The following posts provide a snapshot of the principal U.S., European and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
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EMIR Refit: EU Clarification on Derivatives Trading and Clearing Obligations
07/12/2019
The European Securities and Markets Authority has issued a Statement clarifying the application and interaction of the EU derivatives clearing and trading obligations following the entry into force of the revised European Market Infrastructure Regulation, known as EMIR Refit.
EMIR Refit has, subject to limited exceptions, applied directly across the EU since June 17, 2019. EMIR Refit amended the definition of a Financial Counterparty, bringing central securities depositories authorized under the EU Central Securities Depositories Regulation within scope and categorizing all Alternative Investment Funds as FCs (or, for non-EU funds, as third-country entities equivalent to FCs). It also introduced a clearing threshold for FCs, meaning that small FCs are exempt from the clearing obligation. In addition, Non-Financial Counterparties that meet the clearing threshold no longer must clear all derivatives that they enter that are subject to the clearing obligation, but only those derivatives in the asset class for which they have exceeded the threshold.
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Firms Criticized for Non-Compliance with the EU Contracts For Difference Product Intervention Measures
07/11/2019
The European Securities and Markets Authority has published a Statement cautioning contracts for difference providers to comply with its temporary product intervention measure restricting the marketing, distribution or sale of CfDs to retail clients. The measure is due to expire at the end of the day on July 31, 2019, unless ESMA again renews it.
In its Statement, ESMA states that it has noticed and is concerned that certain firms are not complying with the temporary CfD restriction or any similar permanent national measure. ESMA reminds firms that the temporary CfD restriction does not apply to eligible counterparties or professional clients, including to retail clients who opt to being treated as professional clients, as defined in the revised Markets in Financial Instruments Directive. However, firms must comply with the MiFID II requirements when dealing with a retail client that requests to opt up to being treated as a professional client, including by alerting clients to the loss of protection afforded by the temporary CfD restriction. ESMA also reminds firms that they should not incentivize a retail client to become a professional client by using language that promotes the status or benefits of professional clients.
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US Regulators Clarify Position on Broker-Dealer Custody of Digital Asset Securities
07/08/2019
The U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority have issued a joint statement clarifying how their traditional regulatory approaches would apply to how broker-dealers handle their customers' digital asset securities and transactions. Specifically, the statement focuses on how certain SEC and FINRA rules apply to broker-dealers that wish to take custody of digital asset securities or perform other noncustodial activities involving such assets.
The SEC and FINRA staffs (collectively, the "Staffs") said that a number of firms have applied to FINRA to engage in broker-activities involving digital asset securities, and a number of registered broker-dealers have also submitted applications to expand their businesses to include digital asset securities services. Many of these applications cover proposed business models that would involve the applicant taking custody of digital asset securities, while others would involve certain noncustodial activities.
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UK Conduct Regulator Proposes Banning the Sale to Retail Clients of Derivatives Referencing Crypto-Assets
07/03/2019
The U.K. Financial Conduct Authority has launched a consultation proposing to restrict the sale, marketing and distribution of derivatives and exchange-traded notes that reference certain types of unregulated, transferable crypto-asset to all retail clients by firms in, or from, the U.K. The FCA consultation follows the final report of the U.K. Crypto-Assets Task Force in October 2018. The FCA's view is that although the U.K.'s market in crypto-assets is relatively small, there is still a consumer protection issue that needs to be addressed.
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Financial Stability Board Reports on Implementation of the TLAC Standard
07/02/2019
The Financial Stability Board has published a report on the Review of the Technical Implementation of the Total Loss-Absorbing Capacity (TLAC) Standard. The FSB conducted a review of implementation of the TLAC Standard by jurisdictions that covered the Global Systemically Important Banks to which the TLAC Standard applied as at January 1, 2019 and the home and material host jurisdictions of those G-SIBs. The focus of the review was assessing whether implementation aligns with the timelines and objectives set out in the TLAC Standard.
