focused and streamlined risk factor disclosures for securities, which is presented in an easy to analyse, concise and comprehensible form. The guidelines are intended to assist NCAs in their review of risk factor disclosure and take account of the feedback to ESMA’s July 2018 consultation paper.

ESMA advises Commission on information document for takeover, merger and divisions

ESMA published its technical advice on the minimum information content of documents describing a takeover, merger or division. Under the Prospectus Regulation, issuers may offer/admit securities in connection with takeovers, mergers or divisions without publishing a prospectus, provided that a document is made available to investors describing the transaction and its impact on the issuer.

List of competent authorities under Securitisation Regulation published

ESMA published a list of the competent authorities under Article 29 of Regulation (EU) 2017/2402 (Securitisation Regulation).

IOSCO report on behavioural insights seeks to enhance retail investor protection

The International Organisation of Securities Commissions (IOSCO) published a report on behavioural insights that aims to help its members improve the effectiveness of retail investor protection. The report, entitled ‘The application of behavioural insights to retail investor protection’, provides guidance to help regulators better understand the behaviour of retail investors in making financial investment decisions.

 

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Regulation of derivatives

 

FCA announces permanent ban on retail binary options

Following consultation feedback, the FCA confirmed that all firms acting in or from the UK are prohibited from selling, marketing or distributing binary options to retail consumers. The FCA’s final position and Handbook rules are set out in policy statement PS19/11. The FCA’s rules are permanent and come into force on 2 April 2019. PS19/11 summarises the feedback the FCA received to its consultation paper CP18/37. The FCA is intervening because of evidence of consumer harm from the inherent risks of these products and the poor conduct of the firms selling them.

European Parliament publishes provisional text of position on CCP recovery and resolution proposal

The European Parliament published a provisional version of the text of its position on the European Commission’s proposal for a regulation on a framework for the recovery and resolution of central counterparties (CCPs), which the Parliament adopted at first reading on 27 March 2019. The text makes a number of changes to the Commission’s November 2016 proposal.

ECON endorses political agreement on CCP authorisation and recognition

ECON voted to approve the political agreement reached by the Parliament and the Council of the EU on the European Commission’s June 2017 proposal for a new regulation on the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs. A vote in plenary is scheduled for 18 April 2019.

ESMA launches 2019 CCPs stress test

ESMA launched its third EU-wide CCPs stress test. For this third CCP stress test, ESMA further developed its framework, adding a new component to the exercise on concentration risk, in addition to assessments on credit and liquidity risks. This new component will be used to assess the impact of liquidation costs for concentrated positions.

ISDA publishes monthly review and OTC derivatives compliance calendar update

The International Swaps and Derivatives Association (ISDA) published a round-up of its articles, letters, press releases and updates from March 2019. It also published an updated derivatives compliance calendar, which sets out deadlines and regulatory dates for the OTC derivatives sector and now runs until September 2023.

WFE report on the future of clearing

The World Federation of Exchanges (WFE) published a report on the post-crisis developments that shaped the current clearing landscape. The paper draws on existing studies and quantitative assessments performed by industry bodies, as well as a proprietary survey completed by 20 respondents from across the WFE CCP member base.

EACH welcomes ECON’s adoption of CCP report, but raises concerns over capital increase proposal

The European Association of CCP Clearing Houses (EACH) welcomed the adoption of the ECON Committee report on CCP recovery and resolution by the European Parliament’s Plenary on 27 March 2019, saying it resulted in additional safeguards for financial stability. But EACH expressed concerned about the proposal for the European Parliament to effectively double the CCP’s capital, saying such a substantial proposal ‘is not backed by any quantitative or qualitative evidence and was not included in any form in the European Commission’s impact assessment’. 

 

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Investment funds and asset management

 

ESMA consults on draft RTS under Article 25 of the ELTIF Regulation

ESMA published a consultation paper on draft RTS under Article 25 of Regulation (EU) 2015/760 (the European Long Term Investment Fund (ELTIF) Regulation). Article 25(3) provides that ESMA shall develop draft RTS to determine the costs disclosure requirements applicable to ELTIF managers. The consultation paper represents the second stage in the development of the draft RTS and sets out proposals on which ESMA is seeking the views of external stakeholders. ESMA published the first consultation in July 2015.

