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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 Banking Authority Publishes Peer Review of Deposit Guarantee Scheme Stress Test Results
    06/17/2020

    The European Banking Authority has published the results of its peer review of EU deposit guarantee schemes. The EU Deposit Guarantee Scheme Directive establishes requirements for EU DGSs, including that Member States conduct stress tests of their DGSs. Member States were required to report on their stress tests by July 3, 2019, and the EBA has based its peer review report on the results of the tests. The report is intended to assess the resilience of EU DGSs and identify good practices and areas for improvement.

    Read more.
  • UK Payment Systems and Conduct Regulators Publish Joint Statement on Access to Cash
    06/16/2020

    The U.K. Payment Systems Regulator and U.K. Financial Conduct Authority have published a joint statement on their approach to maintaining access to cash for those that need it in light of bank branch and cash machine closures due to COVID-19. The regulators have adopted a series of actions, including mapping which regions have seen branch and cash machine closures, working with banks, building societies, the Post Office and Link to ensure access to these facilities is re-established as soon as possible and focusing on the needs of vulnerable consumers who require ongoing access to cash. In the longer-term, the regulators will work to ensure reasonable access to cash is maintained, including through use of shared services and local community initiatives, and anticipate additional powers to preserve access to cash from upcoming legislation announced in the U.K. Government’s 2020 budget.
     
    View the PSR's statement on access to cash.
     
    View the FCA's statement on access to cash.
     
    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • European Securities and Markets Regulator Publishes 2019 Annual Report and Updated 2020 Work Program
    06/15/2020

    The European Securities and Markets Authority has published its 2019 Annual Report together with an updated version of its 2020 Work Program, incorporating changes in response to the COVID-19 pandemic.
     
    ESMA’s 2019 Annual Report discusses ESMA’s work in 2019, which included: (a) the entry into force of EMIR 2.2, including significant new responsibilities for ESMA in the authorization and supervision of CCPs; (b) ESMA’s common supervisory action on the application of the revised Markets in Financial Instrument Directive’s requirements on the assessment of appropriateness, for which ESMA will consider whether any follow-up work is needed in 2020; (c) reviews of MiFID II and the Markets in Financial Instruments Regulation, including on fair access to, and lowering the cost of, market data and the consolidated tape; and (d) sustainable finance, including technical advice delivered to the European Commission on the integration of sustainability risks for investment firms and investment funds into relevant EU legislation, a report on undue short-termism in securities markets and contributions to the technical expert group on sustainable finance which is due to deliver technical advice on delegated legislation relating to the EU Benchmarks Regulation.

    Read more.
  • EU Statement on Open Access Requests for Exchange-Traded Derivatives
    06/11/2020

    The European Securities and Markets Authority has published a statement on the open access provisions for exchange-traded derivatives under the Markets in Financial Instruments Regulation.

    MiFIR requires a trading venue to provide open and non-discriminatory access to a CCP so that a CCP can clear trades in transferable securities, money market instruments and ETDs concluded on a trading venue of their choice, which will in turn allow the members of a trading venue to select the CCP they wish to use for clearing. There is a reciprocal requirement on CCPs to provide open and non-discriminatory access to a trading venue that wishes to clear financial instruments through a particular CCP. These provisions are controversial since they mean that valuable intellectual property and IT systems developed by exchanges effectively must be made available to competitors or new market entrants. It has been argued that the open access requirements make the EU unattractive as a location for exchange businesses due to the commercial disadvantages that result for those exchanges which have successfully invested in innovation.

    Read more.
  • UK Regulators Acknowledge European Systemic Risk Board Recommendation on Financial Institution Distributions
    06/08/2020

    The Bank of England and U.K. Prudential Regulation Authority have publicly acknowledged the ESRB's Recommendation on the restriction of distributions during COVID-19. The ESRB recommends that EU financial institutions refrain from making dividend distributions, entering into buy-backs of ordinary shares or creating obligations to pay variable remuneration to material risk takers where those actions reduce the quantity or quality of own funds at the EU group level and sub-consolidated or individual level. The BoE and PRA note that the Recommendation applies to U.K. authorities during the Brexit transition period.

    View the BoE and PRA's joint statement on the ESRB's Recommendation.

