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Financial Regulatory Developments Focus
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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.

  • European Commission Vice President Addresses CCP Temporary Equivalence and Sustainable Finance in London Speech
    11/15/2019

    The Vice President of the European Commission, Valdis Dombrovskis, has given a keynote speech at the Guildhall in London covering, amongst other things, the EU’s proposals for the development of the European sustainable finance framework and a proposed extension to the temporary equivalence regime for U.K. central counterparties.

    Read more.
  • HM Treasury Publishes Equivalence Determinations for EU Financial Services Legislation
    11/06/2019

    HM Treasury has published the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, providing U.K. government ministers with a temporary power to make equivalence and exemptions directions for the EU and EEA Member States under relevant financial services legislation. The temporary power will come into force on the date that the U.K. leaves the EU (currently expected to be no later than January 31, 2020) and can only be used for up to twelve months from that date.

    Read more.
  • UK Conduct Regulator Postpones Implementation Date for Brexit Contingency Plans
    10/30/2019

    The U.K. Financial Conduct Authority has extended the date by which firms must implement Brexit contingency plans following the extension of the Brexit deadline from October 31, 2019 to January 31, 2020. Firms and funds should now notify the FCA for entry into the temporary permissions regime by January 30, 2020 and fund managers have until January 15, 2020 to notify the FCA if they wish to change their existing notification. Firms should continue to comply with transaction and trade reporting requirements under the Markets in Financial Instruments Directive and European Market Infrastructure Directive, respectively.
     
    View the FCA's statement on contingency planning deadlines.
  • UK Government Agrees Extension of Brexit Deadline With European Union
    10/30/2019

    The U.K. Government has published legislation extending the deadline for the U.K.'s withdrawal from the European Union, following an agreement reached with relevant European Union bodies on the extended Brexit deadline. The European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) (No. 3) Regulations 2019 amend the day of the U.K.'s exit from the European Union from October 31, 2019 to January 31, 2020, granting the U.K. government an additional three months in which to ratify its proposed Brexit deal.

    Read more.
  • UK Regulator Publishes Final Technical Standards on Strong Customer Authentication in the Event of a No-Deal Brexit
    10/25/2019

    The U.K. Financial Conduct Authority has published a Policy Statement, final Technical Standards and changes to the Handbook rules on strong customer authentication and common and secure open standards of communication to be applicable when the U.K. leaves the EU. The FCA consulted on the proposed SCA RTS in early 2019 when the U.K. was due to leave the EU on March 29, 2019, and before the EU SCA Regulatory Technical Standards application date. Since then, Brexit has been extended and the EU SCA RTS has applied directly across the EU since September 14, 2019. As a result, the EU SCA RTS would be onshored into U.K. law under the Withdrawal Act. However, in preparation for a no-deal Brexit, the U.K. Payment Services Regulations would require firms to apply the U.K. SCA RTS. As a result, the EU SCA RTS would be revoked and the FCA's SCA RTS will apply in the U.K. in the event of a no-deal Brexit.

    Read more.
  • EU Council Adopts Laws on Enhanced Supervision of Third-Country CCPs 
    10/15/2019

    The Council of the European Union has adopted the amendments to EU law on CCP supervision. The adopted laws revising the European Market Infrastructure Regulation (EMIR 2.2) will change how both EU CCPs and third-country CCPs are supervised, and implement into legislation the controversial EU "location policy" for the largest third-country CCPs. According to the Council's press release, EMIR 2.2 is scheduled to be published in the Official Journal of the European Union on December 12, 2019 and would come into force 20 days later. The legislative process relevant to EMIR 2.2 has taken place with the U.K. exit from the European Union in the background and many of the changes relevant to third-country CCPs are effectively a response to the U.K.'s decision to leave the EU, given that two of the three largest European Union clearing houses are U.K.-based.

    Read more.
  • UK Financial Policy Committee Issues Summary of UK Financial System
    10/11/2019

    The U.K. Financial Policy Committee has issued a summary of the resilience of the U.K. financial system to potential economic shocks and the vulnerabilities it faces. The summary follows the FPC’s meeting on October 2, 2019, at which the FPC agreed on its intended policy action going forward. The FPC is made up of Bank of England staff, the Chief Executive of the U.K. Financial Conduct Authority and certain external members who work to identify, monitor and take action to remove or reduce systemic risks to the U.K. financial system.

