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The following posts provide a snapshot of the principal European and global wholesale financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates. These posts focus on legal and compliance issues rather than accountancy or capital-related matters.

  • UK Task Force Publishes Recommendation for Improving Post-Trade Processes
    04/21/2022

    report on the Future of Post-Trade. The Taskforce is made up of financial market industry individuals involved in post-trade processing activities and was set up as part of the Bank of England's response to the "Future of Finance" report, which set out a vision for the medium-term future of the U.K. financial system and the BoE's role in supporting that.

    Read more.
  • UK Financial Regulators' Statement on Suspension of Nickel Trading on London Metal Exchange
    04/04/2022

    The U.K. Financial Conduct Authority, Prudential Regulation Authority and Bank of England have published a joint statement on the London Metal Exchange's suspension of nickel trading between March 8-16, 2022. Trading was suspended due to challenging commodity market conditions following Russia's invasion of Ukraine.

    Read more.
  • UK Prospectus Review: Government Confirms Policy for Reforms to Boost London's Capital Markets
    03/01/2022

    Following its consultation last year, HM Treasury has set out its policy approach to amending the U.K. Prospectus regime. The current U.K. Prospectus Regulation will be replaced by legislation when parliamentary time allows. The changes will, among other things, separate the regulation of public offers of securities from the regulation of admissions of securities to trading, as Lord Hill recommended. In addition, the Financial Conduct Authority will be granted greater responsibility for the detail of the new regime through rules. The complete set of reforms will only apply once those rules are implemented. The main changes are set out below.

    Read more.
  • European Securities and Markets Authority Publishes Call for Evidence on Climate Risk Stress Testing for Central Counterparties
    02/23/2022
     

    The European Securities and Markets Authority has published a Call for Evidence on climate risk stress testing for EU central counterparties. Responses should be submitted by April 21, 2022.

    Read more.

  • EU Grants Further Time-Limited Equivalence for UK CCPs
    02/09/2022

    An EU Commission Implementing Decision extending the equivalence of U.K. CCPs to June 2025 has been published in the Official Journal of the European Union. The equivalence decision applies to U.K. CCPs already established and authorized in the U.K. on December 31, 2020 and will apply from July 1, 2022, which is when the existing equivalence decision expires. Andrew Bailey, in his speech at TheCityUK Annual Dinner in February 2022, questioned why the equivalence decisions are time-limited. Most equivalence decisions for CCPs in other jurisdictions are not time-limited, although the EU is able to revoke a decision if a jurisdiction is deemed not to maintain equivalence with the EU regime.

    The Decision follows the announcement yesterday by the Commission on the extension and the launch of a targeted consultation on the review of the central clearing framework in the EU. The consultation is seeking views on ways to improve the competitiveness of EU CCPs and clearing activities while also ensuring the appropriate supervision of their risks. The consultation closes on March 8, 2022.
  • UK Government Consultation on Regulation of Central Counterparties and Central Securities Depositories
    01/17/2022

    HM Treasury has released a further consultation under the Future Regulatory Framework Review concerning the regulation of central counterparties and central securities depositories. The Future Regulatory Framework Review is designed to assess whether the U.K. financial services regulatory framework is fit for purpose, considering the U.K.'s exit from the EU, climate change and other global and technological challenges. HM Treasury has published a series of consultations on different aspects of the future framework, including the Phase II consultation in October 2020 and the Proposals for Reform paper published in November 2021. Responses to HM Treasury's latest consultation on CCPs and CSDs may be submitted until February 28, 2022.

    Read more.
  • UK Financial Conduct Authority Publishes Feedback Statement on Access to Wholesale Data
    01/11/2022

    The U.K. Financial Conduct Authority has published a feedback statement relating to the call for input on accessing and using wholesale data. In the feedback statement, the FCA summarizes the responses received and the FCA's findings on whether data are being priced and sold competitively. The FCA confirms that it will undertake the following work to gain a deeper understanding of the potential harm and, where appropriate, take steps to mitigate any harm. In particular, the FCA will focus on the following:
     
    1. Trading data: in Spring 2022, the FCA will run an information gathering and analysis exercise that concentrates on the pricing of trading data, underlying costs and the terms for the sale of trading data. The FCA's findings will be published later in 2022.
    2. Benchmarks: in Summer 2022, the FCA will launch a market study into how competition operates between benchmarks, which will include the pricing of benchmarks, contractual terms and obstacles to switching between benchmarks.
    3. Credit Rating Agencies: by the end of 2022, the FCA will begin a market study on the competition in the sale of credit rating data, including pricing, contractual relationships, difficulties in entry to the credit rating data market and innovation.
    4. Alternative data and advanced analytics: the FCA has commissioned research on the nature and scale of alternative data.
  • European Securities and Markets Authority Provides Regulatory Forbearance for EU CSDR Buy-In
    12/17/2021