    View details of the ESRB's Recommendation.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • European Systemic Risk Board Announces Further Actions to Combat Impact of COVID-19
    06/08/2020

    The European Systemic Risk Board has announced a series of further actions designed to combat the impact of COVID-19 on European financial markets. The actions relate to the five priority areas already identified by the ESRB as requiring particular focus in the context of the COVID-19 pandemic, as follows:
    • Implications for the financial system of guarantee schemes and other fiscal measures to protect the economy: the ESRB has published a Recommendation introducing minimum requirements for national monitoring of the financial stability implications of the various debt moratoria and guarantee schemes introduced by Member States to support economies through COVID-19 (Recommendation A); national regulators are also advised to regularly report information on these schemes to the ESRB in accordance with reporting templates to be published by the ESRB by June 30, 2020 (Recommendation B); national regulators implicated by the Recommendation should communicate the actions they have taken, or intend to take, in response to the Recommendation A by July 31, 2020 and Recommendation B by December 31, 2020;
    Read more.
  • UK Conduct Regulator Publishes Guidance on Branch Access During COVID-19
    06/04/2020

    The U.K. Financial Conduct Authority has published guidance for banks on continuing to make branch access available for essential services. In considering reopening and operating branches, banks should balance the needs of their customers against the safety and welfare of their staff. Maintaining access to essential services for vulnerable customers, such as access to cash, telephone banking and in-person payments, should be a particular priority. Firms should also prioritize the reinstatement of access to cash and essential services in local areas which have lost access to bank branches as a result of the pandemic, and, where this is not possible, should ensure they communicate clearly with customers through websites and physical signs at branches to point them to alternatives, including Post Office services.
     
    View the FCA's guidance on branch access during COVID-19.
     
    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • UK Conduct Regulator Update on COVID-19 Response and 2020 Expectations
    06/04/2020

    The U.K. Financial Conduct Authority’s Executive Director of Supervision for Investment, Wholesale and Specialists, Megan Butler, has given a speech setting out the FCA’s current priorities, its expectations of firms during the COVID-19 pandemic and the outcomes it is focusing on for the wealth management sector, as well as the future priorities for financial regulation.
     
    The FCA initially prioritized immediate relief for firms and consumers, including on mortgages and unsecured lending products, at the outset of the COVID-19 crisis, but is now looking at how it will respond to the challenges of COVID-19 on a more long-term basis. This longer-term approach includes ensuring a good level of operational resilience (in line with the FCA’s ongoing consultation on that topic), that markets can continue to function well, that customers are treated fairly and protected from scams and that the FCA understands firms’ financial resilience so that they can fail in an orderly manner. 

    Read more.
  • UK Prudential Regulator Publishes Further Guidance on IFRS 9 and Capital Requirements
    06/04/2020

    The U.K. Prudential Regulation Authority has published a “Dear CEO” letter providing further guidance on IFRS 9 and capital requirements in the context of COVID-19. The PRA published a “Dear CEO” letter in March 2020, advising firms on the application of certain key concepts (including the definition of "default" in the Capital Requirements Regulation and expected credit loss accounting under IFRS 9). This guidance related in large part to payment holidays, many of which are now coming to an end. The PRA’s latest guidance therefore focuses on exits from those initial payment deferrals. 

    Read more.
  • Bank of England Warns Financial Market Infrastructures Against Profit Distributions
    06/04/2020

    The Bank of England has written to CEOs of U.K. financial market infrastructure providers, urging them to carefully consider the additional risks and potential financial and operational demands of COVID-19 when determining shareholder distributions or variable remuneration. U.K. FMI providers are expected to discuss any intended shareholder distributions with the Bank of England.
     
    View the BoE's Dear CEO letter to FMIs.
     
    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • EU Extends Period for Lower Short Sale Disclosures
    06/03/2020

    The European Securities and Markets Authority has published a Decision renewing the temporary lower threshold for disclosures of net short positions in shares. ESMA's original Decision has been in effect since March 16, 2020 and was due to expire on June 16, 2020. The Decision to renew the measures will apply from June 17, 2020 for a further three months. The lower thresholds apply to all holders of net short positions in shares traded on an EU regulated market (i.e., exchange) who must notify the relevant national regulator if the position reaches or exceeds 0.1% of the issued share capital and of each 0.1% above that threshold.