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UK Regulator Publishes Rules Restricting Sale of Contracts for Difference and Related Options
07/01/2019
The U.K. Financial Conduct Authority has published the Conduct of Business (Contracts for Difference) Instrument 2019, implementing product intervention measures designed to restrict the sale, marketing and distribution of contracts for difference and contract for difference-like options to retail consumers. The rules will affect: (i) retail clients who invest, or may invest, in CFDs and CFD-like options; (ii) investment firms caught by the provisions of the Markets in Financial Instruments Directive (including those caught by the Capital Requirements Directive, where appropriate) that are involved in marketing, distributing or selling CFDs and CFD-like options in, or from, the U.K. to retail clients; and (iii) U.K. branches of third-country investment firms that are involved in marketing, distributing or selling CFDs or CFD-like options to retail clients.
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EU to Lift Temporary Ban on the Sale of Binary Options to Retail Clients in Wake of National Measures
07/01/2019
The European Securities and Markets Authority has ended its temporary prohibition on the marketing, distribution or sale of binary options to retail clients. ESMA's product intervention powers under the Markets in Financial Instruments Regulation allow it to impose temporary prohibitions or restrictions on certain financial instruments, financial activities or practices to address a significant investor protection concern in the EU.
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Bank for International Settlements to Establish Innovation Hub for Central Bank Financial Technology
06/30/2019
The Bank for International Settlements has announced it will establish an innovation Hub to encourage international collaboration on innovative financial technology for central banks. The Hub's purpose will be to: (i) identify trends in technology affecting central banks; (ii) develop "public goods" in the technology space aimed at improving the functioning of the global financial system; and (iii) act as a focal point for central bank innovation.
Read more.TOPIC: FinTech -
UK Financial Conduct Authority Issues Response to EU Opinion on Strong Customer Authentication
06/28/2019
The U.K. Financial Conduct Authority has issued a statement confirming its intended approach to enforcing firms' compliance with EU "strong customer authentication" rules that will apply across the EU from September 14, 2019.
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Global Financial Innovation Network Publishes Progress Report
06/28/2019
The Global Financial Innovation Network, the group of financial regulators established in 2018 to support international financial innovation, has published a report on the progress made during its first year. The group is made up of 35 global regulators from 21 jurisdictions that work together to share knowledge and market experiences and enable innovative firms to interact with a network of regulators.
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Commodity Futures Trading Commission Launches LabCFTC Accelerator
06/27/2019
The Commodity Futures Trading Commission has announced two new programs as part of its LabCFTC initiative. The first is LabCFTC Accelerator, which will provide the agency with a number of tools to drive its understanding and potential adoption of emerging technologies. The second is the CFTC's second annual FinTech Forward conference, which will take place on October 24, 2019 and bring together a variety of stakeholders in the FinTech ecosystem to explore the latest developments in the space.
As part of the LabCFTC Accelerator program, the agency seeks to better understand emerging technologies through the use of tools such as internal pilots and tests, market research and innovation competitions. The topic for the upcoming innovation competition will be announced at the FinTech Forward 2019 conference.
FinTech Forward 2019 will bring together innovators, regulators, market participants, thought-leaders and the general public to cover a number of areas in the FinTech space, including digital assets, commodities and platforms, machine learning and AI, RegTech and algorithmic trading. The agency also said it expects there to be a greater focus on international FinTech, as the event will coincide with the CFTC's Office of International Affairs' International Regulators Symposium. Registration for the FinTech Forward 2019 conference will be open to the public early this fall.
View the CFTC's announcement.
View details of the CFTC LabCFTC initiative.TOPIC: FinTech -
UK Payment Systems Regulator Publishes Progress Report on Access to and Governance of Payment Systems
06/27/2019
The U.K. Payment Systems Regulator has published its fourth report on developments in access to payment systems and the governance of those systems.
Read more.TOPIC: Payment Services -
UK Regulator Secures Insider Dealing Conviction
06/27/2019
The U.K. Financial Conduct Authority has secured convictions against two individuals accused of insider dealing. Fabiana Abdel-Malek, a former senior compliance officer at the London office of a major European headquartered bank, and Walid Anis Choucair, her family friend, were both sentenced to three years' imprisonment for insider dealing.