    Read more.
  • Brexit: European Banking Authority Again Warns Against Letter-Box Entities
    10/08/2019

    The European Banking Authority has issued a further Communication on issues associated with the U.K.'s withdrawal from the EU, scheduled to take place on October 31, 2019. The EBA notes that financial institutions have made progress on their preparations for a no-deal Brexit. However, national regulators have highlighted concerns about the operationalization of relocation plans and customer communication. In particular, national regulators have noted that in some cases authorization has been obtained, but it remains unclear whether the firm has transferred assets, skilled staff and risk function to fully operationalize the new business. The EBA reminds firms of the principles it set out in its October 2017 Opinion on structures, and particularly the need for firms not to set up so-called "empty shells".

    Read more.
  • European Securities and Markets Authority Issues Public Statements on No-Deal Brexit Preparations
    10/07/2019

    The European Securities and Markets Authority has issued four public statements on its preparations for a no-deal Brexit in the event the U.K. fails to agree a deal with the EU or extend the Brexit deadline before October 31, 2019. In its public statement on preparations for a possible no-deal Brexit, ESMA notes that it had already put in place no-deal contingency plans ahead of the U.K.’s previous Brexit deadline extension on April 10, 2019. 

    Read more.
  • No-Deal Brexit Uncertainty Leads EU to Suspend Assessment of Transparency Requirements on Bond Markets
    09/24/2019

    The European Securities and Markets Authority has confirmed in a letter to the European Commission that it considers it inadvisable to conduct an annual review in 2019 of the Regulatory Technical Standards on the transparency requirements for trading venues and investment firms for bonds, structured finance products, emission allowances and derivatives (sometimes referred to as RTS 2). The requirement for an annual review is stipulated in the Markets in Financial Instruments package, and ESMA's report could lead to legislative changes subjecting more bonds and derivatives to the transparency requirements. ESMA's assessment of RTS 2 would be impacted by the uncertainty arising from Brexit, in particular, the potential for a no-deal Brexit, because the outcome would vary depending on whether U.K. data was included or not.

    ESMA intends to conduct its annual review before July 2020 and to determine the impact on bond market liquidity of the U.K.'s departure from the EU.

    View ESMA's letter to the European Commission.
  • UK Prudential Regulator Consults on Credit Risk
    09/18/2019

    The U.K. Prudential Regulation Authority has launched a consultation on its approach to implementing the European Banking Authority's Technical Standards and Guidelines on Probability of Default estimation, Loss Given Default estimation and the treatment of defaulted exposures in the Internal Ratings Based approach to credit risk. The consultation is relevant to U.K. banks, building societies and PRA-designated U.K. investment firms. Responses to the consultation need to be submitted by December 18, 2019.

    Read more.
  • UK Conduct Regulator Escalates Awareness of Need for No-Deal Brexit Preparations
    09/11/2019

    The U.K. Financial Conduct Authority has published a press release announcing that it is stepping up its efforts to assist firms to prepare for a no-deal Brexit. Among other things, the FCA will be publishing a series of digital advertisements highlighting the FCA Brexit webpages, and it has set up a dedicated telephone line (0800 048 4255).

    View the FCA's press release.
  • UK Statutory Instrument Published to Onshore the EU Prospectus Regulation For No-Deal Brexit
    09/06/2019

    A U.K. statutory instrument has been published to onshore the EU Prospectus Regulation in the event of a no-deal Brexit. In preparing for an April Brexit, the U.K. had onshored the EU Prospectus Directive in the Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019 (known as the "Official Listing instrument"). However, since then the date on which the U.K. is due to leave the EU has changed to October 31, 2019 and the EU Prospectus Directive has been repealed by the EU Prospectus Regulation (as of July 21, 2019).