    Read more.
    TOPICS: COVID-19Securities
  • UK Prudential Regulator Publishes Statement on Electronic Signatures
    06/02/2020

    The U.K. Prudential Regulation Authority has published a statement on the use of electronic signatures in the context of remote working arrangements during the COVID-19 pandemic. The PRA has stated that, in the absence of specific legal provisions to the contrary, firms are entitled to use electronic signatures to submit forms and other regulatory documents to the PRA. The advice does not extend to the use of electronic signatures more generally.

    Read more.
  • European Banking Authority Publishes Guidelines on COVID-19 Exposures Reporting
    06/02/2020

    The European Banking Authority has published guidelines on bank reporting and disclosure of exposures subject to measures designed to protect borrowers from the economic impact of the COVID-19 crisis. The measures include payment moratoria, which are exempt from prudential treatment as forbearance measures and therefore not subject to the usual supervisory reporting framework. Public guarantee schemes introduced in many Member States are also not captured by existing reporting frameworks. This has created a data gap, which has implications for the risk-analysis of individual institutions and for overall financial stability in the EU.

    Read more.
  • FCA Publishes Final Guidance on COVID-19 Measures for Mortgage Providers
    06/02/2020

    The U.K. Financial Conduct Authority has published final guidance on how mortgage lenders should treat customers coming to the end of a payment holiday, or those yet to request one, in light of the COVID-19 pandemic. The guidance will come into force on June 4, 2020 and remain in force until October 31, 2020, unless renewed or updated. The guidance covers: (i) fair treatment of customers seeking, or coming to the end of, a payment deferral; (ii) options for customers able, or unable, to resume full payments; (iii) the interaction of the guidance with the FCA’s Mortgage Conduct of Business Sourcebook; (iv) training, monitoring, record keeping and Credit Reference Agency reporting; (v) repossessions; and (vi) debt help and money guidance.

    Read more.
  • Guidance Published on Financial Services Exclusions in the UK Corporate Insolvency and Governance Bill
    06/01/2020

    Following the introduction of the Corporate Insolvency and Governance Bill into Parliament on May 20, 2020, the U.K. government has published a series of guidance notes on the measures proposed in the Bill. The proposed measures, first announced by Secretary of State for Business, Energy and Industrial Strategy on March 28, 2020, are intended to protect companies and businesses facing major funding and operational difficulties in the current COVID-19 pandemic. Once final, the Bill will amend current U.K. insolvency law by, among other things, introducing a new moratorium, establishing a new restructuring plan procedure for failing companies that includes a mechanism to bind a dissenting class of creditors to the plan, and banning termination clauses that would come into effect when a company enters into insolvency, begins a moratorium or starts the new restructuring plan procedure. The Bill will also temporarily remove the threat of personal liability from wrongful trading for directors of companies where they face financial difficulties as a result of COVID-19, which will apply retrospectively from March 1, 2020.

    Read more.
    TOPIC: COVID-19
  • International Organization of Securities Commissions Publishes Statement on COVID-19 Disclosure for Issuers
    05/29/2020

    The International Organization of Securities Commissions, the international policy forum for securities regulators, has published a statement on the disclosure standards that securities issuers should adhere to in the context of COVID-19.

    Read more.
    TOPICS: COVID-19Securities
  • UK Conduct Regulator Announcement on Continuing Professional Development for Regulated Firms
    05/27/2020

    The U.K. Financial Conduct Authority will temporarily allow regulated firms subject to continuing professional development requirements to carry over any uncompleted CPD hours to the following 12-month period, for years ending before April 1, 2021. Firms should review the FCA’s conditions for carrying over CPD requirements, which include where an individual, due to the current exceptional circumstances arising from COVID-19, will be unable to complete their CPD hours in their current CPD period. The FCA also notes that firms are still expected to demonstrate that relevant individuals remain competent to carry out their work and it expects most individuals to be able to continue to complete CPD while on furlough or working from home.
     
    View the FCA's announcement on CPD requirements.
     