ESMA updates Q&As on benchmark disclosure obligations for UCITS

ESMA updated its Q&As regarding the application of the Undertakings in Collective Investments in Transferable Securities (UCITS) Directive. The updated Q&As clarify the UCITS KID benchmark and past performance obligations.

ESMA updates AIFMD Q&As

ESMA today updated its Q&As on the application of Directive 2011/61/EU (the Alternative Investment Fund Managers Directive (AIFMD)). ESMA added two new Q&As on calculation of leverage under AIFMD. The purpose of this Q&A document is to promote common supervisory approaches and practices in the application of the AIFMD and its implementing measures.

IA launches gender pay gap report in the investment management sector

The IA published a new report regarding the gender pay gap in the investment management industry. The report also considers some of the industry initiatives aimed at narrowing the gap and makes suggestions for monitoring progress.

International Capital Market Association responds to liquidity stress testing guidelines consultation

The International Capital Market Association’s Asset Management and Investors Council (ICMA AMIC) submitted a response to ESMA’s consultation on liquidity stress testing in UCITS and AIFs. 

 

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Banks and mutuals

 

EBA’s latest Risk Dashboard for EU banks shows improved asset quality but low profits

The EBA updated its Risk Dashboard, which summarises the main risks and vulnerabilities in the EU banking sector based on end 2018 data. In comparison with 2017, the Dashboard confirms improved asset quality and stable capital ratios, but profitability still below long-term sustainable levels.

SRB chair outlines main achievements and key priorities to ECON committee

The chair of the Single Resolution Board (SRB), Elke König, delivered an address to ECON setting out the SRB’s main achievements, including dealing with the resolution of Banco Popular, and its key priorities for 2019. Ms König said the SRB’s priorities, included completion of the capital markets union and preparing for the implementation of the Bank Recovery and Resolution Directive II and the Single Resolution Mechanism Regulation II.

European Parliament publishes ‘stock take’ papers on the SRB

The European Parliament published two reports (Report 1/Report 2)which take stock of the SRB and its activities over the past years. The reports identify structural challenges and areas where the SRB could improve. The reports were requested by ECON in anticipation of a public hearing of the chair of the SRB, Ms Elke König, scheduled for 2 April 2019.

Treasury Committee to take evidence on Co-op Bank review

Following the publication of the findings of the independent review of the prudential supervision of The Co-operative Bank Plc, the Treasury Committee announced that it will take evidence from Mark Zelmer, the independent reviewer, on 30 April 2019. Commenting on the review, the chair of the Committee, Nicky Morgan MP, said: ‘Although much has changed since the financial collapse of Co-op Bank, this long-overdue review will aid the Committee in its scrutiny of our financial regulatory system’.

UK Asset Resolution to sell £4.9bn of NRAM Ltd assets

UK Asset Resolution (UKAR) announced the sale of a portfolio of loans acquired by the taxpayer during the financial crisis. UKAR confirmed that NRAM Ltd, formerly part of Northern Rock, agreed to sell two separate portfolios of residential owner-occupied mortgages and unsecured loans to Citi for a total of £4.9bn.

EBA receives application of resolution measures to Heta Asset Resolution AG

On 3 April 2019 the EBA acknowledged a notification from the Austrian Financial Market Authority (Finanzmarktaufsicht, FMA), in its capacity as resolution authority, regarding the application of resolution measures to Heta Asset Resolution AG.

Wolfsberg Group, BAFT and ICC add compliance guidance to 2017 Trade Finance Principles

The Bankers Association for Finance and Trade (BAFT), the International Chamber of Commerce (ICC) and the Wolfsberg Group published appendices to their 2017 Trade Finance Principles, which addresses the due diligence required by global and regional financial institutions of all sizes in the financing of international trade, and now features information on open account trade and financial institutions’ trade loans.