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Basel Committee on Banking Supervision Publishes Revisions to Leverage Ratio Requirements
06/26/2019
The Basel Committee on Banking Supervision has published revisions to its standards for leverage ratio capital requirements. The revisions relate to: (i) calculations of leverage ratios for "client-cleared" derivatives; and (ii) disclosure requirements for leverage ratios.
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UK Conduct Regulator Publishes Consultation on Regulation of Proxy Advisors under Revised Shareholder Rights Directive
06/26/2019
The U.K. Financial Conduct Authority has published a consultation on proposed changes to its Decision Making and Penalties Manual and Enforcement Guide to incorporate its new responsibility for regulation of proxy advisors. The proposals will be of interest to those falling within the Proxy Advisors (Shareholders' Rights) Regulations 2019 and anyone who uses the services of proxy advisors. Responses to the consultation should be submitted by July 26, 2019.
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UK Secondary Legislation Published to Implement the Prospectus Regulation
06/25/2019
The Financial Services and Markets Act 2000 (Prospectus) Regulations 2019 have been formally published and will come into force on July 21, 2019.
Read more.TOPIC: Securities -
US and UK Regulators Issue Joint Statement on Credit Derivatives Markets
06/24/2019
The U.S. Commodity Futures Trading Commission, U.S. Securities and Exchange Commission and the U.K. Financial Conduct Authority have issued a joint statement regarding the use of "opportunistic strategies" in the credit derivatives markets, including but not limited to so-called "manufactured credit events." The agencies expressed concern that the use of such strategies could adversely affect the integrity and confidence of these markets, as well as markets more generally, due to issues related to securities, derivatives conduct and antifraud laws, along with public policy concerns.
Read more.TOPIC: Derivatives -
Basel Committee on Banking Supervision Publishes Overview of Pillar 2 Practices and Approaches
06/21/2019
The Basel Committee on Banking Supervision has published an overview report on the Pillar 2 supervisory review process and on the different practices that regulators and legislators in Basel member jurisdictions have adopted in relation to it.
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International Organization for Securities Commissions Publishes Report on Liquidity in Corporate Bond Markets Under Stressed Conditions
06/21/2019
The International Organization for Securities Commissions has published a report studying the effect of stressed market conditions on liquidity in corporate bond markets. The report arose out of concerns about liquidity in the corporate bond market in the years since the global financial crisis and, in particular, the possibility that a significant sell-off could trigger price volatility and temporarily depress prices. The report is based upon a review of existing studies of corporate bond markets, an examination of historic periods of market stress and discussions with industry stakeholders.
Read more.TOPIC: Securities -
Final EU Secondary Legislation Under the Prospectus Regulation Published
06/21/2019
Two Commission Delegated Regulations supplementing the EU Prospectus Regulation have been published in the Official Journal of the European Union. The first Regulation is on the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. It will supplement the requirements in the Prospectus Regulation on: (i) the review, approval and filing of the universal registration document and any amendments; (ii) the format of the prospectus, the base prospectus and the final terms; (iii) the specific information to be included in a prospectus, the minimum information to be included in the universal registration document and the reduced information to be included under the simplified disclosure regime for secondary issuances; (iv) the reduced content, standardized format and the sequence of the EU Growth prospectus; (v) the reduced content and standardized format of the specific summary; and (vi) the review and approval of prospectuses by national regulators. The Regulation also repeals, from July 21, 2019, the existing Implementing Regulation under the existing Prospectus Directive on the form and content of prospectuses.
Read more.TOPIC: Securities -
Financial Action Task Force Publishes Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers
06/21/2019
The Financial Action Task Force has published the outcomes of its third and last Plenary meeting under the U.S. Presidency in Orlando on June 19-21, 2019. The FATF considered key issues such as strategic initiatives, mutual evaluations and the upcoming focus areas under the Chinese Presidency.
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European Banking Authority Publishes Opinion on Strong Customer Authentication Under Payment Services Directive
06/21/2019
The European Banking Authority has published an Opinion on market approaches to payment authentication that will be deemed compliant with the new rules on strong customer authentication coming into force later this year.