    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • European Commission Publishes Adjusted 2020 Work Program
    05/27/2020

    The European Commission has published an adjusted 2020 Work Program to reflect the unexpected challenges arising from COVID-19. The Commission still intends to deliver on the commitments made under its original Work Program, published in January 2020, but has adjusted the timing of certain actions necessary to achieve its objectives. An update on the delivery and expected timing of the objectives under the adjusted Work Program are set out in an amended version of Annex 1 on the Commission’s website.

    Read more.
  • European Banking Authority Reports on Impact of COVID-19 on EU Banking Sector
    05/25/2020

    The European Banking Authority has published a report on the impact of the COVID-19 pandemic on the financial health of EU banks. The report is mostly based on supervisory data submitted by banks in Q4 2019 and Q1 2020. The EBA's report confirms that banks have activated their contingency plans in response to the crisis, however, their operational capabilities remain under pressure. In addition, some banks have used parts of their capital and liquidity buffers and are expected to continue to do so in the coming months. The report also confirms that the asset quality of banks is likely to continue deteriorating as non-performing loan volumes increase.

    View the EBA's report.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • Bank of England to Discontinue Three-Month Contingent Term Repo Facility
    05/22/2020

    The Bank of England has announced that it will discontinue its three-month Contingent Term Repo Facility at the end of May 2020, with the final operation scheduled to take place on May 28, 2020. The BoE’s one-month CTRF operations will continue on a weekly basis until at least June 26, 2020. The BoE has also said that it will reintroduce the operations if necessary. 
     
    The CTRF was established by the BoE in March 2020, at the outset of the COVID-19 outbreak, allowing financial market participants to borrow central bank reserves in exchange for less liquid assets.
     
    View the BoE's market notice on amendments to the CTRF.
    TOPIC: COVID-19
  • UK Prudential Regulator Publishes Guidance on Treatment of COVID-19 Payment Holidays
    05/22/2020

    The U.K. Prudential Regulation Authority has published a new statement on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address COVID-19. The statement follows the announcements made by the PRA, the U.K. Financial Conduct Authority and the U.K. Financial Reporting Council in March 2020 on financial reporting and audit requirements in light of COVID-19. Those announcements included a letter from the PRA to banks on the application of IFRS 9 (including expected credit loss accounting) to loan arrangements during the pandemic.

    Read more.
  • UK Conduct Authority Consults on Guidance on COVID-19 Measures for Mortgage Lenders and Payments Firms
    05/22/2020

    The U.K. Financial Conduct Authority has published two consultations on its draft guidance for firms on mortgages and safeguarding customers’ funds during the COVID-19 pandemic.
     
    The first consultation relates to the FCA’s proposed guidance on how mortgage lenders should treat customers coming to the end of a payment holiday or those yet to request one. The timeframe for customers who have not yet benefited from a payment holiday to apply for one will be extended to October 31, 2020. The current ban on house repossessions will also be extended to October 31, 2020.

    Read more.
  • UK Insolvency and Governance Bill Published
    05/20/2020

    The U.K. Government has published the U.K. Corporate Governance and Insolvency Bill. The Bill amends aspects of insolvency and company law to assist firms struggling to cope with the effects of the COVID-19 pandemic. The measures include:
     
    • A new moratorium giving companies breathing space from creditors while they investigate rescue options;
    • A prohibition on contractual termination upon insolvency clauses, preventing suppliers from refusing to supply goods while a company is going through a rescue process;
    • A temporary removal of liability for wrongful trading for company directors who try to keep their businesses operating through the pandemic;
    • A temporary prohibition on the filing of statutory demands and winding up petitions by creditors; and
    • Temporary permission for companies to hold closed Annual General Meetings.

    Read more.
  • EU Call for Transparency in Financial Reports of EU-Listed Issuers
    05/20/2020

    The European Securities and Markets Authority has published a statement calling for transparency in the half-year financial reports of EU-listed issuers. The statement focuses on interim financial statements that need to be prepared according to IFRS standards and on interim management reports for 2020 half-yearly reporting periods. However, the statement is also relevant to the reporting of financial information in other interim periods. ESMA highlights that issuers must provide updated and useful information that covers the current and expected impact of the coronavirus pandemic on their financial position, performance and cash-flows. In addition, issuers should identify the principal risks and uncertainties to which they are exposed.