    Read more.
  • UK No-Deal Brexit Legislation Extends Transitional Provisions for Third-Country Benchmarks
    09/06/2019

    A U.K. statutory instrument has been published to further the U.K.'s financial services legislation preparations in the event of a no-deal Brexit. The statutory instrument – the Financial Services (Electronic Money, Payment Services and Miscellaneous Amendments) (EU Exit) Regulations 2019 (SI 2019/1212) – provides for, among other things:
    • amending the exit legislation that establishes temporary regimes for EEA e-money and payment services firms to ensure that firms entering the Contractual Run-Off regime can carry out the full range of activities required to discharge any pre-existing contractual obligations;
    • extending the transitional provisions for third-country benchmarks in the Benchmarks (Amendment and Transitional Provisions) (EU Exit) Regulations 2019 by three years to ensure that U.K. firms can use third-country benchmarks until the end of 2022 without the benchmarks needing to be on the Financial Conduct Authority's register;
    • updating cross-references to the Capital Requirements Regulation to take into account the EU amendments to the CRR that became applicable in June 2019; and
    • amending various exit instruments to correct or clarify the original text.

    View the amending regulation and explanatory memorandum.
  • UK Brexit Legislation Published to Onshore the Revised Capital Requirements Regulation
    09/05/2019

    A draft U.K. statutory instrument to onshore into U.K. law, post-Brexit, the revised Capital Requirements Regulation (known as CRR II) has been published – the Capital Requirements (Amendment) (EU Exit) Regulations 2019 (2019 No. 1232). CRR II and the revised Capital Requirements Directive were published in the Official Journal of the European Union on June 7, 2019. Subject to certain exceptions, the Regulation amending CRR will not apply directly across the EU from June 28, 2021. However, some of its provisions are already in force. 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.

    The new U.K. statutory instrument amends the existing U.K. exit legislation to address deficiencies arising due to the changes made in CRR II, but only those changes that will be applicable by October 31, 2019. These changes relate to new definitions, revisions to the rules on what qualifies as capital, new mandates for technical standards to be prepared and some changes to the Minimum Requirements for Own Funds and Eligible Liabilities (MREL). In addition, the statutory instrument removes the automatic preferential capital treatment for EU exposures introduced by CRR II. This aligns with the position taken in the existing exit legislation. It is anticipated that in the event of a no-deal Brexit, the U.K. regulators may use their temporary powers to suspend the additional capital requirements for such exposures.

    View the amending regulation and explanatory memorandum.

    View details of CRR II.
  • European Commission Issues Communication on Final Preparations for No-Deal Brexit
    09/04/2019

    The European Commission has published a Communication on finalizing preparations for the withdrawal of the U.K. from the EU on November 1, 2019. The Commission stresses the likelihood of a no-deal Brexit on October 31, 2019 and asks all stakeholders to take action now to finalize their plans for the situation, noting that the contingency measures that are in place can only mitigate against some of the more significant disruptions. The Commission warns that a further delay to the date that the U.K. exits the EU should not be assumed, in that a delay may not be requested by the U.K. government nor granted by the EU.

    Read more.
  • EU Credit Rating Equivalence Decisions Repealed for Some; Reaffirmed for Others
    07/30/2019

    A series of Implementing Decisions on the equivalence with the EU Credit Rating Agencies Regulation of the credit rating regimes of certain non-EU countries have been published in the Official Journal of the European Union. The EU CRA Regulation provides that banks, investment firms, insurers, reinsurers, management companies, investment companies, alternative investment fund managers and CCPs may only use credit ratings for certain regulatory purposes if a rating is issued by: (i) an EU CRA registered with the European Securities and Markets Authority; (ii) a third-country CRA under the endorsement regime; or (iii) a third-country CRA under the equivalence/certification regime. Equivalence decisions for several jurisdictions were adopted in 2012 under the CRA Regulation, as it was at the time. The equivalence decisions were for Brazil, Canada, Argentina, Singapore, Australia, Mexico, the U.S., Japan and Hong Kong. CRAs from Mexico, the U.S. and Japan subsequently obtained certification from ESMA.

    Read more.
  • UK Conduct Regulator Consults on STS Notifications under Onshored Securitization Regulation
    07/30/2019

    The U.K. Financial Conduct Authority has launched a consultation on draft technical standards on the content and format of STS notifications under the U.K.'s onshored Securitization Regulation. The consultation closes on August 27, 2019. Unless Brexit is delayed further, the FCA intends to publish the final or near-final technical standards on or very near to Exit day, which is currently due to be October 31, 2019.