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European Commission Publishes Commission Delegated Regulation Amending Registration Conditions for SME Growth Markets
06/21/2019
An amending Commission Delegated Regulation to the existing Commission Delegated Regulation (Regulation 2017/565) on requirements for participants in SME growth markets has been published in the Official Journal of the European Union. Regulation 2017/565 supplements related provisions under the Markets in Financial Instruments Directive, which establishes "SME growth markets" as a new type of trading venue for small and medium sized enterprises.
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European Commission Publishes Report on Implementation of Wire Transfer Regulation
06/20/2019
The European Commission has published a report detailing: (i) the extent to which Member States have implemented the sanctions and monitoring sections of the EU Wire Transfer Regulation; and (ii) the particular sanctioning activities that national regulators have adopted under the Regulation. The Commission was obliged to provide the report to the European Parliament and Council of the European Union under the Wire Transfer Regulation. Although Member States are not obliged to take specific steps in response to the report's findings, the Commission concludes the report by stating its intention to continue to support Member States in their implementation of the Wire Transfer Regulation and reserves the right to take further measures to ensure the Regulation is correctly implemented by all Member States.
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Bank of England Publishes Report on the Future of the UK Financial System and the Bank's Priorities for the Future
06/20/2019
Huw van Steenis, the Bank of England financier appointed by the BoE in 2018 to review the future of the U.K. financial system, has published his "Future of Finance" report, setting out a vision for the medium-term future of the U.K. financial system and the BoE's role in supporting that. The report was based on consultations with entrepreneurs, financiers, tech firms, global investors, consumer groups, charities, policymakers and business leaders across the U.K. and overseas. In response, the BoE has published a document which sets out the actions it intends to take to deal with the challenges and opportunities identified in the report.
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UK FICC Markets Standards Board Announces Consultation on Draft Statement of Good Practice
06/20/2019
The U.K. FICC Markets Standards Board has published a Transparency Draft of its new Statement of Good Practice on Conflicts of Interest. The Statement aims to provide guidance for participants in the fixed income, currencies and commodities markets on ways to identify and manage risks arising from conflicts of interest in the FICC markets. The guidance is particularly targeted at firms operating in Europe and the conflicts that may arise from the sale and trading of publicly listed or over-the-counter securities or financial instruments.
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European Commission Publishes Commission Delegated Regulation Extending Exemption from EU Transparency Requirements to the People's Bank of China
06/20/2019
An amending Commission Delegated Regulation to the existing Commission Delegated Regulation (Regulation 2017/1799), which specifies that third-country central banks may be exempted from certain transparency requirements under the Markets in Financial Infrastructure Regulation, has been published in the Official Journal of the European Union. The amendment means that the People's Bank of China will be added to the list of counterparty institutions whose transactions will not be subject to trade transparency requirements under MiFIR to the extent that those transactions are in pursuit of monetary, foreign exchange or financial stability policy. The amending Delegated Regulation will come into force and apply directly across the EU from July 10, 2019.
View the amending Commission Delegated Regulation.
View Commission Delegated Regulation 2017/1799. -
Basel Committee on Banking Supervision Discusses Supervisory Initiatives and Approves Implementation Reports
06/20/2019
Central bankers and banking supervisors of the Basel Committee on Banking Supervision met this week to discuss a range of policy and supervisory initiatives.
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UK Financial Conduct Authority Publishes First Annual Perimeter Report
06/19/2019
The U.K. Financial Conduct Authority has published its first annual perimeter report, which (i) describes the boundaries of the FCA's regulatory oversight, (ii) considers challenges to the regulatory perimeter and (iii) sets out its aims for the future. The motivations behind the report include recent high profile controversies involving firms on the periphery of the FCA's regulatory perimeter (including London Capital & Finance which issued non-transferable bonds to consumers), innovations in technology that test the boundaries of the perimeter and the post-Brexit future of U.K. financial regulation.
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European Banking Authority Proposes Guidelines on Loan Origination and Monitoring
06/19/2019
The European Banking Authority has launched a consultation on draft Guidelines on loan origination and monitoring. The consultation stems from the European Council's Action Plan on tackling non-performing loans in Europe. The purpose of the guidelines is to improve the processes by which institutions grant loans and monitor them thereafter, with the overarching goal of improving the financial stability of the EU financial system.