BSB publishes 2018 annual review of banking culture

The BSB released its annual review for 2018/2019. It includes the results of the third annual BSB assessment, an exercise designed to inform, support and challenge banks and building societies committed to managing their cultures and raise standards of behaviour and competence across the sector. 

 

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Consumer credit, mortgage and home finance

 

Abanca Corporación Bancaria SA v Santos; Bankia SA v Lau Mendoza and another

Articles 6 and 7 of Council Directive (EEC) 93/13 should be interpreted, first, as precluding an accelerated repayment clause of a mortgage loan contract that was found to be unfair from being maintained in part, with the elements which made it unfair removed, where the removal of those elements would be tantamount to revising the content of that clause by altering its substance, and, second, as not precluding the national court from compensating for the invalidity of such an unfair term by replacing that term with the new wording of the legislative provision on which it was based, subject to certain conditions. The Court of Justice of the European Union so held in a preliminary ruling in proceedings concerning the conclusions to be drawn from the finding that an accelerated repayment clause set out in a loan agreement secured by a mortgage concluded between two parties was unfair. 

 

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Consumer access to financial services

 

Scottish Affairs Committee to hear evidence from ATM network organisations

Following a session with consumer groups Which? and Citizens Advice, the House of Commons Scottish Affairs Committee will continue taking evidence on access to cash in a session with senior leaders of ATM network organisations on 2 April 2019. The Committee will question them on the reasons for withdrawal of ATMs, how the effects are managed and what alternative services are being provided. 

 

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Insurance and pensions

 

EIOPA launches biennial stress test of the European occupational pension sector

EIOPA launched its biennial stress test of the European occupational pension sector. The exercise aims to gather insights into the resilience and potential vulnerabilities of the sector. The core assessment refers to the direct impact of a stressed market scenario on the sustainability and funding of defined benefit pension funds and on the projected future retirement income of members of defined contribution pension funds.

EIOPA consults on corrections and amendments to ITS on reporting and disclosure

EIOPA published a consultation on amendments and corrections to the implementing technical standards (ITS) on reporting and disclosure. The relevant ITS are set out in Implementing Regulation (EU) 2015/2450 and Implementing Regulation (EU) 2015/2452. The consultation package and feedback template are available on EIOPA’s website. Stakeholders are invited to comment on the proposals by 14 May 2019.

EIOPA publishes discussion paper on systemic risk and macroprudential policy in insurance

EIOPA published a discussion paper on ‘Systemic risk and macroprudential policy in insurance’. EIOPA previously published three papers laying down its policy stance, covering ‘Systemic risk and macroprudential policy in insurance’ (2017), ‘Solvency II tools with macroprudential impact’ (2018), and ‘Other potential macroprudential tools and measures to enhance the current framework’ (2018). The new paper introduces a specific policy proposal for additional macroprudential tools or measures where relevant and possibly as part of the review of the Solvency II Directive. The cut-off date for feedback is 30 April 2019.

ECON publishes briefing paper for Solvency II scrutiny session

ECON published a briefing paper prepared for its scrutiny session on Solvency II delegated acts, and in particular Commission Delegated Regulation (EU) 2015/35 (the Solvency II Delegated Act), scheduled for 2 April 2019.

EIOPA calls for principle-based regulation of cloud computing

EIOPA published its report on ‘Outsourcing to the cloud: EIOPA's contribution to the European Commission FinTech action plan’. The Commission's action plan requested that the ESAs explore the need for guidelines on outsourcing to cloud service providers by the end of the first quarter of 2019. According to EIOPA, while cloud computing falls under existing regulatory measures on outsourcing, current guidance on these measures, including at the national level, is not homogenous.

PRA publishes consultation paper (CP) 7/19 on Solvency II: Equity release mortgages – part 2 and accompanying Dear CEO letter

On 3 April 2019, the PRA published consultation paper 7/19 on Solvency II: Equity release mortgages–part 2 proposing amendments to its expectations in respect of firms investing in equity release mortgage (ERM) portfolios, as set out in Chapter 3 of supervisory statement 3/17, Solvency II: Matching adjustment–illiquid unrated assets and equity release mortgages. The PRA published an accompanying Dear CEO Letter which sets out how the proposals in CP7/19 clarify the operation of the effective value test. The letter also sets out the PRA’s expectation that insurers validate their internal model solvency capital requirement to provide assurance that the amount of MA benefit in stress is not over-stated.

