Weekly highlights—1 September 2016

Weekly highlights—1 September 2016

Welcome to the weekly Financial Services highlights from the Lexis®PSL Financial Services team for the week ending 1 September 2016.

Brexit

The potential impact of Brexit across policy areas

On 26 August 2016, the House of Commons Library published a report, which assesses the potential impact of Brexit across a range of policy areas—including environment, trade, employment and immigration. Among other things, the report highlights that the consequences of Brexit to policy depend on a number of factors such as the Brexit negotiations, whether the UK stays in the European Economic Area and how the government fills any policy gaps left by withdrawal from the EU.

Regulatory architecture

CBI hosts first financial services summit

On 25 August 2016, the Confederation of British Industry (CBI) issued a press release stating that CBI Scotland will host its inaugural financial services summit in Glasgow on 1 September 2016 for senior figures from business and government to discuss this sector of the Scottish economy.

ECB analyses effectiveness of non-standard monetary policy

On 30 August 2016, the European Central Bank (ECB) published a working paper containing an analysis of professional forecasters’ perceptions of the effects of the monetary policy measures announced by the US Federal Reserve after the collapse of Lehman Brothers. The paper further examines how agents updated their expectations for the yields of Treasury and corporate securities embedding different degrees of credit risk in response to announcements of non-standard measures.

FSB releases progress report to G20

On 26 August 2016, the Financial Stability Board (FSB) issued a press release stating that it had published a progress report for the G20 on the FSB’s plan to assess and address the decline in correspondent banking. The progress report will be submitted to the G20 leaders’ summit in Hangzhou on 4–5 September, as requested by G20 finance ministers and central bank governors.

European Commission and Council release letter ahead of G20 Summit

On 30 August 2016, President Donald Tusk of the European Council and President Jean-Claude Juncker of the European Commission, published a joint letter to heads of state and government to highlight the key issues to be discussed at the G20 summit in Hangzhou, China on 4-5 September 2016. It highlights the key deliverable, being the G20 Hangzhou action plan and the updated growth strategies.

ECB board member speaks on operational frameworks

On 30 August 2016, the ECB published a speech given by Benoît Cœuré, member of the executive board of the ECB, at the Federal Reserve Bank of Kansas City’s 40th economic policy symposium on 27 August 2016. The speech explores the challenges to monetary policy’s operational frameworks which appeared during and after the global financial crisis, and how best to adapt to them.

ECB board member speaks on financial policy in Beijing

On 31 August 2016, the ECB published a speech by Peter Praet, member of the executive board of the ECB, given on international monetary policy in Beijing on 31 August 2016. Mr Praet’s speech covered recurrent cycles in the global economy and how monetary policy should steer these cycles.

Meeting date set for expert working party on financial services

On 31 August 2016, the Council of the European Union issued a communication announcing a meeting for the working party on financial services, for attachés and experts, on 13 September 2016 at 14:00. The working party will continue to examine the proposal for a European regulation on establishing an EU programme to support specific activities enhancing the involvement of consumers and other financial services end-users in policy-making in the field of financial services from 2017‒2020.

GLEIF publishes new registration authorities list

On 31 August 2016, the Global Legal Entity Identifier Foundation (GLEIF) issued a press release stating that it has published its new registration authorities list, which contains 652 business registers and other relevant registration authority sources and assigns a unique code to each register on the list. Legal entity identifier (LEI) issuing organisations will reference this code in their LEI issuance processes and reporting.

Financial Conduct Authority updates

FCA publishes quarterly KPIs

On 25 August 2016, the Financial Conduct Authority (FCA) published its quarterly key performance indicators (KPIs) from June 2016. Among the KPIs is the average processing time of determined applications which has, recently, increased as the FCA recruits and trains additional temporary staff.

MiFID II

European Parliament has no objection to Delegated Regulation under MiFIR

On 26 August 2016, the European Parliament updated its procedure file which sets out the Parliament's non-objection to the Delegated Regulation on definitions, transparency, portfolio compression and supervisory measures on product intervention and positions under the Markets in Financial Instruments Regulation (EU) 600/2014 (MiFIR).

FCA releases MiFID II implementation roundtable minutes

On 31 August 2016, the FCA published the minutes from its Markets in Financial Instruments Directive (Directive 2004/39/EC, MiFID II) implementation trade association roundtable meeting held on 3 August 2016 in Canary Wharf, London.

Prudential requirements

ECB publishes working paper on a multi-layered interbank model for assessing systemic risk

On 25 August 2016, the ECB released a working paper regarding a multi-layered interbank model for assessing systemic risk. A key finding of the paper is there are material non-linearities in the propagation of shocks to individual banks when taking into account that banks are related to each other in various market segments.

Regulation on ex ante contributions published in Official Journal

On 30 August 2016, Commission Delegated Regulation (EU) 2016/1434 of 14 December 2015 correcting Delegated Regulation (EU) 2015/63 supplementing the Bank Recovery and Resolution Directive 2014/59/EU with regard to ex ante contributions to resolution financing arrangements was published in the Official Journal (OJ).

ECB report—noise shocks and cyclical developments

On 25 August 2016, the ECB published a working paper which explores the role of ‘noisy information’ in cyclical developments and aims at separating fluctuations that are due to genuine changes in fundamentals from those due to temporary animal spirits or expectational errors—ie ‘noise shocks’.