    View ESMA's statement.
    TOPICS: COVID-19Securities
  • UK Regulator Confirms Policy on Credit Risk
    05/14/2020

    The U.K. Prudential Regulation Authority has published a Policy Statement 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 EBA's regulatory products are designed to address concerns about the variability of own funds requirements arising from the internal models that firms use to calculate their minimum credit risk capital requirements under the Capital Requirements Regulation. The Policy Statement is relevant to U.K. banks, building societies and PRA-designated U.K. investment firms.

    Read more.
  • Financial Services Exemptions in UK Insolvency and Governance Bill
    05/14/2020

    The U.K. Government intends to exempt financial services firms from certain provisions of the new U.K. Corporate Governance and Insolvency Bill. The Bill, announced on March 28, 2020, will amend aspects of the U.K. insolvency regime (as set out under the Insolvency Act 1986) in light of the financial difficulties faced by many businesses as a result of the COVID-19 pandemic. The Bill also includes provisions for companies’ annual general meetings and filing requirements during the COVID-19 crisis.

    Read more.
  • European Systemic Risk Board Actions on Five COVID-19 Priority Areas
    05/14/2020

    The European Systemic Risk Board has established five priority areas on which it intends to take action to combat the impact of COVID-19 on the EU financial system. In determining its actions, the ESRB hopes to ensure an effective response to the pandemic across the EU that prevents individual Member State actions from negatively impacting the EU Single Market and to take advantage of flexibility in regulatory standards to support financial institutions in providing financial services and liquidity.

    Read more.
  • Bank for International Settlements Reports on Financial Crime During COVID-19
    05/14/2020

    The Bank for International Settlements has published a report on financial crime during the COVID-19 pandemic. The Report provides an overview of the increase in financial crime observed since the COVID-19 outbreak, which includes an increase in cyber threats, greater misuse of online financial services and virtual assets to move illicit funds and possible corruption associated with government stimulus funds. The Report also describes the cyber resilience measures proposed by national and international agencies and the AML actions taken by supervisory bodies, including the issuance of public statements to raise awareness of COVID-19-related AML risks, provision of guidance on the application of existing AML/CTF frameworks and coordination with the financial sector for the reporting of COVID-19-related fraud.

    Read more.
  • European Securities and Markets Authority Publishes Statement on Fund Managers' Liquidity Risk Management During COVID-19
    05/14/2020

    The European Securities and Markets Authority has published a statement confirming its support for the European Systemic Risk Board's Recommendation on tackling the implications of market illiquidity for asset managers with exposures to corporate debt and real estate. In accordance with the ESRB's Recommendation, ESMA intends to coordinate with Member State national regulators to engage closely with these asset managers. The supervisory engagement ties in with ESMA's common supervisory action, announced in January 2020, on liquidity risk management by managers of Undertakings for the Collective Investment in Transferable Securities.

    View ESMA's statement on fund managers' liquidity risk management.

    View details of the ESRB's Recommendation.

    View details of ESMA's common supervisory action on liquidity risk management for UCITS.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
    TOPICS: COVID-19Funds
  • UK Working Group Updates LIBOR Expectations in Wake of COVID-19
    05/13/2020

    The U.K. Financial Conduct Authority has announced a series of updates to the Working Group on Sterling Risk-Free Reference Rates’ proposed implementation of LIBOR reforms. In March 2020, the RFRWG published a roadmap for the discontinuation of new sterling LIBOR lending by the end of Q3 2020. The FCA, Bank of England and RFRWG now acknowledge that, in light of the COVID-19 pandemic, it will no longer be feasible to transition away from LIBOR across all sterling LIBOR-linked loans by this proposed deadline.

    Read more.
  • UK Conduct Regulator Guidance on Post and Paper Documents During COVID-19
    05/13/2020

    The U.K. Financial Conduct Authority has published guidance on how firms should handle post and paper documents during COVID-19. The FCA expects firms to continue to comply with requirements for post and paper-based processes and, where this is not possible, firms should notify the FCA. The FCA also expects firms to contact customers who do not use online services in a timely manner and should be able to demonstrate any steps they have taken to mitigate the impact of any non-compliance with usual post and paper-based processes.