    Read more.
  • European Commission Communicates on Financial Services Equivalence
    07/29/2019

    The European Commission has published a Communication on equivalence in the area of financial services, including an annex that briefly sets out the equivalence decisions adopted by the Commission since January 2018. The Communication describes the Commission's current equivalence policy priorities, recent legislative improvements and the main assessment and the decision-making processes. It also sets out recent and ongoing work on equivalence assessments and monitoring.

    Read more.
  • UK Conduct Regulator Extends Period for Use of Its Brexit Temporary Transitional Power
    07/25/2019

    The U.K. Financial Conduct Authority has announced that it will extend its use of the temporary transitional power from June 30, 2020 to December 31, 2020 in light of the change to the date that the U.K. is due to leave the EU to October 31, 2019. 

    Read more.
  • UK Regulators Consult on Amending EU Exit Instruments
    07/25/2019

    The Bank of England and the Prudential Regulation Authority have opened a consultation on further changes to EU Exit instruments following the extension of Brexit from April to October 31, 2019, which means that certain EU legislation that has been published since April will become retained law. The consultation closes on September 18, 2019.

    The consultation covers: (i) a proposed update on the Bank's and PRA's intended use of the temporary transitional power; (ii) proposals for the PRA Rulebook and Binding Technical Standards that will be retained, or 'onshored', in U.K. law; and (iii) the Bank's proposed BTS under the Central Securities Depositories Regulation.

    Read more.
  • UK Draft Legislation for Post-Brexit EMIR 2.1 Published
    07/25/2019

    A draft U.K. statutory instrument to onshore into U.K. law, post-Brexit, the revised European Market Infrastructure Regulation (known as EMIR Refit) has been published - The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) (No. 2) Regulations 2019.

    EMIR Refit was published in the Official Journal of the European Union on May 28, 2019 and, for the most part, has applied directly across the EU since June 17, 2019.

    Read more.
  • Certain UK Brexit Regulations Updated and Amended
    07/16/2019

    The draft U.K. Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 3) Regulations 2019 have been published.

    Read more.
  • European Banking Authority Publishes Report on FinTech's Impact on Payment and Electronic Money Institutions' Business Models
    07/08/2019

    The European Banking Authority has published a report on the impact of financial technology on the business models of payment and electronic money institutions. The report aims to provide an overview of the current FinTech landscape and raise awareness of the main trends affecting business models. It follows major developments in the industry including the introduction of the revised Payment Services Directive (known as PSD2), the emergence of new market entrants offering innovative products and the growth of instant and mobile payment methods.

    Read more.
  • 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 Conduct Regulator Publishes Dear CEO Letter on its Wealth Management and Stockbroking Supervision Strategy
    06/13/2019

    The U.K. Financial Conduct Authority has published a "Dear CEO" letter addressed to wealth management and stockbroking firms, identifying the key areas of focus for its two-year Wealth Management and Stockbroking supervision strategy. In the letter, the FCA identifies the four key types of harm for customers in this sector as: (i) reductions in savings and investments due to fraud, investment scams and inadequate client money or assets controls; (ii) loss of confidence in the industry due to mismanagement of conflicts of interest and market abuse; (iii) reductions in savings and investments due to substandard order handling procedures and execution processes; and (iv) inability to understand the costs of services provided by firms as a result of insufficient or inaccurate disclosure.

    Read more.
  • 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. 

    Read more.
  • 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.
  • Revised EU Statement on the Share Trading Obligations in a No-Deal Brexit
    05/29/2019

    Following concerns regarding its March 19, 2019 statement, the European Securities and Markets Authority has published a revised statement on the impact of a no-deal Brexit on the trading obligation for shares where no decision on the U.K.'s equivalence as a third country market has been made. The Markets in Financial Instruments Regulation requires investment firms to conclude transactions in shares admitted to trading on a regulated market or traded on an EU trading venue, i.e. namely regulated markets, multilateral trading facilities, systematic internalisers and equivalent third-country trading venues. The U.K. has adopted this requirement in its onshored MiFID II legislation. Similarly, following its exit from the EU, the new U.K. on-shored share trading obligation would restrict trading of shares in the U.K. to trades on U.K. trading venues unless a third-country equivalence decision was made.