    The European Securities and Markets Authority has issued a public statement on the supervisory approach to the implementation of the buy-in regime under the EU Central Securities Depositories Regulation. The EU CSDR provides a harmonized regulatory and prudential regime for central securities depositories and increases the robustness and resilience of securities settlement arrangements. The settlement discipline regime is set out in EU Regulatory Technical Standards. The RTS cover measures for preventing settlement fails through automated matching, a hold and release mechanism and partial settlement. CSDR and the RTS also provide measures for monitoring and addressing settlement fails, such as a mechanism for cash penalties and a mandatory buy-in process. The application date of the settlement discipline rules has been postponed several times, most recently, citing the coronavirus pandemic, to delay the application date to February 1, 2022.

    Read more.
  • European Securities and Markets Authority Provides Regulatory Forbearance for EU Clearing and Derivatives Trading Obligations in Support of LIBOR Transition
    12/16/2021

    The European Securities and Markets Authority has issued a statement in which it states that EU national regulators should not, from January 3, 2022, prioritize supervisory action for any failures by firms to comply with the mandatory clearing obligation under the European Market Infrastructure Regulation, for interest rate derivatives referencing EONIA, GBP LIBOR, JPY LIBOR or USD LIBOR and the derivatives trading obligation for IRD classes referencing GBP LIBOR or USD LIBOR. On November 18, 2021, ESMA submitted final draft Regulatory Technical Standards to amend the EU clearing and trading derivative obligations in support of the benchmark transition to risk-free rates. However, ESMA is aware of the time that the approval process may take and therefore considers that regulatory forbearance is appropriate.
  • European Securities and Markets Authority Publishes Proposed EU Clearing and Derivatives Trading Obligations Changes for LIBOR Transition
    11/18/2021

    The European Securities and Markets Authority has published a final report and final draft Regulatory Technical Standards to amend the EU clearing and trading derivative obligations for the benchmark transition to risk-free rates. To support the transition away from EONIA and LIBOR to risk-free rates such as €STR, ESMA is proposing to amend the scope of the derivatives clearing and trading obligations for interest rate derivatives denominated in EUR, GBP, JPY and USD. In particular, ESMA is proposing to:
    • Remove IRD classes referencing GBP and USD LIBOR from the clearing and trading obligations.
    • Remove IRD classes referencing EONIA and JPY LIBOR from the clearing obligation.
    • Introduce a clearing obligation for IRD classes referencing €STR, SONIA and SOFR.

    The draft RTS have been submitted to the European Commission for endorsement.
  • Bank of England Drops Warning Against Profit Distributions for Financial Market Infrastructures
    11/11/2021

    The Bank of England has written to the CEOs of all regulated U.K. financial market infrastructures notifying them that they are no longer expected to discuss prospective shareholder distributions with the BoE.

    Read more.
  • European Commissioner Announces Proposed Extension of Equivalence for UK CCPs
    11/10/2021

    European Commissioner McGuinness has announced that in early 2022 the European Commission will be proposing an extension of the time-limited equivalence granted to U.K. CCPs. The existing equivalence decision is due to expire at the end of June 2022. The Commissioner reiterated that the EU would continue to build out the capability of EU CCPs to reduce the reliance on U.K. CCPs. Furthermore, the EU will seek to strengthen the supervisory powers for EU-level supervision of CCPs.
  • Revised Global Principles on Outsourcing for Regulated Participants in the Securities Markets
    10/27/2021

    The International Organization of Securities Commissions has published an updated Principles on Outsourcing for regulated market participants in the securities markets.  The updated Principles are based on IOSCO’s 2005 Outsourcing Principles for Market Intermediaries and 2009 Outsourcing Principles for Markets.  However, the updated Principles will also apply to trading venues, market intermediaries, market participants acting on a proprietary basis, and credit rating agencies.  Financial market infrastructures may also choose to consider their application, although the Principles are not addressed to those entities.

