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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.

  • Financial Stability Board Publishes Final Recommendations on Global Stablecoins
    10/13/2020

    Following its consultation earlier this year, the Financial Stability Board has published a final report on the regulation, supervision and oversight of global stablecoin arrangements. In the report, the FSB discusses the characteristics of GSCs, the risks posed by GSCs, existing approaches to regulating and supervising GSCs and issues with cross-border supervision of GSCs. Alongside the report, the FSB has published a summary of the responses to its consultation.

    Read more.
  • UK Conduct Regulator Bans Sale to Retail Clients of Derivatives Referencing Crypto-Assets from January 2021
    10/06/2020

    The U.K. Financial Conduct Authority has published a Policy Statement and final rules prohibiting the sale, marketing and distribution to retail clients of derivatives and exchange traded notes referencing certain types of unregulated, transferable crypto-assets by firms acting in, or from, the U.K. The ban will apply from January 6, 2021.

    The prohibition will apply to the marketing, distributing or selling of crypto derivatives in, or from, the U.K. to retail clients by MiFID investment firms, MiFID optional exemption firms, U.K. branches of third-country investment firms and to EEA MiFID investment firms that currently passport into the U.K. and which will continue operating after the Brexit transitional period ends on January 1, 2021.

    Read more.
  • UK Prudential Regulator Proceeds with Extension of Coverage under Financial Services Compensation Scheme
    08/04/2020

    The U.K. Prudential Regulation Authority has published a Policy Statement and final rules on the temporary high balances coverage extension under the Financial Services Compensation Scheme. The PRA has decided to implement the proposal, made in July this year and in response to the coronavirus pandemic, to extend coverage under the FSCS for temporary high balances, from six months to 12 months from the date of the deposit or the first date the balance becomes legally transferrable to the depositor. The change will be effected by changes to the PRA's depositor protection rules and the Statement of Policy on the Deposit Guarantee Scheme. The change will take effect from August 6, 2020. The coverage will revert to six months from February 1, 2021.

    View the Policy Statement, updated rules and Statement of Policy.
  • European Commission Publishes Capital Markets Recovery Package in Response to COVID-19 Pandemic
    07/24/2020

    The European Commission has published a series of proposed legislative amendments to reduce the burden on financial institutions during the coronavirus pandemic in relation to their obligations under the EU Securitization Regulation, the Markets in Financial Instruments Directive and the Prospectus Regulation. The package is referred to as the Capital Markets Recovery Package and is designed to make it easier for companies to raise capital and increase banks' capacity to finance the recovery.

    Read more.
  • Outcome of European Supervisory Authorities’ Review of PRIIPs Technical Standards Published
    07/21/2020

    The Joint Committee of the European Supervisory Authorities has published a letter addressed to the European Commission informing it of the outcome of the ESAs’ review of the Regulatory Technical Standards (Commission Delegated Regulation (EU) 2017/653) on the presentation, content, review and revision of a standardized “key information document” and the conditions for fulfilling the requirement to provide a KID. The RTS supplements the Packaged Retail and Insurance-based Investment Products Regulation, which introduced a requirement for manufacturers of PRIIPs to produce a KID with the intention of improving retail investors’ understanding of the financial products they were purchasing.

    Read more.
  • UK Proposals to Extend Regulatory Perimeter to Capture Promotion of Unregulated Crypto-Assets
    07/20/2020

    HM Treasury has released proposals to amend the U.K.’s financial promotion rules to subject unregulated crypto-assets to the financial promotions regime. The Government proposals aim to enhance consumer protection, ensure market integrity and fight against financial crime. Responses to the consultation can be submitted until October 25, 2020. The Government is separately consulting on limiting the ability of authorized firms to approve financial promotions of unauthorized without consent from the Financial Conduct Authority.

    Read more.
  • UK Proposals to Tighten Financial Promotion Rules By Unauthorized Firms
    07/20/2020

    HM Treasury has released proposals to amend the U.K.’s financial promotion rules to provide increased consumer protection from misleading advertisements and a lack of suitable information. The U.K. financial promotion rules provide that a person may not communicate a financial promotion—an invitation or inducement to engage in an investment activity—unless the communication is exempt, the firm is authorized to carry on a regulated activity or the communication is approved by an authorized firm. Only financial promotions that are not real-time may be approved by an authorized person, and any approval must comply with the Financial Conduct Authority’s financial promotion rules. Any communication must be fair, clear and not misleading.