    Firms should also ask customers who have sent cheques via post that have not yet been processed to contact the firm. The firm should consider whether the cheque relates to client money under the FCA’s Client Assets Sourcebook regime, whether they are able to provide the services without cashing the cheque and, if so, whether their intended actions are in compliance with the FCA Client Assets Sourcebook.

    View the FCA's statement on post and paper documents.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • Bank of England Publishes Interim Financial Stability Report on Impact of COVID-19
    05/07/2020

    The Bank of England’s Financial Policy Committee and Monetary Policy Committee have published reports focusing on the impact of COVID-19 on the U.K. economy and banking sector, together with the minutes of their May Committee meetings and a transcript of the BoE’s joint FPC and MPC press conference, discussing the findings of the Committee reports.

    Read more.
  • Financial Action Task Force Reports on Financial Crime During COVID-19
    05/04/2020

    The Financial Action Task Force has published a report on financial crime (including money laundering and terrorism financing activities) during COVID-19, identifying challenges, good practices and policy responses to the emerging threats and vulnerabilities.

    The increased threats identified include fraud from criminals attempting to profit from the pandemic, a spike in cyber crime, particularly phishing emails and spam campaigns and a corresponding impact on other predicate crimes including human trafficking, exploitation of workers, online child exploitation and organized property crime. In conjunction, confinement and social distancing measures designed to combat COVID-19 are impacting government and private sector capacity to implement AML and CTF obligations.

    Read more.
  • Bank of England Announces COVID-19 Changes to Resolution Measures
    05/01/2020

    The Bank of England and U.K. Prudential Regulation Authority have issued a statement on changes to the resolution measures applicable to the major U.K. banks and building societies, designed to ease the operational burden on firms in the wake of COVID-19.

    The dates by which firms must submit their first reports describing their preparations for resolution, and publish summaries of those reports, under the BoE and PRA’s new Resolvability Assessment Framework have been extended by one year. The first reports should be submitted to the PRA by October 2021 and public disclosures should be made by June 2022.

    Read more.
  • UK Conduct Regulator Grants Regulatory Forbearance From Strong Customer Authentication for E-Commerce Transactions
    04/30/2020

    The U.K. Financial Conduct Authority has granted firms an additional six months to implement strong customer authentication for e-commerce, extending the deadline from March 14, 2021 to September 14, 2021. The forbearance has been granted in light of the exceptional circumstances arising from COVID-19, in a bid to minimize disruption to consumers and merchants.

    Read more.
  • UK Prudential Regulator Publishes Q&A on Use of Liquidity and Capital Buffers During COVID-19
    04/20/2020

    The U.K. Prudential Regulation Authority has published a Q&A guide on how banks should use their capital and liquidity buffers during the COVID-19 crisis. The PRA and Financial Policy Committee have stressed the important role that banks must play in providing liquidity to the economy in the wake of the pandemic, using all tools at their disposal, including the buffers built up in the years since the 2007-2009 financial crisis.

    Read more.
  • UK Conduct Regulator Confirms Regulatory Rules Allow Electronic Signatures
    04/20/2020

    The U.K. Financial Conduct Authority has published a statement on its expectations for wet-ink signatures in light of the coronavirus pandemic. The FCA confirms that FCA rules do not require wet-ink signatures for agreements and do not prevent the use of electronic signatures either. However, the FCA stresses the validity of electronic signatures is a legal matter, for which firms should seek legal advice, if appropriate.

    The FCA also states that firms may use electronic signatures in submitting forms.

    View the FCA's statement on wet-ink signatures.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
    TOPIC: COVID-19
  • G20 Action Plan for COVID-19
    04/15/2020

    The G20 finance ministers and central bank governors have published an Action Plan for the international response to the COVID-19 pandemic. The Action Plan covers the healthcare, economic and fiscal responses that G20 members have agreed to undertake, as well as measures to ensure a return to a strong and sustainable global economy, the provision of support to countries in need and the learning of lessons in preparation for future crises.