    Read more.
  • Guidance on Post-Brexit Counter-Terrorism Regulations Issued by UK Government
    05/03/2019

    The Foreign and Commonwealth Office has issued guidance on the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019, the proposed U.K. regulations that will govern the U.K.'s application of international sanctions following the U.K.'s withdrawal from the EU. The Regulations will apply within the U.K. and relate to the conduct of U.K. persons (i.e. British nationals and legal entities incorporated in the U.K.), wherever those persons may be situated in the world (including branches of U.K. companies operating overseas).

    Read more.
  • UK Government Consults on Implementation of the EU Fifth Money Laundering Directive
    04/15/2019

    HM Treasury launched a consultation on its proposed options for transposing the Fifth Money Laundering Directive into U.K. law. 5MLD makes a number of changes to the European Anti-Money Laundering and Counter-Terrorist Financing regime set out in the Fourth Money Laundering Directive. EU Member States are required to transpose 5MLD into national laws, which must take effect by January 10, 2020. HM Treasury is consulting on how it proposes to effect the transposition, in particular where the U.K. has discretion as to how certain aspects are implemented and where gold plating provisions are proposed. Notably, the U.K. government intends to implement 5MLD irrespective of when the U.K. leaves the EU, and is committed to implementing the Financial Action Task Force's standards, focusing on those areas highlighted in the FATF's mutual evaluation report of the U.K.'s AML/CTF regime. Responses to the consultation were to be submitted by June 10, 2019.

    Read more.
  • UK's Exit from EU Postponed to October 31, 2019
    04/11/2019

    The EU and the U.K. have agreed to postpone the date on which the U.K. will leave the EU from April 12, 2019 to October 31, 2019. The U.K. notified the EU under Article 50 of the Treaty on the European Union on March 29, 2017 that it would leave the EU. That notification set the date for the U.K.'s exit as March 29, 2019, unless an agreement was reached between the U.K. and the EU. That date was amended by agreement to April 12, 2019 on March 22, 2019. This is the second postponement.

    The EU has implemented the postponement in European Council Decision (EU) 2019/584 taken in agreement with the United Kingdom of 11 April 2019 extending the period under Article 50(3) TEU. The U.K. implemented the extension through the European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) (No. 2) Regulations 2019, which amended the European Union (Withdrawal) Act 2018.

    View the Council's Decision.

    View the U.K. Regulations.
  • US Commodity Futures Trading Commission Issues No-Action Letters to Ensure Continued Relief and Substituted Compliance for U.K. Firms Post-Brexit
    04/05/2019

    The Commodity Futures Trading Commission has issued two no-action letters to ensure that existing regulatory relief and substituted compliance measures for EU firms will continue to apply to U.K. firms following the U.K.’s departure from the EU.  The CFTC said that the no-action letters will bring greater clarity to the market in light of Brexit and reflect the CFTC’s commitment to ensuring that Brexit will not create regulatory uncertainty in global derivatives markets.  The relief is intended to cover both “no-deal” and “soft” Brexit scenarios.  The relief would apply upon the departure of the U.K. (and would thus take effect at the end of the most recent extension of the departure date to October 31, 2019).

    CFTC Letter 19-08 extends to U.K. entities substituted compliance measures originally issued for EU entities.  These measures include comparability determinations for certain entity-level, transaction-level and uncleared margin requirements (the EU Comparability Determinations), along with an exemption for EU-authorized multilateral trading facilities and organised trading facilities from the CFTC’s swap execution facility registration requirements.

    Read more.
  • UK Financial Conduct Authority Implements Permanent Ban of Sale of Binary Options to Retail Consumers
    03/29/2019

    Following its recent consultation, the U.K. Financial Conduct Authority has published a Policy Statement, final rules and a Statement on the new product intervention measure it is introducing for retail binary options. Both contracts for difference and binary options are considered to have given rise to significant investor protection concerns, due to their complexity, the lack of transparent information at the point of sale, the risk of significant loss for investors and the deployment of aggressive marketing techniques by certain providers and distributors of the products. The FCA's product intervention powers under the Markets in Financial Instrument Regulation and, where the FCA has gone beyond those powers, the Financial Services and Markets Act 2000 allow it to impose prohibitions or restrictions on certain financial instruments, financial activities or practices to address a significant investor protection concern. The FCA also consulted on product intervention rules for CfDs and those final rules are expected to be published in April this year.