    Read more.
  • UK Plans to Accelerate Regulator’s Process for Cancelling Firm Authorization (in Certain Situations)
    07/20/2020

    HM Treasury has published a policy statement setting out how it intends to change the Financial Conduct Authority’s cancellation of authorization process for firms that are no longer carrying out regulated activities under the FCA’s remit. The FCA’s regulatory scope has expanded since the provisions were set out in the Financial Services and Markets Act 2000. HM Treasury is concerned that the inability of the FCA to act quickly to cancel a firm’s authorization and remove details of the firms from the Financial Services register may lead to consumer harm. The Government is therefore planning to add a simpler process whereby the FCA can remove a firm’s authorization where it suspects that the firm is no longer undertaking regulated activities, such as where a firm fails to pay its fees or file a regulatory return. The existing procedure, which requires the FCA to demonstrate that a firm is failing to fulfil the threshold conditions, has failed to carry on a regulated activity or that it is advantageous for the FCA to use its powers to meet its operational objectives, will not be amended. A bill to make the changes will be laid when Parliamentary time allows.

    View the policy statement on changes to the FCA’s cancellation of authorization process.

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  • UK Prudential Regulator Proposals to Extend Coverage under the Financial Services Compensation Scheme
    07/09/2020

    The U.K. Prudential Regulation Authority has opened a consultation on proposals for extending coverage of the Financial Services Compensation Scheme for temporary high balances. Responses to the consultation may be submitted until July 23, 2020. The PRA is proposing to extend coverage under the FSCS for temporary high balances, from six months to 12 months from the date of the deposit or the first date the balance becomes legally transferrable to the depositor. The coverage would revert to six months from February 1, 2021. The proposal is made because of the impact of COVID-19 on consumers.

    View the consultation paper.
  • International Organization of Securities Commissions Proposes Artificial Intelligence Requirements for Market Intermediaries and Asset Managers
    06/25/2020

    The International Organization of Securities Commissions has issued a consultation on proposed guidance on the use of artificial intelligence and machine learning by market intermediaries and asset managers. The draft guidance is intended to assist IOSCO member jurisdictions to develop appropriate regulatory frameworks to mitigate the risks arising from the increased use of AI and ML by financial institutions. Comments on the draft Guidance can be submitted until October 26, 2020.

    Read more.
  • UK Conduct Regulator Consults on Permanent Ban for Marketing Speculative Illiquid Securities to Retail Investors
    06/18/2020

    The U.K. Financial Conduct Authority has launched a consultation on its proposals to make permanent its ban on the mass-marketing of speculative illiquid securities to retail investors. The FCA’s temporary product intervention measures, restricting the sale of speculative illiquid securities to retail investors other than sophisticated or high net worth investors, came into force on January 1, 2020 for a period of one year. The FCA’s consultation sets out the FCA’s plan for making the measures permanent and extending them to include listed bonds with similar features to speculative illiquid securities that are not regularly traded. Responses to the consultation should be submitted by October 1, 2020.

    Read more.
  • EU Consultation on Enhancing Intra-EU Investor Protection
    05/26/2020

    The European Commission has launched a consultation on the intra-EU investment protection and facilitation framework. The Commission is seeking views on the current EU system for investor protection, in particular, how it might be strengthened to encourage further cross-border investment within the EU. The Commission is also investigating how to make cross-border investments easier in the context of the Capital Markets Union. Both legislative and non-legislative options are being considered to address the divergence of investor protection across the EU and concerns about enforcements of rights and remedies. The consultation closes on September 8, 2020. If its assessment of the feedback indicates that it would be appropriate to do so, the Commission intends to publish a legislative proposal in Q1 2021.