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UK Law Commission Makes Recommendations to Improve Anti-Money Laundering Regime
06/18/2019
The U.K.'s Law Commission has published a report, entitled "Anti-money Laundering: the SARS Regime", setting out recommendations to improve the prevention, detection and prosecution of money laundering and terrorism financing in the U.K. The Law Commission began a review in 2017 into the U.K. anti-money laundering regime, focusing on the suspicious activity reporting (SAR) process and taking into account EU and U.K. anti-money laundering legislation and related legislation, such as the General Data Protection Regulation. Following the consultation, the Commission has decided not to recommend amendments to the primary legislation, but instead that more detailed guidance should be issued. As a result, and for example, new exceptions from the reporting regime will not be proposed, as has been argued by some aspects of industry for reports on low-value transactions or reports on issues which are already in the public domain. The Commission is making several recommendations to improve the existing system, including:- The establishment of a new Advisory Board to supervise the development of guidance and to advise the Secretary of State on potential improvements to the regime, including in relation to emerging threats.
- A new online SAR report that is easier to use with the aim of ensuring more consistent data is provided to the U.K. Financial Intelligence Unit through these reports.
- Creating an obligation for the Government to issue statutory guidance on key legal concepts within the framework so as to improve certainty around the obligation to report suspicious activities.
View the report. -
New EU Guidelines on Disclosure of Climate-Related Information
06/18/2019
The European Commission has published new, non-binding Guidelines on reporting climate-related information. The new Guidelines are supplementary to the guidelines issued by the Commission in 2017 on reporting non-financial information. The new Guidelines are intended to assist large public entities (with over 500 employees) to report climate-related information under the EU Non-Financial Reporting Directive. The new Guidelines incorporate the recommendations of the Financial Stability Board's taskforce on climate-related financial disclosures, taking into account the EU's forthcoming taxonomy on sustainable activities. The new Guidelines include guidance on reporting of climate-related information related to business models, key performance indicators, risks and their management. Further guidelines for banks and insurance companies are set out in the annex.
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International Cyber Task Force Reports on Cyber Regulation
06/18/2019
The International Organization of Securities Commissions has published the final report of its Cyber Task Force on cyber regulation. The report sets out how IOSCO member jurisdictions apply three recognized cyber frameworks - the CPMI-IOSCO Guidance on Cyber Resilience for Financial Market Infrastructures; the National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity; and the International Organization for Standardization 27000 series standards. The Cyber Task Force does not propose that IOSCO issues any further guidance on this topic, as this could lead to duplication. The report is instead intended to be a resource for financial market regulators and firms, to raise awareness of existing cyber guidance and to encourage the adoption of good practices. The Cyber Task Force recommends that IOSCO's member jurisdictions use these standards to close any gaps in their existing cyber frameworks and that further work is undertaken to establish where those gaps are.
View the report.TOPIC: Cyber Security -
UK Secondary Legislation Published to Implement Changes under EMIR REFIT
06/17/2019
The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (Amendment) Regulations 2019 have been made and will come into force on July 9, 2019.
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European Securities and Markets Authority Postpones Review of Transparency Requirements under MiFIR
06/17/2019
The European Securities and Markets Authority has postponed its review of the operation of transparency requirements laid out under Regulatory Technical Standards issued under the Markets in Financial Instruments Regulation. MiFIR's transparency regime obliges those providing investment services in the EU to disclose details of their transactions in bonds, structured finance products, emission allowances and derivatives both prior to, and following, trades. The detail of how participants should comply with this transparency regime is set out in the related delegated acts and technical standards published under MiFIR. Under the MiFIR RTS, ESMA is obliged to submit a report on the operation of thresholds for the liquidity and trade percentiles of certain financial instruments by July 30 each year. However, given the continuing uncertainties over Brexit, ESMA considers it would be inappropriate to perform the review by the usual deadline, particularly as the results of its review may lead to a tightening of the relevant rules. No new deadline for performing the review has yet been established.
View ESMA's letter.