FCA publishes update on its work on access to insurance

The FCA published an update on its work on access to insurance. The update outlines the FCA’s further work in this area since it published a feedback statement to its call for input on access to insurance in June 2018. The FCA’s call for input invited views on the ability of consumers who suffer with cancer to access travel insurance.

Lloyd’s Market Association updates guidance on consumer wordings

The Lloyd’s Market Association published the latest version of its guidance on consumer wordings. The guidance aims to assist managing agents with the drafting of new consumer products and/or the adaptation of existing commercial wordings to produce consumer versions that reflect current UK regulatory requirements and best practice.

European Parliament rejects Commission PEPP amendment

The European Parliament rejected the European Commission proposal for Amendment 2 to the proposal for a Regulation on the Pan-European Personal Pension Product (PEPP) (COM(2017)0343 – C8-0219/2017 – 2017/0143(COD)).

 

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Payment services and systems

 

EBA clarifies API issues under PSD2

The EBA published clarifications to the second set of issues raised and discussed by participants of its working group on application programming interfaces (APIs) under Directive (EU) 2015/2366 (the revised Payment Services Directive (PSD2)). The issues relate to API performance and support, the provision of a list of third party providers (TPPs) that are interested in testing, the testing by TPPs that are not authorised, and the timelines applicable across the EEA if account servicing payment service providers (ASPSPs) want to be exempted from the fall-back mechanism. 

 

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FinTech and virtual currencies

 

European Commission and ESAs launch European Forum for Innovation Facilitators

The European Commission and the ESAs launched the European Forum for Innovation Facilitators (EFIF), which aims to improve co-operation and co-ordination in support of the application of new technological developments in the EU financial sector. The EFIF, which is intended to provide a platform for participating authorities to collaborate and share experiences from engagement with firms through innovation facilitators, will be comprised of the ESAs and NCAs.

EU Commission announces launch of INABTA

The European Commission announced the launch of the International Association of Trusted Blockchain Applications (INATBA), which took place in Brussels on 3 April 2019. INATBA brings together industry, startups and small and medium enterprises, policy makers, international organisations, regulators, civil society and standard setting bodies to support blockchain and distributed ledger technology (DLT) to be mainstreamed and scaled-up across multiple sectors and to encourage the global governance and development of blockchain and DLT.

BoE embraces FinTech

The BoE published a post in its Bank Overground series describing the ways in which the BoE is embracing FinTech and ensuring it develops in ways that maximise the opportunities while minimising risks for society. While there is no bespoke authorisation regime for FinTech banks in the UK, and the regulatory standards which apply are the same as apply to any other form of banking through the New Bank Start Up Unit, the PRA and FCA provide proportionate and transparent authorisation processes to help firms, with technology-innovative business models, engage with and understand regulatory requirements.

EIOPA calls for principle-based regulation of cloud computing

EIOPA published its report on ‘Outsourcing to the cloud: EIOPA's contribution to the European Commission FinTech action plan’. The Commission's action plan requested that the ESAs explore the need for guidelines on outsourcing to cloud service providers by the end of the first quarter of 2019. According to EIOPA, while cloud computing falls under existing regulatory measures on outsourcing, current guidance on these measures, including at the national level, is not homogenous. 

 

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Sustainable finance

 

European Parliament adopts text of proposed low carbon benchmarks regulation

The European Parliament adopted on first reading the text of a proposal for a regulation of the European Parliament and of the Council on low carbon benchmarks and positive carbon impact benchmarks, amending Regulation (EU) 2016/1011 (the Benchmarks Regulation). There were 579 votes in favour, 40 against and 42 abstentions. The European Parliament called on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal.