    Read more.
  • US Regulators Offer Margin Relief for Legacy Swaps No Deal Brexit Scenario
    03/25/2019

    The Commodity Futures Trading Commission has unanimously approved an interim final rule that will allow swap dealers and major swap participants to, in the event of a no-deal Brexit scenario, transfer legacy swaps entered into before the compliance date of the CFTC's margin requirements for uncleared swaps to an affiliate without triggering such requirements. The CFTC's interim final rule is substantively identical to an interim final rule adopted by the U.S. Prudential Regulators, which provides the same relief for legacy swaps entered into before the compliance date of their margin requirements for uncleared swaps.

    Both interim final rules apply only to legacy swaps that are transferred solely for relocation purposes. They do not cover economic changes to legacy swaps, such as amendments that modify payment amount calculation methods, maturity date or notional amount of the uncleared swap.

    The interim final rules are each effective immediately upon their respective publication in the Federal Register, and the transfer relief will apply for a period of one year following the U.K.'s withdrawal from the EU in the event of a no deal Brexit.

    Read more.
  • European Council Publishes Brexit Extension Decision
    03/22/2019

    The European Council has published its decision to extend the deadline for the U.K.’s withdrawal from the EU until May 22, 2019, provided that the Withdrawal Agreement passes through the House of Commons by March 29, 2019.

    Read more.
  • ‚ÄčNo-Deal Brexit Changes to UK Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Rules
    03/22/2019

    The Financial Conduct Authority has published a market bulletin that advises issuers and stakeholders of key changes to the Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Rules that will apply in the event of a no-deal Brexit.

    In the event of a no-deal Brexit, the U.K.’s primary market regime will apply to all issuers that have securities admitted to trading, or have applied for admission to trading, on a U.K.-regulated market or admitted to listing in the U.K., or that are making a public offer in the U.K. The rules will apply regardless of the country an issuer is incorporated in.

    Read more.
  • EU Statement on the Impact of a No-Deal Brexit on the Share Trading Obligation
    03/19/2019

    May 29, 2019 update: ESMA's guidance of March 19, 2019 has been superseded by revised guidance issued, details of which are available here.

    The European Securities and Markets Authority has published a statement on the impact of a no-deal Brexit on the trading obligation for shares. The Markets in Financial Instruments Regulation requires investment firms to conclude transactions in shares admitted to trading on a regulated market or traded on an EU trading venue, i.e. namely regulated markets, multilateral trading facilities, systematic internalisers and equivalent third-country trading venues. The requirement is not applicable to transactions in shares traded in the EU on a non-systematic, ad-hoc, irregular and infrequent basis. ESMA's statement is relevant should there be a no-deal Brexit (currently set for March 29, 2019) and there is no equivalence decision for the U.K.

    Read more.
  • Further EU Clarification For Financial Services Firms in a No Deal Brexit
    03/07/2019

    The European Securities and Markets Authority has published a statement on its approach to certain provisions of the Markets in Financial Instruments package and the Benchmarks Regulation in the event of a no-deal Brexit.

    Read more.
  • European Banking Authority Publishes Revised Guidelines on Outsourcing Arrangements
    02/25/2019

    The European Banking Authority has published revised Guidelines on outsourcing arrangements. The guidelines are intended to update and replace outsourcing guidelines issued in 2006 (by the EBA's predecessor, the Committee of European Banking Supervisors) on outsourcing by credit institutions. The EBA Guidelines have a wider scope, applying to all financial institutions that are within the scope of the EBA's mandate, namely credit institutions and investment firms subject to the Capital Requirements Directive, as well as payment institutions and electronic money institutions. The investment firms within scope, provided that the new Investment Firm Regulation and Directive and related changes to CRD and the Capital Requirements Regulation have entered into force, will only be the largest investment firms (Class 1 Investment Firms). The Guidelines also integrate the recommendation on outsourcing to cloud service providers that was published by the EBA in December 2017. Both the 2006 guidelines and the December 2017 recommendations will be repealed when these new Guidelines enter into force.