View the transparency RTS. -
UK Parliamentary Committee Report Criticizes UK's Post-Brexit Sanctions Policy
06/12/2019
The U.K. Foreign Affairs Committee has published a critical report on the U.K. government's plans for the future of sanctions policy following Brexit. Currently, the U.K. must comply with economic and financial sanctions agreed at EU-level. Following the U.K.'s exit from the EU, it will regain autonomy over sanctions policy, but the Foreign Affairs Committee report reveals a lack of high-level thought on policy, a muddled position on key issues, including the implementation of EU sanctions into U.K. law following Brexit, the U.K.'s ability to impose "Magnitsky" sanctions (sanctions imposed upon individuals accused of human rights violations), and the extent to which the U.K.'s future sanctions policy should be coordinated with allies' policies, and a lack of cross-departmental government coordination in developing a coherent U.K. sanctions policy.
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European Commission Publishes Progress Report on European Economic Monetary Union
06/12/2019
The European Commission has published a report on progress made in Europe since the publication of "The Five Presidents' Report" of 2015, in which five of the EU's key figures set out their agenda for deepening the EU's Economic and Monetary Union. The report is published ahead of the Euro Summit on June 21, 2019, where EU leaders will meet to review progress in tackling the challenges faced by the EU.
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European Commission Updates Credit Rating Agencies Regulation Equivalence Decisions
06/11/2019
The European Commission has published a series of draft Implementing Decisions on the equivalence with the EU Credit Rating Agencies Regulation of the credit rating regimes of certain non-EU countries. The Implementing Decisions for Brazil, Canada, Argentina, Singapore and Australia repeal the existing equivalence decisions of the credit rating legislation in these countries, stripping these regimes of their equivalent status. The Implementing Decisions for Mexico, the US, Japan and Hong Kong confirm the equivalence of such countries' credit rating legislation.
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UK Law Commission Embarks Upon Review of Intermediated Securities System
06/11/2019
The Law Commission has been appointed to review potential legal issues with the U.K. intermediated securities system. Intermediated securities are shares and bonds held electronically through computerized credit entries.
Read more.TOPIC: Securities -
European Securities and Markets Authority Publishes Final Report on Frequent Batch Auctions
06/11/2019
The European Securities and Markets Authority has published a final report presenting the feedback to its November 2018 call for evidence, which sought to improve its understanding of "frequent batch" auction systems and their use in the circumvention of the "double volume cap" imposed under the Markets in Financial Instruments Regulation and transparency requirements under the revised Markets in Financial Instruments Directive (or MiFID II). ESMA intends to produce further guidance on areas highlighted in the report, particularly focusing on price determination and pre-trade transparency, and will review the broader effects of the MiFID II transparency regime.
Read more.TOPIC: MiFID II -
UK To Adopt Amendments to Brexit Legislation
06/10/2019
HM Treasury has laid before Parliament a draft of the Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 2) Regulations 2019. The draft Regulations make amendments to certain elements of the EU exit legislation relating to financial services that has been developed by the U.K. government in preparation for the U.K.'s exit from the EU. The amendments will come into force on the later of: (i) the day after the day on which the Regulations are made; and (ii) immediately before exit day or, in the case of the amendment to the Capital Requirements Regulations, exit day.
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UK Prudential Regulator Offers Modification of UK Capital Rules Reflecting Changes to Capital Requirements Regulation II
06/10/2019
The U.K. Prudential Regulation Authority has published a draft modification of its capital rules to correspond with changes made to the Capital Requirements Regulation II that will apply directly in Member States from June 27, 2019. Firms wishing to benefit from the modified rules should apply to the Authorisations Division of the PRA.
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UK Competition and Markets Authority Targets Anti-Competitive Practices in Investment Consultancy and Fiduciary Management Services
06/10/2019
The U.K. Competition and Markets Authority has issued the Investment Consultancy and Fiduciary Management Market Investigation Order 2019. This is U.K. secondary legislation intended to combat anti-competitive practices in the supply and acquisition of investment consultancy and fiduciary management services to and by the pension schemes they advise. The Order was made on June 10, 2019 and enters into force on December 10, 2019. It follows the CMA's consultation on a draft version of the Order that was published for review by interested parties on February 12, 2019. In the final Order, the CMA has endeavoured to resolve a number of the issues raised in response to the consultation. These include amending the Competitive Tender Process as originally drafted by imposing a less stringent "reasonable endeavours" obligation on trustees who are required to obtain bids from three or more unrelated Fiduciary Management Providers, and excluding in-house investment advice or fiduciary management functions from the scope of the Order.