    Read more.
  • European Securities and Markets Authority Supports Delay to Buy-In Regime under EU Central Securities Depositories Regulation
    09/24/2021

    The European Securities and Markets Authority has published a letter to the European Commission urging the Commission to delay the buy-in regime under the Central Securities Depositories Regulation. The EU CSDR provides a harmonized regulatory and prudential regime for central securities depositories and increases the robustness and resilience of securities settlement arrangements. The Commission consulted in 2020 on proposals to improve securities settlement in the EU and on central securities depositories, and legislative proposals are expected before the end of 2021.

    Read more.
  • Bank of England Publishes Dear CEO Letters to Central Counterparties, Central Securities Depositories and Payment System Operators on Supervisory Expectations for Material Outsourcing to the Public Cloud
    09/17/2021

    The Bank of England has written to the CEOs of Central Counterparties, Central Securities Depositories, Recognised Payment System Operators and Specified Service Providers subject to the BoE’s supervision, drawing their attention to the BoE’s expectations of material outsourcing arrangements, including the use of the public cloud.

    The letters observe that in Q2 2021, the BoE’s Financial Policy Committee found that financial institutions had scaled up their reliance on cloud service providers since the start of 2020, leading to an increasing reliance on a small number of providers and a potential increase in financial stability risk. Reliance on third parties by CCPs, CSDs, RPSOs and SSPs is subject to existing legislation and the Principles for Financial Markets Infrastructure, which the BoE expects firms to comply with. Firms are also expected to have regard to the BoE’s policy on operational resilience and any relevant international standards.

    Read more.
  • HM Treasury Consults on Extension of Senior Managers’ Regime to Financial Market Infrastructures
    07/20/2021

    HM Treasury has published a consultation paper seeking feedback on its proposals for the extension of the Senior Managers’ and Certification Regime to certain U.K. financial market infrastructures. The SMCR was originally implemented for U.K. banks in 2016, extended to all U.K. authorized firms in December 2019, and further extended to U.K. benchmark administrators in December 2020. The government is seeking views on whether and, if so, how the SMCR should be extended to FMIs as well as the proportionate application of it to FMIs. Responses to the consultation on the SMR for FMIs should be submitted by October 22, 2021.

    Read more.
  • UK Prospectus Review: Proposed Reforms to Boost London's Capital Markets
    07/02/2021

    The U.K. government has begun a consultation on proposals to reform the U.K. prospectus regime. This much anticipated consultation sets out proposals based on the important recommendations made in the U.K. Listing Review, which was chaired by Lord Hill. Responses to the consultation should be submitted by September 24, 2021.

    The final changes to the prospectus regime will be made through legislation and the rules of the Financial Conduct Authority, following consultation. The existing U.K. Prospectus Regulation will be replaced, in whole or part, by FCA rules.

    Read more.
  • UK Taskforce on Innovation, Growth and Regulatory Reform Publishes Recommendations
    06/16/2021

    The Taskforce on Innovation, Growth and Regulatory Reform has published its report, making several recommendations for reforming the U.K.'s approach to regulation as well as practical suggestions for implementing the reforms. The main recommendation tasks the government with building a U.K. regulatory framework that has proportionality at its core and that is based on the principles of the common law. The report also provides specific proposals for regulatory reforms across several sectors, identified as high growth sectors, including the financial services sector. The TIGRR recommendations will be progressed by the newly established Brexit Opportunities Unit, which is being led by Lord Frost, Minister of State at the Cabinet Office. Consultations on proposals to implement these ambitious recommendations are expected later this year.

    The TIGRR report recommends the approach to regulation is reformed along traditional common law lines, moving away from the EU codified system. The report suggests that the government reconsiders the approach to regulation with the aim of enhancing productivity, encouraging competition and invigorating innovation.

    Read more.
  • UK to Remove Open Access Regime for Exchange-Traded Derivatives
    06/05/2021

    The U.K. Government has announced that it will permanently remove the open access regime for exchange-traded derivatives. The regime, established under the EU Markets in Financial Instruments Regulation and onshored into U.K. laws in preparation for the end of the Brexit transitional period, requires a trading venue to provide open and non-discriminatory access to a CCP, with a reciprocal requirement for CCPs to provide access for trading venues, when clearing transferable securities, money market instruments and ETDs. In the EU, a temporary opt-out from the regime was made available and then extended for trading venues and CCPs in relation to ETDs, but that is due to expire on July 3, 2021 (having been extended for a period of one year due to difficulties surrounding COVID-19).