    Read more.
  • UK Financial Conduct Authority on Onshoring the EU Temporary Product Intervention Measures
    02/22/2019

    The U.K. Financial Conduct Authority has published a statement on onshoring of the European Securities and Markets Authority's temporary product intervention measures on retail contracts for difference and binary options products.

    In June 2018, ESMA issued decision notices prohibiting the marketing, distribution or sale of binary options to retail clients and restricting the marketing, distribution or sale of CFDs to retail clients. These decisions have been renewed by ESMA and are currently due to expire on April 1, 2019 for binary options and April 30, 2019 for CFDs. Under the European Union (Withdrawal) Act 2018, the decisions will become part of U.K. domestic law on March 29, 2019, if the U.K. leaves the EU on that date without a ratified Withdrawal Agreement.

    Read more.
  • HM Treasury Publishes Guidance On Pension Scheme Arrangements and the EMIR Clearing Obligation In A No Deal Brexit Scenario
    02/21/2019

    HM Treasury has published guidance on the availability of the exemption from the clearing obligation for Pension Scheme Arrangements under the European Market Infrastructure Regulation in a post-Brexit no deal scenario. The U.K. government has been publishing statutory instruments (U.K. secondary legislation) onshoring and amending EU regulations for Brexit. This is being done under the European Union (Withdrawal) Act 2018, so as to ensure a workable U.K. statute book after Brexit. The U.K.'s onshoring legislation has been drafted so as to come into operation on exit day if there is a "no deal" scenario where the U.K. leaves the EU without a ratified withdrawal agreement. The onshoring legislation includes various statutory instruments to onshore the EU EMIR.

    Read more.
  • EU to Recognize Three UK CCPs in a No-Deal Brexit Scenario
    02/18/2019

    The European Securities and Markets Authority has announced that in the event of a no-deal Brexit, it will recognize three U.K.-established CCPs for the purposes of providing services in the EU, namely - LCH Limited, ICE Clear Europe Limited and LME Clear Limited. ESMA has adopted recognition decisions for each of the U.K. CCPs, which will take effect on the day after the U.K. leaves the EU. This follows the European Commission's earlier determination of U.K. equivalence for CCPs.

    View ESMA's announcement.
  • UK Financial Conduct Authority Consults on Proposed Changes to Handbook for Implementing the EU Prospectus Regulation
    01/28/2019

    The Financial Conduct Authority has published for consultation proposed changes to the Handbook. The changes are to align the Prospectus Rules sourcebook within the Handbook to ensure it is consistent with the new EU Prospectus Regulation that came into force on July 20, 2017.

    The EU Prospectus Regulation sets out information that companies need to disclose to investors and potential investors in a prospectus when raising capital. Even though certain provisions of the EU Prospectus Regulation were anticipated to come into effect after the U.K.’s anticipated exit from the EU on March 29, 2019, the EU Prospectus Regulation will still be applicable during any Brexit transition or implementation period.

    Read more.
  • UK to Adopt EU Equivalence Decisions for Exchanges and Bank Exposures in No Deal Brexit
    01/17/2019

    HM Treasury has laid before Parliament a draft of the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019. The draft Regulations grant HM Treasury temporary powers to make equivalence determinations in relation to any EEA state for EU legislation that is being onshored. The retained EU law includes the Benchmark Regulation, the Capital Requirements Regulation, the European Market Infrastructure Regulation, the Markets in Financial Instruments Regulation, the Credit Rating Agencies Regulation, the Prospectus Directive, the Transparency Directive, the Securities Financing Transaction Regulation, the Short Selling Regulation and Solvency 2. The powers will enable HM Treasury to make equivalence decisions before Brexit that come into force on exit day in a no deal scenario. These powers are distinct from the powers granted to HM Treasury to make equivalence decisions post-Brexit under the specific sectoral onshored legislation and apply in parallel to relevant temporary permissions or registration regimes. The temporary powers would expire 12 months after exit day.

