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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.

  • Basel Committee on Banking Supervision Defers Basel III Implementation in Response to COVID-19
    03/30/2020

    The Basel Committee on Banking Supervision has delayed the implementation timeline for Basel III to allow firms to focus on tackling the challenges resulting from the coronavirus (COVID-19) pandemic.

    Read more.
  • European Securities and Markets Authority Maintains MiFID II Equity Transparency Calculations Application Date
    03/27/2020

    The European Securities and Markets Authority has issued a statement in which it confirms that the existing date for the application of the equity transparency calculations will remain unchanged. The Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation, which became effective on January 3, 2018, introduced pre- and post-trade transparency requirements for equity and non-equity financial instruments. On February 28, 2020, ESMA published the transparency calculations that will apply to new instruments from April 1, 2020 until March 31, 2021. Further calculations will be released ahead of that date once the data quality review for those instruments has been completed.

    ESMA's statement confirms that the new calculations will apply from April 1, 2020, as intended, because firms have had to implement new transparency calculations in the past and so do not need to revise their IT systems to comply with the obligation. In addition, ESMA is of the view that a delay could negatively impact those firms that have planned for the new calculations.

    View ESMA's statement.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Centre.
    TOPICS: COVID-19MiFID II
  • UK Financial Conduct Authority Clarifies Senior Manager Responsibility For Work-Related Travel
    03/27/2020

    The U.K. Financial Conduct Authority has published a statement emphasizing the responsibility of relevant Senior Managers or equivalent persons in prioritizing which of their firm's employees cannot work from home and need to travel into an office or business continuity site to perform their role. The FCA's statement is relevant to all FCA-regulated firms across the U.K. and is made in relation to the COVID-19 pandemic. The FCA states that it expects the number of individuals that need to travel into an office or other place of work to be considerably less than would be required for a business-as-usual basis. The FCA provides a list of roles that it considers are capable of being performed from home. These are: financial advisers, staff who can safely and securely trade shares and financial instruments from home, business support staff, claims management companies and those selling non-essential goods and credit.

    View the FCA's statement.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Centre.
  • COVID-19: European Central Bank Recommends Suspension of Dividends by Large Eurozone Banks
    03/27/2020

    The European Central Bank has published an updated Recommendation requiring the largest Eurozone-based banks to suspend the payment of any dividends and buyback of shares until at least October 1, 2020. The Recommendation is addressed to significant institutions that are directly prudentially supervised by the ECB. Eurozone national regulators of smaller banks are expected to apply the Recommendation, as deemed appropriate. The Recommendation applies to both 2019 and 2020 dividends, but does not retroactively apply to dividends that have already been paid for the 2019 financial year. Where a bank believes that it is legally obliged to make a dividend pay-out, it should explain the reasons to its joint supervisory team.

    The purpose of the Recommendation is to ensure that banks are able to maintain their lending and therefore the support of businesses during the current global pandemic.

    View the ECB recommendation here.

    View the ECB press release here.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • European Securities and Markets Authority Grants Regulatory Forbearance for Financial Reporting in Wake of COVID-19
    03/27/2020

    The European Securities and Markets Authority has published guidance for issuers on compliance with their financial reporting requirements in light of the challenges presented by the coronavirus (COVID-19) pandemic. Under the EU Transparency Directive, issuers of debt securities or shares must publish annual and half-yearly financial reports within four months and three months, respectively, of the end of the relevant reporting period.

    Read more.
  • COVID-19: EU Regulatory Forbearance for Banks and Investment Firms for Reporting Securities Financing Transactions
    03/26/2020

    UPDATE: Further to its statement published on March 18, 2020, the European Securities and Markets Authority has published a clarifying statement to confirm that the regulatory forbearance granted for banks and investment firms subject to the upcoming reporting obligation under the Securities Financing Transaction Regulation also applies to securities financing transactions subject to the backloading requirement.

    ESMA published its initial public statement on steps it is taking to mitigate the impact of the coronavirus (COVID-19) on the EU financial markets. ESMA is granting regulatory forbearance for banks and investment firms subject to the upcoming reporting obligation under the SFTR. Banks and investment banks were due to start reporting SFTs from April 13, 2020. EU banks and investment firms have been rolling out necessary diligence to categorize their clients and confidentiality waivers ahead of the launch, as well as installing new IT systems to report. ESMA's regulatory forbearance delays the reporting obligation for banks and investment firms from April 13, 2020 to July 13, 2020, which is the date from which CCPs and central securities depositories must begin reporting SFTs. Other Financial Counterparties must report from October 12, 2020 and Non-Financial Counterparties from January 11, 2021.