    Read more.
  • European Securities and Markets Authority Publishes Recommendations to Reform the EU Central Securities Depositories Regulation
    05/20/2021

    The European Securities and Markets Authority has published a letter addressed to the European Commission making recommendations for inclusion in the Commission's Review of CSDR. The EU Central Securities Depositaries Regulation provides a harmonized regulatory and prudential regime for central securities depositories and increases the robustness and resilience of securities settlement arrangements. There is a single market for CSD services across the EU and a third-country equivalence regime for CSDs. ESMA's recommendations include:
     
    1. That the Target2-Securities system, a systemically important common settlement platform, providing settlement services in central bank money for the majority of EEA CSDs, be brought within the scope of CSDR.
    2. Amendment of the supervision arrangements for T2S. Currently, the European Central Bank oversees T2S, alongside a cooperative framework based on a memorandum of understanding between the ECB, ESMA, the national competent authorities of the CSDs participating in T2S, and the central banks overseeing the CSDs. ESMA considers that CSDR should provide for a cooperative arrangement for supervision/oversight of T2S in the form of a college of supervisors, with clear roles for the participating authorities.

    Read more.
  • International Bodies Launch Survey on Margin Calls
    05/05/2021

    The Basel Committee on Banking Supervision, the Committee on Payments and Market Infrastructure and the International Organization of Securities Commissions has published a survey on margin calls as part of an investigation into liquidity shortfalls during the early stages of the COVID-19 pandemic. The combined effect of government measures to contain the pandemic in March 2020, together with market uncertainty, job losses and travel restrictions triggered a pullback in economic activity and stress on market liquidity. The non-bank financial intermediation sector was found to be particularly vulnerable to the liquidity shock.

    Read more.
  • UK Financial Services Act 2021 Published
    04/29/2021

    The U.K. Financial Services Bill has received Royal Assent from Her Majesty the Queen and has become an Act of Parliament, the Financial Services Act 2021. Some provisions of the Act came into force on the date of Royal Assent, with a limited number following on June 29, 2021. The majority of the Act will come into force on a date specified in regulations yet to be made by HM Treasury.

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  • UK HM Treasury Consults on an Expanded Resolution Regime for CCPs
    02/24/2021

    HM Treasury has opened a consultation seeking views on an expanded resolution regime for CCPs. The existing U.K. CCP recovery and resolution regime was established by the Financial Services Act 2012, which extended to CCPs (with modifications) the special resolution regime for banks and investment firms. Since then, there have been international and EU developments. In particular, the Financial Stability Board published guidance on financial resources for CCP resolution and the EU has published the EU CCP Recovery and Resolution Regulation. The U.K., when it was an EU member state, supported and helped develop the EU Regulation. HM Treasury is proposing to amend the U.K. regime to bring it into line with international standards and the proposals, bar a few technical exceptions, follow the EU Regulation. Responses to the consultation may be submitted until May 28, 2021.

    Read more.
  • European Securities and Markets Authority Consults on 2021 Supervisory Fees for EU Trade Repositories
    02/22/2021

    The European Securities and Markets Authority has published a consultation on its proposals for recalibrating the 2021 annual supervisory fees to be charged by ESMA to EU trade repositories. ESMA's annual fees are intended to cover its costs for supervising EU trade repositories, and to be proportionate to the turnover of the trade repository concerned.

    Read more.
  • EU Launches Review of the Financial Collateral Directive
    02/12/2021

    The European Commission has launched a targeted consultation related to post-trade services, which considers the EU Financial Collateral Directive. The Commission is also consulting on the Settlement Finality Directive, combining the review of these two Directives since they are closely related. The consultations close on May 7, 2021. The FCD establishes a harmonized EU framework for the use of financial collateral to secure transactions. It provides for close-out netting provisions to be enforceable under their terms and ring-fences the operation of financial collateral arrangements should one of the parties become insolvent, creating protections from the usual insolvency laws of a Member State. The FCD consultation does not cover the re-use of financial collateral given under a security financial collateral arrangement by a collateral taker as this issue has recently been addressed in the Securities Financing Transactions Regulation. The consultation focuses on issues relating to the recognition of close-out netting provisions and its impact on SFD systems.