    View the consultation page.
  • 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 Consults on Global Stablecoins
    04/14/2020

    The Financial Stability Board has launched a consultation on global stablecoin arrangements. The consultation is in response to the G20 mandating the FSB to analyze potential regulatory issues posed by global stablecoins and to advise on multilateral responses. Responses to the consultation should be submitted by July 15, 2020. The FSB's final report is expected to be published in October 2020.

    Read more.
  • UK Conduct Regulator Consults on COVID-19 Financial Relief for Consumers Guidance
    04/02/2020

    The U.K. Financial Conduct Authority is consulting on proposed measures to ease the financial implications of COVID-19 on consumers. The measures would be introduced via guidance issued by the FCA on areas of particular concern to consumers. The consultation, which is deliberately short given the unprecedented circumstances arising from the pandemic, is open until 9am on April 6, 2020 and, if confirmed, the measures will take effect from April 9, 2020.

    Read more.
  • UK Conduct Regulator Dear CEO Letter to Firms on Consumer Protection During COVID-19 Pandemic
    03/31/2020

    The U.K. Financial Conduct Authority has published a Dear CEO letter addressed to firms providing services to retail investors on the actions they should be taking to protect consumers during the COVID-19 pandemic. Firms are expected to provide strong support and service to consumers, to be transparent with their customers and to report to the FCA immediately if they foresee themselves getting into financial difficulty.

    Read more.
  • European Banking Authority Provides Clarity on the Prudential Framework in Light of COVID-19 
    03/25/2020

    The European Banking Authority has released two separate statements in response to the COVID-19 pandemic, the first covering bank prudential regulation and the second dealing with consumer protection and payment services.

    Read more.
  • European Banking Authority Publishes Final Set of Recommendations for Improving the EU Deposit Guarantee Scheme Directive
    02/11/2020

    The European Banking Authority has published the third in a series of three opinions on the implementation of the Deposit Guarantee Scheme Directive in the EU. This opinion relates to DGS funding and uses of DGS funds. It is dated January 23, 2020. The first opinion related to the eligibility of deposits, coverage level and cooperation between deposit guarantee schemes and was published in August 2019. The second opinion, published in October 2019, was on DGS payouts. The opinions have been prepared to assist the European Commission in its obligation to report on the implementation of the DGSD.

    Read more.
  • EU Opinion on Italian Accepted Market Practice in Accordance with the Market Abuse Regulation
    01/31/2020

    The European Securities and Markets Authority has published an opinion supporting the Italian Commissione Nazionale per le Società e la Borsa’s (Consob) revised accepted market practice on liquidity contracts for the purposes of the Market Abuse Regulation. The Market Abuse Regulation provides certain prohibitions against market manipulation but allows “accepted market practices” (AMPs) as a defense against allegations of market manipulation. To benefit from the defense, it is necessary to establish that a relevant transaction was conducted for legitimate reasons and in accordance with a formally accepted AMP. AMPs must be established by national regulators and notified to ESMA. ESMA will then issue an opinion on the compatibility of the AMP with MAR and whether its establishment would threaten market confidence.
    Read more.
  • UK Conduct Authority to Review Suitability of Retirement Income Financial Advice
    01/21/2020

    The U.K. Financial Conduct Authority has announced the focus of its second review assessing suitability - advice received by consumers on retirement income. The FCA intends to publish a report on the outcome of the review in 2020. Alongside the announcement, the FCA has published a letter addressed to the CEOs of financial advice firms describing its approach to tackling key areas of concern with financial advice firms and setting out the action it expects these firms to undertake. The letter covers assessing suitability of advice, defined benefit pension transfer advice, pensions and investment scams, adequate financial resources and professional indemnity insurance, the FCA's recently imposed ban on the promotion of speculative mini-bonds to retail consumers, the Senior Managers and Certification Regime and preparing for the end of the Brexit implementation period.

    View the FCA's statement.

    View the Dear CEO letter.
  • EU Political Agreement on Proposed Regulation on Cross-Border Crowdfunding Service Providers
    12/19/2019

    The EU legislative bodies have announced that political agreement has been reached on the proposed Regulation on European Crowdfunding Service Providers for Business. The proposed ECSP Regulation is part of the EU Capital Markets Union initiative and the Commission's FinTech Action Plan. It aims to increase access to finance through crowdfunding for innovative companies, start-ups and SMEs. The European Commission published the original legislative proposal on March 8, 2018. Since then, the text of the proposed ECSP Regulation has been amended.