    Read more.
  • COVID-19: European Central Bank Confirms Easing of Prudential Measures for Large Eurozone Banks
    04/15/2020

    The European Central Bank, Banking Supervision has published a letter addressed to the significant Eurozone banks that it directly prudentially supervises under the Single Supervisory Mechanism. The ECB, Banking Supervision, expresses its support of the EBA's statement dated March 31, 2020 on supervisory reporting and Pillar 3 disclosures. In line with the EBA's statement, the ECB: (i) confirms that significant Eurozone banks may delay by one month the submission of supervisory data for remittance dates between March 2020 and May 2020; (ii) excludes information on the liquidity coverage ratio; and (iii) is allowing firms an additional two months to submit information on funding plans.

    The ECB recommends that Eurozone national regulators should apply the same delays to the smaller Eurozone banks.

    View the ECB's letter to significant banks.

    View details of the EBA's statement on supervisory reporting and Pillar 3 disclosures.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • Financial Stability Board Reports to G20 on COVID-19 Response
    04/15/2020

    The Financial Stability Board has published a report to the G20 on the financial stability implications and policy measures taken in response to the coronavirus pandemic. The report provides an overview of the impact on financial stability of the outbreak and describes the policy actions taken by FSB member jurisdictions. The FSB confirms that it is monitoring financial resilience, focusing on the ability of:
    • financial institutions and markets to channel funds to the real economy;
    • market participants to obtain U.S. dollar funding, particularly in emerging markets;
    • financial intermediaries to manage liquidity risk; and
    • market participants and financial market infrastructures, such as CCPs, to manage evolving counterparty risks.

    The report also sets out how the FSB is supporting international cooperation and coordination on the COVID-19 response by: (i) information sharing; (ii) conducting financial stability risk assessments; and (iii) assisting with coordinating responses on policy issues.

    View the FSB's report to the G20 on the COVID-19 response.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
    TOPIC: COVID-19
  • UK Conduct Regulator Says Banks Must Have a Senior Manager Responsible for the Unregulated Activity of Lending to Small Businesses
    04/15/2020

    The U.K. Financial Conduct Authority has published a Dear CEO letter to U.K. regulated banks on lending to small businesses. In the letter, the interim Chief Executive, Christopher Woolard, reminds banks about the importance of ensuring that the benefits of the Government's Coronavirus Business Interruption Loan Scheme are passed to the businesses and consumers that need it. The FCA confirms that it and the PRA are monitoring the level of lending to businesses.

    Read more.
  • Financial Stability Board Writes to G20 on COVID-19 Response
    04/14/2020

    The Financial Stability Board has published a letter from Randal K. Quarles, the FSB Chair, to G20 Finance Ministers and Central Bank Governors on the response to the coronavirus pandemic. The letter highlights that the financial sector needs to respond to a "twin challenge": the increased demand for credit throughout the global economy and the uncertainty around the value of assets. The letter describes how the FSB and its member jurisdictions have responded to the pandemic to support local and global market functioning, discussing in particular, the steps taken to maintaining financial stability and supporting the real economy during the COVID-19 crisis. The letter also outlines the work to promote a global financial system that supports a strong recovery, including the FSB's prioritizing of certain areas, namely non-bank financial intermediation, the orderly transition away from LIBOR, utilizing technological innovation to assist in cybersecurity and promoting efficient and resilient cross-border payments.

    View the FSB's letter.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • EU Delays Publication Dates for Annual Transparency Calculations for Non-Equities
    04/09/2020

    The European Securities and Markets Authority has issued a public statement announcing the delay of the publication dates of the annual transparency calculations for non-equity instruments. ESMA's statement is made in response to the impact of the coronavirus. 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. ESMA is postponing the publication of the annual transparency calculation for derivatives, exchange traded commodities, exchange traded notes, emission allowances and structured finance products from April 30, 2020 to July 15, 2020 and their application from June 1, 2020 to September 15, 2020. The transitional transparency calculations will continue to apply until September 14, 2020 (inclusive). The publication and application of the annual transparency calculations for bonds remain unchanged. The new thresholds will be applicable from June 1, 2020.