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  • EU Launches Review of the Settlement Finality Directive
    02/12/2021

    The European Commission has launched a targeted consultation related to post-trade services, which considers the EU Settlement Finality Directive. The Commission is also consulting on the Financial Collateral Directive, combining the review of these two Directives since they are closely related. The consultations close on May 7, 2021. The SFD establishes various insolvency carve-outs for designated market infrastructure systems and provides for finality of transactions within such systems. Under the protections currently afforded by the SFD, transfer orders which enter into designated systems within certain deadlines are guaranteed to be finally settled and cannot be unwound at the behest of insolvency officials, regardless of whether the sending participant has become insolvent or transfer orders have been revoked in the meantime. The SFD essentially excludes "insolvency claw-back" rules, such as those for transactions at an undervalue or trading by insolvent or near-insolvent entities, from applying to holdings in designated systems and modifies the timing of "moratorium" rules which prevent transactions by insolvents. This also gives certainty as regards holdings in central securities depositories and as to the finality of transactions in some clearing and payment systems. Under the SFD, each EU Member State automatically recognizes systems that have been designated by other Member States. However, there is no EU regime for third country systems, a lacuna which has already been fixed by the U.K. in its SFD laws after Brexit.

    Read more.
  • EU Amends Rules to Address LIBOR Cessation and Extends Use of Third-Country Benchmarks to 2023
    02/02/2021

    The Council of the European Union has announced that it has adopted the final text of the regulation to address LIBOR cessation, which will amend the EU Benchmark Regulation. According to the Council, the amending Regulation will be published in the Official Journal of the European Union on February 12, 2021 and it will enter into force and apply from February 13, 2021.

    The EU Benchmark Regulation sets out the authorization and registration requirements for benchmark administrators, including third-country entities, and the requirements for governance and control of administrators. It provides for different categories of benchmarks depending on the risks involved, imposes additional requirements on benchmarks considered to be "critical" and gives powers to national regulators to mandate, under certain conditions, contributions to or the administration of critical benchmarks.

    Read more.
  • European Securities and Markets Authority Publishes Final Report on Proposed Fees for Benchmark Administrators
    02/01/2021

    The European Securities and Markets Authority has published its final report on proposed supervisory fees for EU benchmark administrators. In 2019, the EU Benchmarks Regulation was amended, granting ESMA new powers to act as competent authority for EU administrators of critical benchmarks and third-country benchmark administrators that have been recognized by ESMA from January 1, 2022. Before these amendments take effect, third-country benchmark administrators may seek recognition from a national regulator of an EU member state. Both the current and new provisions only apply in the absence of an equivalence decision for the relevant third-country where the benchmark administrator is located. The recognition allows EU supervised entities to use the benchmark, for example in financial contracts. The amendments require ESMA to charge fees to the administrators under its supervision. The European Commission tasked ESMA with producing technical standards on those fees.

    Read more.
  • EU Grants Equivalence to More US CCPs
    01/28/2021

    An EU equivalence decision for U.S. CCPs regulated by the U.S. Securities Exchange Commission that are "covered clearing agencies" under the SEC rules has been published in the Official Journal of the European Union. The decision paves the way for these U.S. CCPs to be recognized by the European Securities and Markets Authority upon which they will be able to provide clearing services to EU trading venues and businesses. Relevant U.S. CCPs that potentially would be covered by this designation but which were not previously granted equivalence include the Fixed Income Clearing Corporation, National Securities Clearing Corporation, The Depository Trust Company and The Options Clearing Corporation. ICE Clear Credit LLC also registered with the SEC, however, this CCP already benefits from EU equivalence as it falls within the previous EU equivalence decision for U.S. CCPs regulated by the Commodity Futures Trading Commission. ICE Clear Europe, which was an EU CCP until Brexit, is also recognized under the EU's temporary equivalence for U.K. CCPs. LCH SA is also registered with the SEC, but is an EU CCP and so the equivalence regime is not applicable to it.

    Read more.
  • EU CCP Recovery and Resolution Regulation Published
    01/22/2021

    The EU Regulation on the recovery and resolution of CCPs has been published in the Official Journal of the European Union. The Regulation sets out the rules and procedures for the recovery and resolution of EU CCPs authorized under the European Market Infrastructure Regulation. The aim of the Regulation is the establishment of a framework for the orderly recovery of a CCP through implementation of recovery plans. A CCP's recovery plan will form part of its operational rules, which are agreed with its clearing members. A CCP's operating rules must also ensure the enforceability of the recovery measures outlined in the recovery plan, including to contracts or assets governed by the law of a third country or to third-country entities.