    Read more.
  • European Banking Authority Publishes Guidelines on Technology and Security Risk Management
    11/28/2019

    The European Banking Authority has published its final guidelines on the management of information and communication technology and security risks by financial institutions in the EU. The Guidelines set out how financial institutions should comply with relevant provisions on the governance and risk management of ICT and security risks under the Fourth Capital Requirements Directive and the Second Payment Services Directive. 

    Read more.
  • UK Conduct Regulator Announces 2020 Mini-Bond Product Intervention Measures
    11/26/2019

    The U.K. Financial Conduct Authority has announced that it will introduce temporary product intervention measures for 12 months from January 1, 2020 to December 31, 2020 to combat risks to consumers of the promotion of speculative mini-bonds. The measures follow the high profile failure of mini-bond issuer London Capital & Finance plc, which has prompted an investigation by the FCA into the circumstances surrounding LC&F's collapse and the FCA's supervision of the firm. HM Treasury is also conducting an ongoing investigation into the wider policy questions raised by LC&F's failure, focusing on a review of the regulatory regime governing non-transferable debt securities and an assessment of Innovative Finance ISA rules.

    Read more.
  • Eurozone Single Resolution Board Publishes Opinions on Internal Rules for its use of Personal Data
    11/22/2019

    The Eurozone Single Resolution Board has published a series of three opinions setting out its own internal rules for the circumstances in which it may restrict the rights of data subjects under Regulation (EU) 2018/1725, data protection legislation that is commonly understood as the public sector equivalent of the General Data Protection Regulation. The Regulation governs the use of personal data by EU institutions and agencies. 

    Read more.
  • European Commission Publishes Report on Liability for Artificial Intelligence
    11/21/2019

    The New Technologies formation of the European Commission’s Expert Group on Liability and New Technologies has published a report on liability regimes for artificial intelligence. The report discusses existing laws concerning liability for emerging digital technologies and describes how those laws could be improved to cater for the new risks and challenges associated with new technologies. The New Technologies formation is a panel that was established by the European Commission in March 2018 and was asked to examine existing EU liability regimes and make recommendations for amendments to take account of emerging digital technologies where necessary.

    Read more.
  • UK Information Commissioner’s Office Consults on Application of Powers under Proceeds of Crime Act
    11/08/2019

    The U.K. Information Commissioner’s Office, the U.K.’s independent body for the upholding of information rights in the public interest, has issued a consultation paper on proposals that it be granted investigative and other powers under the Proceeds of Crime Act 2002. The proposals are in response to the increasing number of cases in which financial gains are made by criminals involved in the theft of personal data.

    Read more.
  • European Banking Authority Publishes Opinion on Strengthening Depositor Protection in the EU
    10/30/2019

    The European Banking Authority has published the second in a series of three opinions on the implementation of the Deposit Guarantee Scheme Directive in the EU. This opinion relates to DGS payouts. The first opinion related to the eligibility of deposits, coverage level and cooperation between deposit guarantee schemes and was published in August 2019. The third opinion will cover DGS funding and the uses of DGS funds. The opinions have been prepared to assist the European Commission in its obligation to report on the implementation of the DGSD.

    Read more.
  • European Banking Authority Urges EU Legislative Update for Cross-Border Banking and Payment Services in the Digital Era
    10/29/2019

    The European Banking Authority has published a report identifying potential barriers to customer choice and the cross-border provision of banking and payment services in the EU, together with proposals for how to overcome these issues. Building on the EBA's FinTech Roadmap and the European Commissioner's Consumer Financial Services Action Plan, the report sets out the areas where the institutions, including FinTech firms, may face challenges when seeking to provide intra-EU cross-border services, focusing on authorizations and licensing, consumer protection and conduct of business requirements and anti-money laundering and countering the financing of terrorism. The EBA makes recommendations for where changes to EU primary legislation or further guidelines could address the issues to enhance the EU's single market.