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UK Regulator Publishes Thematic Review of Money-Laundering Risks in Capital Markets
06/10/2019
The U.K. Financial Conduct Authority has published a report on its thematic review assessing money-laundering risks posed to capital markets. The review involved 19 participants including investment banks, recognised investment exchanges, trade bodies, a custodian bank, clearing and settlement houses, inter-dealer brokers and trading firms. The report sets out what the FCA found in its review, the AML risks that were identified and fictitious case studies identifying different AML scenarios that firms may use to inform their own procedures. The FCA expects firms to review their AML systems, taking this report into account. It is considering its supervisory approach, including the possibility of utilising data supplied under MiFID II to mitigate money-laundering risks.
Read more. -
G20 Finance Ministers and Central Bank Governors Meet in Japan
06/09/2019
The G20 Finance Ministers and Central Bank Governors have published a Communiqué from the most recent G20 Summit held in Japan.
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EU Capital Requirements Directive V and Capital Requirements Regulation II Finalized
06/07/2019
The legislative amendments to the EU's Capital Requirements Regulation and the Capital Requirements Directive, widely referred to as "CRD5" or "CRR2", have been published in the Official Journal of the European Union. Subject to certain exceptions, the Regulation amending CRR will apply directly across the EU from June 28, 2021. EU Member States are required to transpose the Directive amending CRD into their national laws and to apply those provisions from December 29, 2020, subject to certain exceptions.
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European Securities and Markets Authority Chair Queries EMIR REFIT Clearing Threshold Calculation for Certain Financial Counterparties
06/07/2019
The Chair of the European Securities and Markets Authority, Steven Maijoor, has requested clarity from the European Commission on the methodology for calculating the clearing threshold of a Financial Counterparty that is part of a non-financial group under the revised European Market Infrastructure Regulation (known as EMIR REFIT).
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Revisions to EU Bank Recovery and Resolution Directive Finalized
06/07/2019
A new Directive amending the EU's Bank Recovery and Resolution Directive, widely referred to as "BRRD2", has been published in the Official Journal of the European Union.
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UK Regulator Publishes Policy Statement on Supervisory and Enforcement Process for Securitization Repositories, including post-Brexit
06/06/2019
The U.K. Financial Conduct Authority has published a Policy Statement setting out the final rules governing the FCA's authority to impose sanctions on persons for breaching requirements imposed under the U.K. Securitization Regulations 2018, which implements the EU Securitization Regulation. The Policy Statement also includes proposals on how the FCA will apply its existing supervisory and enforcement processes to securitization repositories (the bodies responsible for collecting and maintaining records of securitizations) after the U.K.'s exit from the EU.
Read more. -
US Commodity Futures Trading Commission Provides Margin Relief for Legacy Swaps
06/06/2019
In response to a request from the International Swaps and Derivatives Association, the Commodity Futures Trading Commission's Division of Swap Dealer and Intermediary Oversight issued no-action relief that will permit swap dealers to make certain amendments to so-called "legacy swaps" without such swaps losing their legacy status for purposes of the CFTC's uncleared swap margin rule. Legacy swaps are exempt from the CFTC's uncleared swap margin rule because they were entered into prior to the relevant compliance date for that rule. The relief provides clarity that certain amendments to legacy swaps will not bring them within scope of the rule.
The relief will permit swap dealers to continue to treat the following as legacy swaps:- legacy swaps that are amended in an immaterial manner (defined as amendments that would not affect the economic obligations of the parties or the valuation of the swap);
- a swap resulting from the exercise of a swaption that is itself a legacy swap;
- the remaining portion of a swap following a partial termination of such legacy swap;
- the remaining portion of a swap following a partial novation of such legacy swap; and
- new swaps resulting from a multilateral compression exercise consisting solely of legacy swaps.
View the No-Action letter.TOPIC: Derivatives