    If the recovery measures do not restore the CCP's viability, the CCP's resolution authority will have the power to take action to ensure the continuity of the CCP's critical functions and, if needed, resolve the CCP. This includes setting up bridge CCPs. In the event of losses arising under a resolution, these will be borne by a CCP's owners, creditors and counterparties in line with the hierarchy of claims in insolvency. The CCP recovery and resolution framework would apply to all CCPs established in the EU. It is not proposed that the recovery and resolution framework would apply to the wider group of a CCP.

    Read more.
  • European Commission Publishes New EU Cybersecurity Strategy
    12/16/2020

    The European Commission and High Representative of the Union for Foreign Affairs and Security Policy have published details of a new EU Cybersecurity strategy, which aims to enhance the EU's resilience to cyber threats and build a cybersecure digital transformation. The overall strategy is set out in a Communication, which is accompanied by two legislative proposals. The first legislative proposal is for a new EU Directive on the resilience of critical entities (the proposed CER Directive), which will enhance and repeal the existing 2008 European Critical Infrastructure Directive (Council Directive 2008/114/EC). The second proposal is for a new Directive on cybersecurity across the EU (NIS2), which would augment and repeal the existing NIS Directive (Directive (EU) 2016/1148). The Commission consulted earlier this year on proposals for each of these legislative proposals.

    Read more.
  • UK Government Seeks Input on UK Framework for Cross-Border Financial Services
    12/15/2020

    HM Treasury has launched a call for evidence on the U.K.'s framework for cross-border financial services. HM Treasury is considering policy approaches for ensuring the U.K. framework is fit for the future given the U.K.'s exit from the EU, including consideration of how effective and proportionate regulation can support attracting investment and liquidity to the U.K. Responses to the consultation may be submitted until March 11, 2021.

    Read more.
  • European Commission Consults on Central Securities Depositories Regulation
    12/08/2020

    The European Commission has launched a consultation on proposals to improve securities settlement in the EU and on central securities depositories. The EU Central Securities Depositaries Regulation provides a harmonized regulatory and prudential regime for CSDs and increases the robustness and resilience of securities settlement arrangements. There is a single market for CSD services across the EU and a third-country equivalence regime for CSDs. Responses to the consultation can be submitted until February 2, 2021.

    Read more.
  • Financial Stability Board Issues Final Guidance on Financial Resources for CCP Resolution
    11/16/2020

    The Financial Stability Board has issued a final report and guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution. The FSB consulted on the guidance in 2018, stating that, in its view, further evidenced-based guidance was needed to develop the guidance, such as the practical experience of resolution planning that resolution authorities and Crisis Management Groups have gained.

    Read more.
  • EU Authority Updates Statements on Reporting Obligations Post-Brexit Transitional Period
    11/10/2020

    The European Securities and Markets Authority has published updated statements regarding the end of the Brexit transition period on December 31, 2020. 

    Read more.
  • UK Grants Equivalence to EEA CCPs
    11/10/2020

    The U.K. Central Counterparties (Equivalence) Regulations 2020 (SI No. 2020/1244) have been made, granting equivalence for EEA CCPs from 10:59 pm on December 31, 2020. The decision will enable U.K. businesses and trading venues to continue using the clearing services of EEA CCPs under the U.K. European Market Infrastructure Regulation after the end of the Temporary Recognition Regime, provided that the Bank of England grants the individual CCP concerned recognition status.

    The EU has granted temporary equivalence for U.K. CCPs, which is set to expire in June 2022.

    View the Central Counterparties (Equivalence) Regulations 2020, SI No. 2020/1244.

    View details of the temporary equivalence decision for U.K. CCPs.
  • European Securities and Markets Authority Reports on Implementation of EU Central Securities Depositaries Regulation
    11/05/2020

    The European Securities and Markets Authority has published two reports relevant to the EU Central Securities Depositaries Regulation. The CSDR provides a harmonized regulatory and prudential regime for CSDs and increases the robustness and resilience of securities settlement arrangements. There is a single market for CSD services across the EU and a third-country equivalence regime for CSDs. ESMA's reports, which will be considered as part of the upcoming review of CSDR by the European Commission, are on the following:
     
    1. Internalized settlement, which is the regime for settlement other than through an EU CSD. In the report, ESMA notes that no significant risks have been identified. National EU regulators have identified that operational risk and custody risk are evident, in response to which, ESMA recommends improved operational processes and enhanced identification of client accounts. According to ESMA, the issues involved in the internalized settlement reporting regime are normal in terms of any new reporting requirements. Noting the limited time period that the data covers, ESMA highlights that continued monitoring of the regime is important to assess whether the area warrants regulation. ESMA considers that custodian clients should at least be informed of the risks and costs of the place of settlement.
    2. Cross-border services and handling of applications. ESMA found that CSDR has had a limited impact on the provision of cross-border services in the EU by EU CSDs. ESMA states that future reports will need access to more detailed information and that they should consider whether most of the activity remains with global custodians as well as the impact of CSDR on costs and competition.