    Read more.
  • European Supervisory Authorities Issue Guidance on Scope of Application to Bonds of the PRIIPs Regulation
    10/24/2019

    The Joint Committee of the European Supervisory Authorities has published a Supervisory Statement on the scope of application to bonds of the EU Packaged Retail and Insurance-based Investment Products Regulation. The ESAs have issued the Supervisory Statement in an attempt to avoid the adoption of diverse approaches by national regulators across the EU as to when a Key Information Document is required for different types of bonds under the PRIIPs Regulation. The PRIIPs Regulation, directly applicable across the EU since January 1, 2018, imposes a requirement upon issuers of packaged retail and insurance-based investment products to issue KIDs to retail investors describing key features of their products, in order to enhance transparency and improve investor protection in the PRIIPs market.

    Read more.
  • Financial Stability Board Publishes Letter to G20 Ministers on Effect of Reforms and Future Work
    10/13/2019

    The Financial Stability Board has published a letter to G20 Finance Ministers and Central Bank Governors describing the progress of post-financial crisis reforms and key focus areas for the future. Over the past ten years, the FSB has proposed a number of reforms to the global financial system, working with international organizations on implementation to improve financial stability.

    Read more.
  • UK Government Responds to Committee Report on Conduct Authority's Perimeter of Regulation
    10/10/2019

    The U.K. government has published a response to the Treasury Committee's report on the Financial Conduct Authority's perimeter of regulation. The Committee's Report is part of its ongoing inquiry, The Work of the Financial Conduct Authority, which is considering: (i) the timeliness in which the FCA is able to take action; (ii) the transparency of the FCA's work and decisions; and (iii) the scope of the FCA's regulatory perimeter.

    Read more.
  • International Organization of Securities Commissions Review of Suitability Requirements for Complex Products
    09/26/2019

    The International Organization of Securities Commissions has published a report, "Thematic Review on Suitability Requirements with respect to the Distribution of Complex Financial Products". The report summarizes the outcome of the review IOSCO undertook of a sample of member jurisdictions' implementation of the IOSCO 2013 Suitability Requirements for the Distribution of Complex Financial Products, which aims to prevent mis-selling of complex products. The Suitability requirements comprise nine principles relating to classification of customers, general duties regardless of customer classification, disclosure requirements, customers protections, incentives and enforcement.

    Read more.
  • European Banking Authority Recommends Changes to EU Deposit Guarantee Scheme Directive
    08/08/2019

    The European Banking Authority has published an Opinion on the eligibility of deposits, coverage level and cooperation between deposit guarantee schemes. The EU Deposit Guarantee Scheme Directive requires the European Commission to report on the implementation of the Directive. The EBA's Opinion is the first of three opinions that it will issue to support the Commission in preparing the report. The other two opinions are expected before the end of 2019, one covering deposit guarantee scheme pay outs and the other DGS funding and uses of DGS funds.

    Read more.
  • UK Committee Recommends Enhancing the Financial Conduct Authority's Powers and Remit
    08/02/2019

    The U.K. Treasury Committee has published a report on the Financial Conduct Authority's perimeter of regulation. The Report is part of the Committee's ongoing inquiry, The Work of the Financial Conduct Authority, which is considering: (i) the timeliness in which the FCA is able to take action; (ii) the transparency of the FCA's work and decisions; and (iii) the scope of the FCA's regulatory perimeter. This Report considers the last of these issues and makes several recommendations to the Treasury on the remit and powers of the FCA to enhance understanding of consumers of the regulatory perimeter, reduce harm to consumers and mitigate against regulatory arbitrage.