Basel III progress update to G20

On 30 August 2016, the Bank of International Settlements (BIS) published a report to G20 leaders on the implementation of the Basel III regulatory reforms. It is the seventh report from the BIS, and seeks to summarise the outcomes from the Basel Committee on Banking Supervision's (BCBS) regulatory consistency assessment programme (RCAP).

BIS, IMF, and FSB report on effective macroprudential policies

On 31 August 2016, the Bank for International Settlements (BIS) issued a press release stating that BIS, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) had published a joint report on the elements of effective macroprudential policies, specifically what lessons can be learned from international experience. The report highlights that the range of institutional arrangements and policies being adopted across countries suggests there is no 'one-size-fits-all' approach.

Enforcement and redress

FCA decisions committee responds to Treasury Committee

On 25 August 2016, the Treasury Committee published press release setting out a response received from Tim Parkes, Chairman of the Financial Conduct Authority’s (FCA) Regulatory Decisions Committee (RDC), regarding a request by the Treasury Committee for information on the composition of the RDC’s membership, its involvement in settled cases, and entrenching demonstrable independence.

Markets and trading

ESMA assesses latest risk outlook for EU securities markets

On 30 August 2016, the European Securities and Markets Authority (ESMA) issued a press release which stated that its latest risk analysis report on trends, risks and vulnerabilities, found the overall assessment of risk levels in EU markets under its remit remains unchanged. Market and credit risks remain at a very high level, while liquidity and contagion risk remain high.

ECB working paper on stock market effects of STT

On 30 August 2016, the ECB published a working paper with regard to the stock market effects of a securities transaction tax (STT) with quasi-experimental evidence from Italy. The report highlights the peculiarity of the Italian STT as only concerning stocks of corporations with a market capitalisation above €500m.

Derivatives market prepares for non-cleared margining rules

On 30 August 2016, the International Swaps and Derivatives Association (ISDA) published a media comment in which ISDA speaks of the challenges awaiting the derivatives market as it prepares for the advent of non-cleared margining rules from 1 September 2016. This involves a first-phase group of large derivatives users required to post variation and initial margin on their non-cleared derivatives trades under rules coming into force in the US, Canada and Japan. The ISDA has stressed the importance of banks having ‘everything in place on time’.

Regulation on European Electronic Access Point RTS published in Official Journal

On 31 August 2016, Commission Delegated Regulation (EU) 2016/1437 of 19 May 2016 supplementing the Transparency Directive 2004/109/EC with regard to regulatory technical standards on access to regulated information at Union level was published in the OJ.

Investment funds and asset management

Investment Association publishes July 2016 investor behaviour statistics

On 25 August 2016, the Investment Association issued a press release containing monthly statistics of UK investor behaviour for July 2016 which show industry assets reached a record high as outflows slowed. In the month, funds under management of UK authorised funds increased by £40bn in July to reach a high of £989bn, a 4% month-on-month increase.

IOSCO publishes good practices for fees and expenses of CIS

On 26 August 2016, the International Organisation of Securities Commission (IOSCO) issued a press release stating that it had published the final report on good practice for fees and expenses of collective investment schemes (CIS). The report aims to identify common international examples of good practice that can be applied to CIS fees and expenses.

Consumer finance

Money Advice Trust report sheds light on young people's debt issues

On 30 August 2016, the Money Advice Trust, the charity that runs National Debtline, published a report on the large number of young people who are building up debt, worrying about money and falling behind on their repayments. The report says 37% of the 18 to 24 year-olds surveyed are already in debt, owing an average of £2,989, which excludes student loans and mortgages.

Insurance

ABI comments on positive growth in income protection policies

On 30 August 2016, the Association of British Insurers (ABI) issued a press release in which it reported that the number of individual income protection policies has increased for the first time since 2007, showing a 2% increase between 2014 and 2015, amounting to 1.15 million policies in force.

Key facts of the European insurance industry

On 30 August 2016, Insurance Europe published its annual Key Facts document which includes data on the European insurance industry for 2015. Statistics within the report include the information that European life premiums accounted for 34% of 2015 global life premiums, while European non-life premiums accounted for 30% of 2015 global non-life premiums.

PRA issues Solvency II reminder

On 30 August 2016, the Prudential Regulation Authority (PRA) issued a Solvency II reminder to insurance firms of the 7 September 2016 deadline for submitting their scope of responsibilities (SoR) as set out in the key function holder—notifications 6.3 in the PRA rulebook.

Investigations, enforcement and discipline

FCA issues final notice and public censure

The FCA has issued a prohibition and public censure to Amir Khan of Sovereign Worldwide Ltd for acting dishonestly with regard to personal mortgage applications, but did not impose a financial penalty of £80,000 after Mr Khan supplied verifiable evidence of serious financial hardship. For more information, see Final notice 2016: Amir Khan.

FCA issues final notice to senior LIBOR trader

The FCA took action because of deliberate misconduct by Peter Johnson between 2005 and 2007 when making submissions for the calculation of LIBOR on behalf of Barclays. The FCA has issued a final notice under the Financial Services and Markets Act 2000 (FSMA) to Johnson, and imposed an order to prohibit him from performing any function in relation to any regulated activities by him or any authorised or exempt person/firm. For more information, see Final notice 2016: Peter Charles Johnson.

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