    View ESMA's reports.
  • UK Parliament Publishes Financial Services Bill for Post-Brexit Regulatory Framework
    10/21/2020

    The U.K. Government has published a Financial Services Bill setting out a proposed regulatory framework for the financial services industry following the U.K.'s exit from the EU. The Bill is part of the U.K.'s wider initiative under the Future Regulatory Framework Review to re-frame its regulatory framework. Although Brexit has brought challenges to the financial sector, there may also be post-Brexit opportunities for the U.K. to seize. The aim of these reforms is to cement the U.K.'s position as a global financial centre of excellence. A core piece of that will be to set conditions that continue attracting business to the U.K. and to look for opportunities to cut "red tape" whilst at the same time maintaining the U.K.'s globally recognized high regulatory standards.

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  • EU Final Guidelines on Transfers of Information Between Securitization Repositories
    10/05/2020

    The European Securities and Markets Authority has published a final report and final guidelines on the portability of information between securitization repositories under the EU Securitization Regulation. ESMA is responsible for the registration and supervision of securitization repositories. It is required under the Securitization Regulation to develop guidelines for supervisory purposes and will apply them from January 1, 2021, except for those provisions that require securitization repositories to have policies for the orderly transfer of data to other securitization repositories, which apply from June 18, 2021. The guidelines will apply to transfers of information between repositories either at the request of a reporting entity or in the event of a securitization repository's registration being withdrawn. The guidelines set out the specific procedures and the content of policies for the orderly transfer of information by securitization repositories.

    View ESMA's final report and guidelines.
  • EU Grants Temporary Recognition to UK CCPs For End of Brexit Transition Period
    09/28/2020

    The European Securities and Markets Authority has announced that it has granted temporary third-country recognition to three U.K. CCPs from January 1, 2021 under the European Market Infrastructure Regulation. ESMA's announcement follows the time-limited equivalence decision for the U.K.'s legal and regulatory supervision regime of U.K. CCPs, which was published on September 21, 2020. The third-country recognition for ICE Clear Europe Limited, LCH Limited and LME Clear Limited means that EU clearing members of these three CCPs will be able to continue to access the services and that the CCPs will be able to continue to provide their services in the EU at the end of the transition period on December 31, 2020, following the U.K.'s withdrawal from the EU.

    Read more.
  • EMIR 2.2 Secondary Legislation Published
    09/21/2020

    Three Commission Delegated Regulations have been published in the Official Journal of the European Union, supplementing the revised European Market Infrastructure Regulation. The Delegated Regulations contain provisions related to the changes introduced by EMIR 2.2, the amending EU Regulation that came into force on January 1, 2020 and introduced changes to the procedures and authorities involved in the authorization of central counterparties and the requirements for the recognition of third-country CCPs. EMIR 2.2 also introduced a new tiering system for third-country CCPs, making non-systemically important (or "Tier 1") third-country CCPs subject to less stringent requirements than systemically important (or "Tier 2") third-country CCPs. The Commission Delegated Regulations all relate to third-country CCP provisions of EMIR 2.2 and will enter into force on September 22, 2020. They have been published in the form adopted by the European Commission in July 2020.

    Read more.
  • Confirmation on EU Securitization Disclosure Requirements
    09/04/2020

    The European Securities and Markets Authority has published a press release confirming that certain requirements under the Securitization Regulation will enter into force on September 23, 2020.

    Read more.
  • EU Publishes Draft Delegated Regulation on Changes to CCP Colleges under EMIR 2.2
    09/01/2020

    The European Commission has published a draft Delegated Regulation designed to amend existing Delegated Regulation (EU) No 876/2013, which supplements the European Market Infrastructure Regulation with regards to changes to the composition, functioning and management of colleges for central counterparties. Under EMIR, "colleges" are supervisory bodies made up of the regulators responsible for supervision of a given CCP. From January 2020, revisions to EMIR (known as "EMIR 2.2") took effect, which introduced changes to the procedures and authorities involved in the authorization of central counterparties and the requirements for the recognition of third-country CCPs. EMIR 2.2 required ESMA to develop draft Regulatory Technical Standards on: (i) which currencies were "most relevant" for the purposes of determining which central banks should be included in a CCP's college; and (ii) details of the practical arrangements for the functioning of the college that should be agreed in writing between the members of the college.