    Read more.
  • EU Restrictions on Contracts for Difference Lifted in Wake of National Measures
    07/31/2019

    The European Securities and Markets Authority has announced that it will not again renew its product intervention measure for Contracts for Differences. ESMA's product intervention powers under the Markets in Financial Instruments Regulation allow it to impose temporary prohibitions or restrictions on certain financial instruments, financial activities or practices to address a significant investor protection concern in the EU. ESMA's first restrictions on the marketing, distribution and sale of CfDs to retail clients applied from August 1, 2018 and was then extended every three months because ESMA did not consider that the consumer protection risk had been addressed. ESMA's view is that because most national regulators in EU member states have now adopted permanent measures, its own temporary restrictions do not need to be extended. The U.K. Financial Conduct Authority has imposed permanent restrictions on the sale, marketing and distribution of CfDs and CfD-like options to retail consumers. The rules will apply to all CfDs entered into from August 1, 2019, and to CfD-like options entered into from September 1, 2019.

    Read more.
  • UK Conduct Regulator Consults on Firms' Treatment of Vulnerable Consumers
    07/23/2019

    The U.K. Financial Conduct Authority has launched a consultation on its proposed guidance on how financial services firms should treat "vulnerable" consumers. The consultation will be divided into two stages: the first stage focuses on: (i) whether the draft guidance covers the right issues and provides sufficient clarity to firms on what they should do to improve outcomes for vulnerable consumers; (ii) the potential impact of the guidance on firms' costs and the potential benefit to consumers of the implementation of the guidance; and (iii) whether the guidance is sufficient to ensure firms take appropriate action to treat vulnerable consumers fairly or whether additional policy interventions are required. The second stage will seek input on a revised draft of the guidance, which will take account of feedback received during the first stage, together with a cost-benefit analysis. Responses to the first stage of the consultation should be provided by October 4, 2019.

    Read more.
  • European Securities and Markets Authority Launches Consultation on Disclosure Guidelines Under EU Prospectus Regulation
    07/12/2019

    The European Securities and Markets Authority has launched a consultation on its proposed guidelines on compliance with disclosure requirements under the new EU Prospectus Regulation. The Consultation Paper may be of particular interest to investors, issuers, offerors or persons asking for admission to trading on a regulated market and any market participant who is affected by the new Prospectus Regulation. Responses to the consultation should be submitted by October 4, 2019. ESMA intends to publish a final summary of all consultation responses and a final version of the guidelines in Q2 2020.

    Read more.
  • Firms Criticized for Non-Compliance with the EU Contracts For Difference Product Intervention Measures
    07/11/2019

    The European Securities and Markets Authority has published a Statement cautioning contracts for difference providers to comply with its temporary product intervention measure restricting the marketing, distribution or sale of CfDs to retail clients. The measure is due to expire at the end of the day on July 31, 2019, unless ESMA again renews it.

    In its Statement, ESMA states that it has noticed and is concerned that certain firms are not complying with the temporary CfD restriction or any similar permanent national measure. ESMA reminds firms that the temporary CfD restriction does not apply to eligible counterparties or professional clients, including to retail clients who opt to being treated as professional clients, as defined in the revised Markets in Financial Instruments Directive. However, firms must comply with the MiFID II requirements when dealing with a retail client that requests to opt up to being treated as a professional client, including by alerting clients to the loss of protection afforded by the temporary CfD restriction. ESMA also reminds firms that they should not incentivize a retail client to become a professional client by using language that promotes the status or benefits of professional clients.

    Read more.
  • UK Conduct Regulator Publishes Final Prospectus Regulation Rules
    07/11/2019

    The Prospectus Regulation Rules Instrument 2019 has been published, setting out the new FCA Prospectus Regulation Rules sourcebook. The Instrument also makes amendments to certain other sections of the FCA Handbook as well as to the FCA's Enforcement Guide and Perimeter Guidance manual. The new rules aim to align the U.K. rules with the EU Prospectus Regulation and will take effect from July 21, 2019.

    Any prospectus approved by the FCA before July 21, 2019 will be governed by national law under the old Prospectus Directive regime until either: (i) the end of the prospectus' validity; or (ii) July 21, 2020. Prospectuses submitted for approval on or after July 21, 2019 must be in line with the EU Prospectus Regulation and the FCA's new Prospectus Regulation Rules sourcebook.

    View the Prospectus Regulation Rules Instrument 2019.