    Read more.
    TOPICS: COVID-19MiFID II
  • European Securities and Markets Authority Recommends Regulatory Forbearance for Funds’ Periodic Reporting Obligations
    04/09/2020

    The European Securities and Markets Authority has announced its expectation that national regulators should, where possible, deprioritize supervisory action against certain fund managers for failure to comply with periodic financial reporting deadlines for funds they manage for the periods ending from December 31, 2019 to April 30, 2020 (inclusive). The fund managers covered by ESMA’s statement are: (i) undertakings for the collective investment in transferable securities (UCITS) management companies; (ii) self-managed UCITS investment companies; (iii) authorized alternative investment fund managers; (iv) non-EU AIFMs marketing AIFs; (v) European Venture Capital Fund managers; and (vi) European Social Entrepreneurship managers.

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    TOPICS: COVID-19Funds
  • UK Prudential Regulator Announces Delays for Certain Regulatory Reporting and Disclosure Requirements
    04/09/2020

    The U.K. Prudential Regulation Authority has announced a series of amendments to regulatory reporting and disclosure requirements applicable to U.K. banks, building societies, designated investment firms and credit unions, in light of the global COVID-19 pandemic. The PRA’s changes follow recent statements and recommendations made by the European Banking Authority, providing clarity on measures to mitigate the impact of COVID-19 on the EU banking sector.

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  • UK Prudential Regulator Publishes 2020/2021 Business Plan
    04/09/2020

    The U.K. Prudential Regulation Authority has published its Business Plan for 2020/2021, which sets out its strategic goals for the next 12 months and its work plan to deliver them. The PRA has had to tailor its intended Business Plan to take account of the impact of the COVID-19 pandemic. In particular, it has elected to cancel its 2020 annual cyclical scenario stress tests, delay the publication of the results of the 2019 biennial exploratory scenario, postpone less critical aspects of its supervisory program for individual firms and extend consultation periods and implementation timeframes for new initiatives where possible.

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  • EU Regulatory Forbearance for Audit Requirements for Interest Rate Benchmark Administrators and Contributors
    04/09/2020

    The European Securities and Markets Authority has issued a public statement asking national regulators across the EU not to prioritize supervisory actions against interest rate benchmark administrators and contributors for failing to comply with the external audit requirements under the Benchmark Regulation, where those audits are carried out by September 30, 2020. The EU Benchmark Regulation requires an interest rate benchmark administrator to have an external audit conducted of its compliance with the benchmark methodology and Benchmark Regulation. Contributors to interest rate benchmarks are required to have an external audit conducted of their input data and compliance with the Benchmark Regulation. ESMA is granting the regulatory forbearance in response to the impact of COVID-19. ESMA states that administrators and contributors that anticipate a delay to the required audits should inform their nation regulator.

    View ESMA's statement.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • UK Prudential Regulator Takes Further Steps in Response to COVID-19
    04/09/2020

    The U.K. Prudential Regulation Authority has announced two further measures in response to the coronavirus outbreak. The first is the PRA's decision to maintain the systemic risk buffer rates at the rate set in December 2019. The rates determine the amount of additional regulatory capital that must be held by "systemic risk buffer institutions" (i.e. U.K. financial institutions deemed to be systemically important). In scope firms are the so-called "ring-fenced bodies" within the meaning in the Financial Services and Markets Act 2000 and include banks and large building societies holding more than £25bn in deposits. The buffer applicable to each institution is intended to reflect the relative costs to the U.K. economy if the institution in question were to fall into distress. In December 2019, the PRA maintained the rates that had first been set in May 2019. The SRB rates will be re-assessed in December 2021 and the decision taken then will take effect in January 2023.

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  • UK Conduct Regulator Publishes 2020/2021 Business Plan
    04/07/2020

    The U.K. Financial Conduct Authority has published its Business Plan for 2020/2021, which sets out its five key priorities for the next one to three years.

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  • European Commission Consults on Retail Payments Strategy for the EU
    04/03/2020

    The European Commission has launched a consultation on a retail payments strategy for the EU. The Commission's final strategy will be published in Q3 2020 alongside the new digital finance strategy, on which the Commission launched a consultation on the same day. The consultation closes on June 26, 2020.

    The Commission states that the RPS will be a key to reinforcing the international role of the euro, strengthening Europe's influence and enhancing its economic autonomy. In addition, the Commission notes that safe and efficient payment systems and services will assist the EU in tackling emergencies, such as the coronavirus outbreak.

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