    Read more.
    TOPICS: COVID-19Securities
  • UK Financial Conduct Authority Expectations on Financial Resilience of Firms
    03/26/2020

    The U.K. Financial Conduct Authority has published a statement reminding firms that they are able to use capital and liquidity buffers during the COVID-19 pandemic. The FCA also stated that firms should plan ahead and ensure that any potential exit from the market is conducted in an orderly manner. The statement is relevant for firms that are solo-regulated by the FCA.

    Firms are encouraged to contact the FCA if they are unable to meet their capital requirements.

    View the FCA announcement.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • COVID-19: UK Regulators Issue Joint Statement on Financial Statement Requirements
    03/26/2020

    The U.K. Financial Conduct Authority, the Financial Reporting Council and the Prudential Regulation Authority have announced a number of measures and initiatives to assist firms during the current global coronavirus pandemic. These include:
    • a statement from the FCA on the publishing of audited financial reports for listed companies;
    • guidance from the FRC for companies preparing financial statements to be read in conjunction with PRA guidance on assessing expected loss under IFRS9; and
    • guidance from the FRC for audit firms.

    Read more.
  • UK Conduct Regulator: COVID-19 Will Not Impact LIBOR Deadline
    03/25/2020

    On March 25, 2020, the U.K. Financial Conduct Authority confirmed that COVID-19 is not expected to affect LIBOR preparations and the target date for LIBOR cessation of the end of 2021 still stands. The FCA does acknowledge, however, that some interim LIBOR milestones may not be met as a result of the pandemic, and it will continue to monitor the impact on such timelines carefully.
     
    View the FCA's statement on COVID-19 and LIBOR.
     
    Details of other regulatory responses to COVID-19 are available at our COVID-19 Research Center.
  • COVID-19: UK Financial Conduct Authority Confirms No Short Selling Ban (Yet)
    03/23/2020

    The U.K. Financial Conduct Authority has published a statement confirming that, in the wake to the COVID-19 pandemic, it is working with regulators in the U.S., the EU and elsewhere to ensure that the financial markets can remain orderly and open. Noting the recent volatility in the financial markets, the FCA confirms that the U.K. has not imposed a short selling ban and neither has the U.S. or any other major financial market. The EU has however temporarily reduced the threshold for the reporting of short positions. Net short position holders are required to notify the relevant national regulator of any net short position of 0.1% of the issued share capital of a company and of each 0.1% above that threshold. This also applies to listed shares on UK markets.  It is not necessary to notify existing positions above the new lower threshold that were not previously notifiable, until new trading takes place.

    Read more.
    TOPICS: COVID-19FundsSecurities
  • COVID-19: European Securities and Markets Authority Extends Consultation Deadlines
    03/20/2020

    The European Securities and Markets Authority has announced that it is extending the consultation response dates to assist market participants as they implement arrangements to ensure business continuity during the coronavirus outbreak.

    Read more.
  • COVID-19: European Securities and Markets Authority Clarifies MiFID II Telephone Recording Requirements
    03/20/2020

    The European Securities and Markets Authority has published a statement on the telephone recording obligations in the Markets in Financial Instruments Directive. MiFID II requires records to be kept of all services, activities and transactions undertaken by an investment firm, including recordings of telephone conversations or electronic communications relating to: (i) transactions concluded when a firm deals on own account (proprietary trading); and (ii) the provision of client order services that relate to the reception, transmission and execution of client orders. Firms are also required to implement and maintain a policy for the recording of these telephone conversations.

    Read more.
    TOPICS: COVID-19MiFID II
  • EU Lowers Short Sale Disclosure Threshold
    03/16/2020

    The European Securities and Markets Authority has announced a Decision to lower the threshold for disclosing short positions in shares. Effective March 16, 2020, all holders of net short positions in shares traded on an EU regulated market (i.e., exchange) must notify the relevant national regulator if the position reaches or exceeds 0.1% of the issued share capital. Net short position holders must notify the relevant national regulator of any net short position of 0.1% of the issued share capital of a company and of each 0.1% above that threshold.

    Read more.
    TOPICS: COVID-19Securities