    View details of the FCA Policy Statement on the Prospectus Regulation Rules sourcebook.
  • UK Conduct Regulator Publishes Arrangements for Sharing Personal Data with Non-EEA Authorities
    07/02/2019

    The U.K. Financial Conduct Authority has published its signed Administrative Arrangement agreement dictating the circumstances in which it, as an EEA authority, may share the personal data that it holds with non-EEA authorities. The agreement is a standard form of agreement which will be signed by relevant EEA and non-EEA authorities and is designed to safeguard personal data transfers between authorities in light of new requirements imposed by the General Data Protection Regulation. The agreement includes, among other things, provisions restricting the circumstances in which relevant authorities may transfer data (including that it may only be transferred for the purpose of assisting the authority to fulfil its regulatory mandate and that it will only transfer data that are adequate, relevant and limited to what is necessary for the purposes for which they are transferred) and the processes the authority will establish to review their own policies and procedures on transfers of personal data.
     
    View the FCA's signed Administrative Agreement.
  • EU to Lift Temporary Ban on the Sale of Binary Options to Retail Clients in Wake of National Measures
    07/01/2019

    The European Securities and Markets Authority has ended its temporary prohibition on the marketing, distribution or sale of binary options to retail clients. ESMA's product intervention powers under the Markets in Financial Instruments Regulation allow it to impose temporary prohibitions or restrictions on certain financial instruments, financial activities or practices to address a significant investor protection concern in the EU.

    Read more.
  • UK Regulator Publishes Rules Restricting Sale of Contracts for Difference and Related Options
    07/01/2019

    The U.K. Financial Conduct Authority has published the Conduct of Business (Contracts for Difference) Instrument 2019, implementing product intervention measures designed to restrict the sale, marketing and distribution of contracts for difference and contract for difference-like options to retail consumers. The rules will affect: (i) retail clients who invest, or may invest, in CFDs and CFD-like options; (ii) investment firms caught by the provisions of the Markets in Financial Instruments Directive (including those caught by the Capital Requirements Directive, where appropriate) that are involved in marketing, distributing or selling CFDs and CFD-like options in, or from, the U.K. to retail clients; and (iii) U.K. branches of third-country investment firms that are involved in marketing, distributing or selling CFDs or CFD-like options to retail clients.

    Read more.
  • UK Conduct Regulator Publishes Consultation on Regulation of Proxy Advisors under Revised Shareholder Rights Directive
    06/26/2019

    The U.K. Financial Conduct Authority has published a consultation on proposed changes to its Decision Making and Penalties Manual and Enforcement Guide to incorporate its new responsibility for regulation of proxy advisors. The proposals will be of interest to those falling within the Proxy Advisors (Shareholders' Rights) Regulations 2019 and anyone who uses the services of proxy advisors. Responses to the consultation should be submitted by July 26, 2019.

    Read more.
  • Bank of England Publishes Report on the Future of the UK Financial System and the Bank's Priorities for the Future
    06/20/2019

    Huw van Steenis, the Bank of England financier appointed by the BoE in 2018 to review the future of the U.K. financial system, has published his "Future of Finance" report, setting out a vision for the medium-term future of the U.K. financial system and the BoE's role in supporting that. The report was based on consultations with entrepreneurs, financiers, tech firms, global investors, consumer groups, charities, policymakers and business leaders across the U.K. and overseas. In response, the BoE has published a document which sets out the actions it intends to take to deal with the challenges and opportunities identified in the report.

    Read more.
  • 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 Competition and Markets Authority Targets Anti-Competitive Practices in Investment Consultancy and Fiduciary Management Services
    06/10/2019

    The U.K. Competition and Markets Authority has issued the Investment Consultancy and Fiduciary Management Market Investigation Order 2019. This is U.K. secondary legislation intended to combat anti-competitive practices in the supply and acquisition of investment consultancy and fiduciary management services to and by the pension schemes they advise. The Order was made on June 10, 2019 and enters into force on December 10, 2019. It follows the CMA's consultation on a draft version of the Order that was published for review by interested parties on February 12, 2019. In the final Order, the CMA has endeavoured to resolve a number of the issues raised in response to the consultation. These include amending the Competitive Tender Process as originally drafted by imposing a less stringent "reasonable endeavours" obligation on trustees who are required to obtain bids from three or more unrelated Fiduciary Management Providers, and excluding in-house investment advice or fiduciary management functions from the scope of the Order.