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  • Global Common Template Published to Aid Continuity of Access to Financial Market Infrastructures
    08/14/2020

    The Financial Stability Board has published a common template for gathering information about continuity of access to financial market infrastructures for firms in resolution. The template facilitates implementation of the FSB’s 2017 Guidance on continuity of access to FMIs for a firm in resolution. The aim of the common template is to streamline the process of gathering information, reduce the burden on FMIs who receive multiple requests for information and make more efficient the process of giving information by FMIs to participants and authorities. All FMIs are urged to complete the questions in the common template and to make those available to their participants and national resolution authorities by November/December 2020. The FSB intends, after 12 months, to assess how the common template has achieved its goals.

    View the comment template.

    View the FSB’s Guidance.
  • European Central Bank Consults on Compounded €STR Rates
    07/24/2020

    The European Central Bank has launched a consultation on proposals to publish compounded term rates based on the euro short-term rate (€STR). The consultation closes on September 11, 2020. The ECB is requesting feedback on specific characteristics of the compounded rate using €STR. Publication would take place on a daily basis shortly after the €STR publication. Published maturities could range from one week up to one year. A daily index, making it possible to compute compounded rates over non-standard periods, is also envisaged.
     
    View the ECB's consultation paper on compounded term rates based on €STR.
  • European Central Bank Published Good Practice Guidance on Preparation for Benchmark Rate Reforms 
    07/23/2020

    The European Central Bank has published a report on the results of its industry-wide assessment of Eurozone banks’ readiness for the benchmark interest rate reforms, which affect both EONIA and EURIBOR in the euro area. The purpose of the report is to share good practices that the ECB has identified in its horizontal assessment of the preparedness of Eurozone banks supervised under the Single Supervisory Mechanism. According to the ECB, banks need to improve their preparation for the reforms and escalate their implementation of risk mitigation measures. 

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  • Final EU Guidelines for Securitization Repositories Assessing Data Completeness and Consistency
    07/10/2020

    The European Securities and Markets Authority has published a final report and final guidelines on securitization repository data completeness and consistency thresholds. The guidelines will apply to EU securitization repositories that are registered with and supervised by ESMA. From January 1, 2021, ESMA will consider the guidelines in its supervision of securitization repositories.

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  • EU Consultation on Guidelines for SFT Position Reporting by Trade Repositories
    07/09/2020

    The European Securities and Markets Authority has published a consultation paper on proposed Guidelines on the calculation of positions in Securities Financing Transactions by trade repositories under the EU Securities Financing Transactions Regulation. The consultation closes on September 15, 2020. ESMA intends to finalize the Guidelines for publication in Q4 2020 or Q1 2021.

    The proposed Guidelines aim to ensure consistency of position calculation by trade repositories to national regulators, including the time of calculations, the scope of the data used in calculations, the treatment of outliers, the recordkeeping of data and the calculation methodologies. They also aim to ensure a consistent methodology is used under SFTR and the European Market Infrastructure Regulation.

    View the consultation paper.
  • European Commission Consults on Proposed Revisions to EU Cybersecurity Rules
    07/07/2020

    The European Commission has launched a consultation on proposed revisions to the EU Directive on the security of network and information systems across the Union (commonly known as the NIS Directive), which is designed to protect the security of EU network and information systems. The NIS Directive sets out, among other things, the parameters of national network and information security strategies to be implemented by Member States for providers of "essential services", which include credit institutions (as defined under the EU Capital Requirements Regulation) and financial market infrastructures.

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  • UK Conduct Regulator Statement on Open Access Regime for Exchange-Traded Derivatives
    07/06/2020

    The U.K. Financial Conduct Authority has published an updated statement on the open access regime for trading and clearing exchange-traded derivatives. The Markets in Financial Instruments Regulation provided a temporary opt-out from the open access requirements for trading venues and clearing houses in relation to ETDs. The opt-out was due to expire on July 3, 2020. However, in light of COVID-19, the EU has announced it is postponing the implementation of the open access regime for ETDs until July 3, 2021. The FCA's statement acknowledges the EU's postponement of the regime and states that the amended open access regime will form part of retained EU law that will be transposed by the U.K. post-Brexit and will continue to apply in the U.K. after the end of the transition period.

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