    Read more.
  • UK Draft Directions for EEA Funds and Fund Managers Wanting to Continue to Market in the UK Post-Brexit
    01/07/2019

    The U.K. Financial Conduct Authority has published two draft Directives relating to Brexit under the: (1) draft Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019; and (2) Alternative Investment Fund Managers Regulations 2013, as amended by the draft Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019. These draft regulations will establish a Temporary Permissions Regime enabling EEA funds that currently market in the U.K. under an EEA passport to continue to do so for three years after the U.K. exits the EU.

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  • UK Regulator Consults on Technical Standards for Strong Customer Authentication in Payments as Preparation for a No-Deal Brexit
    12/19/2018

    The U.K. Financial Conduct Authority has launched a consultation on the proposed Technical Standards on strong customer authentication and common and secure open standards of communication (referred to as the U.K. SCA RTS). The U.K. SCA RTS would apply in the U.K. from September 14, 2019 in the event of a no-deal Brexit. The FCA's proposals will apply to payment service providers, including banks, building societies, e-money issuers, payment institutions, registered Account Information Services (AIS) and Payment Initiation Services (PIS) service providers. Responses to the consultation should be submitted by February 19, 2019. The FCA intends to publish the final Technical Standards in April 2019.

    The EU SCA Regulatory Technical Standards (Commission Delegated Regulation (EU) 2018/389), which supplement the EU Payment Services Directive, came into force on March 14, 2018. The EU SCA RTS impose obligations on PSPs to increase the security of customers' payments made by card and other means and set out requirements on account servicing payment service providers (ASPSPs) relating to the third party providers of Account Information Services and Payment Initiation Services. The EU SCA RTS will apply directly across the EU from September 14, 2019.

    The FCA is proposing to make the U.K. SCA RTS substantially similar to the EU SCA RTS so as not to disrupt and confuse the substantial preparations that industry has already made to implement the EU requirements. In the event of a no-deal Brexit, the U.K. SCA RTS will supplement the U.K. Payment Services Regulations 2017, as amended by the Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018. Without the U.K. SCA RTS, the revised-for-Brexit PSRs would be ineffective as they require compliance with U.K.SCA RTS.

    View the consultation paper (CP18/44).
  • EU Temporary Equivalence Decisions for UK CCPs and CSDs
    12/19/2018

    The European Commission has adopted temporary equivalence decisions determining that the U.K. regulatory frameworks applicable to central counterparties and central securities depositories will be deemed equivalent to EU standards under the European Market Infrastructure Regulation and the Central Securities Depositories Regulation, respectively, in the event of a no-deal Brexit.

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  • European Commission Adopts Measures in Preparation for a No Deal Brexit
    12/19/2018

    The European Commission has published a Communication on Implementing the Commission's Contingency Action Plan for a no deal Brexit and has adopted all the legislative proposals and delegated acts announced in its November 2018 Contingency Plan. The actions relevant to the derivatives industry are the adoption by the Commission of:
     
    1. A temporary and conditional equivalence decision for CCPs already established and authorized in the U.K. CCPs established in third countries (which the U.K. will become on exit day) whose supervisory and legal regimes have been deemed to be equivalent to the EU regime may provide clearing services to clearing members or trading venues established in the EU. Such a CCP must be recognized by the European Securities and Markets Authority in accordance with the processes outlined in the European Market Infrastructure Regulation. The adopted decision would grant equivalence to the regulatory and legal regimes of the U.K. and Northern Ireland in relation to CCPs. The Commission's equivalence decision would apply for 12 months from exit day. ESMA remains to designate various U.K. CCPs.

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  • Brexit: European Banking Authority Calls for More Communication with Clients
    12/17/2018

    The European Banking Authority has published a press release calling for firms to take more action in their Brexit-related communications with customers. The U.K. will depart the EU without a transitional period on March 30, 2019 if the withdrawal agreement is not ratified by that time. In June 2018, the EBA issued an Opinion that stressed the need for firms to consider their obligations to existing and prospective customers. It set out a list of minimum information that national regulators should ensure firms send to customers whose contracts or services might be affected by the end of the year. In its press release, the EBA urges firms to consider the June 2018 Opinion and to communicate to customers the risks and effects that a no-deal Brexit may have on a customer's contract with the firm.

    View the press release.

    View details of the EBA's June 2018 Opinion.
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