    Read more.
  • UK Regulator Publishes Policy Statement on Peer-To-Peer and Investment-Based Crowdfunding Platforms
    06/04/2019

    The U.K. Financial Conduct Authority has published a Policy Statement containing its final changes to the rules and guidance governing loan-based crowdfunding platforms (or "peer-to-peer" platforms). The Policy Statement follows the FCA's July 2018 consultation paper on proposed changes to the regulation of the crowdfunding sector. Peer-to-peer platforms will need to comply with the majority of the changes by December 9, 2019, with the exception of the FCA's Mortgage and Home Finance Conduct of Business rules, which will apply to platforms that offer home finance products from June 4, 2019. The Policy Statement also reflects on the rules applicable to investment-based crowdfunding platforms (i.e. platforms that allow investors to invest in businesses directly, for instance through the purchase of shares or debt securities), in particular surrounding financial promotions for non-readily realized securities and non-mainstream pooled investments. The FCA continues to review responses to its July 2018 consultation paper in relation to these platforms and may issue additional rules and guidance in due course.

    Read more.
  • UK Financial Conduct Authority Publishes Near Final Changes to Handbook Implementing the EU Prospectus Regulation
    05/31/2019

    The U.K. Financial Conduct Authority has published a Policy Statement containing its near final rules implementing the EU Prospectus Regulation, which will be set out in the FCA's new Prospectus Regulation Rules sourcebook. The FCA's new rules are aimed at aligning the U.K. rules with the EU Prospectus Regulation. The changes remain subject to finalization of certain related changes under the Financials Services and Markets Act 2000 and relevant EU legislation. Issuers seeking approval of a draft prospectus on or after July 21, 2019 must ensure their draft is in line with the EU Prospectus Regulation and PRR sourcebook. In the event the U.K. leaves the EU before that date, the proposals will not come into effect, and the U.K. would use the Financial Services (Implementation of Legislation) Bill to permit alignment of U.K. rules with those of the EU. The FCA would, in that situation, expect to issue a further Consultation Paper setting out proposals for replicating the EU Prospectus Regulation in the U.K. domestic regime. The FCA has so far declined to comment on the detail of any such proposals.

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  • European Commission Responds to Uncertainty Regarding Scope of PRIIPs Regulation
    05/14/2019

    The European Commission has issued a response to concerns raised by the European Supervisory Authorities about the market impact of uncertainty around the scope of the Packaged Retail and Insurance-based Investment Products Regulation. In a letter to the Director General of the European Commission dated July 19, 2018, the heads of the ESAs raised the difficulties that manufacturers of financial products face in determining whether their products fall within the requirements of the PRIIPs Regulation. The letter describes the broader market impact that this uncertainty has caused, which includes a reduction in the availability of corporate bonds to retail investors, a reduction in the number and volume of low denomination issuances by non-financial corporates and greater difficulties for retail investors wishing to trade their bonds. In its response, issued on May 14, 2019, the European Commission refused to pass judgement on whether certain categories of products should be deemed to fall within or outside the scope of the PRIIPs Regulation and stressed that the determination of whether an instrument is a packaged retail investment product should be undertaken on a case-by-case basis.

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  • Consultation and Draft Direction on Confirmation of Payee System Issued by UK's Payment Systems Regulator
    05/09/2019

    The Payment Systems Regulator, the regulatory body responsible for monitoring the payment systems industry in the U.K., has published a second consultation paper requesting feedback on its proposals for a mandatory "Confirmation of Payee" service, together with a draft direction setting out deadlines by which the six largest payment services providers should provide such services. The Confirmation of Payee service is being developed to assist in the PSR's fight against "Authorised Push Payment" scams - involving theft of money via fraudulent payment requests made to individuals and businesses - and accidental misdirected payments, which together cause millions of pounds in losses to individuals and businesses annually. Certain payment service providers have committed to introducing a Confirmation of Payee process. However, the PSR considers that progress on doing so has been too slow. The consultation closes on June 05, 2019.

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