European Parliament publishes provisional text of position on sustainable investment taxonomy proposal

The European Parliament published a provisional version of the text of its position on the European Commission’s proposal for a regulation on the establishment of a framework to facilitate sustainable investment, which the Parliament adopted at first reading on 28 March 2019. The text makes a number of changes to the Commission’s May 2018 proposal. The Commission’s proposal, which is also referred to as the Taxonomy Regulation, sets out uniform criteria for determining whether an economic activity is environmentally sustainable.

ECON endorses political agreement on sustainability-related disclosures

ECON voted to approve the political agreement reached on 6 March 2019 by the Parliament and the Council of the EU on the European Commission’s May 2018 proposal for a new regulation on sustainability-related disclosures in the financial services sector. A vote in plenary is scheduled for 18 April 2019.

HMT updates European Scrutiny committees on proposed sustainable investments regulation

The economic secretary to the Treasury, John Glen MP, wrote to the chair of the House of Lords European Union Committee, Lord Boswell of Aynho, and to Sir William Cash MP, the chair of the Commons European Scrutiny Committee, to update them on the proposal for a Regulation of the European Parliament and of the Council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341 (IORP II).

International Capital Market Association recommends more specific definition of sustainable instruments

ICMA responded to IOSCOs consultation on finance in emerging markets and the role of securities regulators. It specifically responded to questions six seven and ten of IOSCO’s consultation—recommending a more specific definition of sustainable instruments, aligning the reference in Recommendation 5 with existing project categories, and external reviews.

 

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Dates for your diary

 

DateSubjectEvent

 

5 April 2019

 

Pensions

 

The deadline for responses to FCA ‘CP19/5: Retirement Outcomes Review: Investment pathways and other proposed changes to our rules and guidance’ is 5 April 2019.

 

5 April 2019Resolvability assessment framework

The deadline for responses to PRA ‘CP31/18: Resolution assessment and public disclosure by firms’ and BoE ‘CP: The Bank of England’s approach to assessing resolvability’ is 5 April 2019.

 

5 April 2019FinTech and virtual currencies

The deadline for responses to FCA ‘CP19/3: Guidance on Cryptoassets’ is 5 April 2019.

 

6 April 2019Pensions

Following FCA ‘PS18/6: Advising on pension transfers’ updates to assumptions used when revaluing benefits come into force on this date.

 

6 April 2019Pensions

Following FCA ‘PS18/20: Improving the quality of pension transfer advice’ updates to pension increase assumptions come into force on this date.

 

6 April 2019Pensions

The Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019(which name the single financial guidance body the ‘Money and Pensions Service’, and make consequential amendments to legislation to reflect the new body’s name and functions in the UK) enter into force on 6 April 2019.

 

8 April 2019

Brexit


Securitisation

 

The deadline for responses to FCA CP19/11: Securitisation (Amendment) (EU Exit) Regulations 2019 and Securitisation Regulations 2018 (proposed changes to DEPP and EG)is 8 April 2019.

 

8 April 2019Regulation of capital markets

The deadline for the European Commission to endorse ESMA’s draft final Regulatory Technical Standards on supervisory cooperation between competent authorities and the European Supervisory Authorities under the Securitisation Regulation is 8 April 2019.

 

8 April 2019Consumer credit

The deadline for responses to the European Commission’s consultation on the functioning of the Consumer Credit Directive is 8 April 2019.

 

10 April 2019

Regulatory architecture


Investment funds

 

The rules set out in Regulation of the European Parliament and of the Council establishing a framework for the screening of foreign direct investments into the Union will be enter into force on 10 April 2019.

 

10 April 2019Prudential requirements

The deadline for feedback to PRA CP1/19: ‘Credit risk mitigation: Eligibility of financial collateral’ is 10 April 2019.

 

10 April 2019Brexit

The European Council will hold a special Article 50 summit to discuss the latest Brexit developments on 10 April 2019.

 

12 April 2019Brexit

If the UK’s Withdrawal Agreement with the EU is not ratified by the House of Commons, prior to the European Council Article 50 Summit on the 10 April 2019, and the UK does not indicate an alternative way forward at that summit, the UK will leave the EU without an agreement on 12 April 2019 as per the European Union (Withdrawal) Act 2018, as amended by the European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) Regulations 2019.

 

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