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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.

  • Government Details Proposed Financial Services and Markets Bill
    05/10/2022

    Following the Queen's speech yesterday, the government has published a briefing pack setting out details of the bills that it intends to introduce, including the so-called Brexit Freedoms Bill as well as key legislation relevant to financial services. The government will introduce a Financial Services and Markets Bill, which will, among other things:
    • Introduce new statutory objectives for the financial services regulators to support growth and international competitiveness.
    • Implement the changes to the wholesale markets arising out of the Wholesale Markets Review. HM Treasury confirmed in March of this year that the changes that will be made by legislation and where powers will be delegated to the financial services regulators for rules to be made. Among the changes are the removal of the share trading obligation and the double volume cap, changes to the derivatives trading obligation, taking OTC derivatives that are economically equivalent to exchange traded commodity derivatives out of the position limits regime, and the establishment of a consolidated tape.

    Read more.
  • Queen’s Speech Confirms Government Will Proceed with Brexit Freedoms Bill
    05/10/2022

    Prince Charles, Prince of Wales, delivered the Queen’s speech in which he announced that the government will be introducing the so-called Brexit Freedoms Bill, which was first announced by Prime Minister Boris Johnson on January 31, 2022, and is intended to make it easier to amend or remove retained EU laws to better suit the U.K.’s circumstances and policies. The Brexit Freedoms Bill will work in tandem with a government drive to reform, repeal and replace EU laws that are seen as outdated, cumbersome or otherwise not in the U.K.’s national interest.

    Read more.
  • International Organization of Securities Commissions Seeks Feedback on Reports on Corporate Bond Markets and Regulation of Exchange Traded Funds
    04/06/2022

    The International Organization of Securities Commissions is seeking feedback on two IOSCO reports: the first on drivers of liquidity in corporate bond markets during COVID-19 induced market stresses and the second on good practices for the regulation of exchange traded funds.

    Read more.
  • European Securities and Markets Authority Publishes Report on Short Selling Regulation Review
    04/04/2022

    The European Securities and Markets Authority has published a report on its review of certain aspects of the EU Short Selling Regulation. The review was prompted by the volume of short selling that occurred around the outbreak of the COVID-19 pandemic and national regulators' responses to it. ESMA also considered the possibility in Europe of high volatility in so-called "meme-stocks" (stocks which gain popularity through social media.

    Read more.
  • UK Regulator Finalizes Rules On Scope Of PRIPPs
    03/25/2022

    Following its consultation last year, the U.K. Financial Conduct Authority has published its final policy and rule amendments on the scope of the rules governing packaged retail and insurance-based investment products (or PRIIPs). The FCA had aimed to bring in the new rules by January 1, 2022. Instead, the final rules and Regulatory Technical Standards will apply from March 25, 2022. Firms will have until December 31, 2022 to apply the new requirements. These changes are designed to bring legal certainty to the scope of the PRIIPs regime, as it applies to corporate bonds, and mitigate risks relating to misleading performance scenarios and summary risk indicators and concerns about the transaction costs calculation methodology. It is hoped that the amendments will promote liquidity and improve choice in the retail corporate bond market, and also reduce the complexity of key information documents (or KIDs), the key information disclosure documents that must accompany PRIIPs when they are made available to retail investors.

    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.
  • Permanent Lower Threshold for Notification of Net Short Positions Under EU Short Selling Regulation Announced
    01/11/2022

    A Commission Delegated Regulation, published in the Official Journal of the European Union, amends the EU Short Selling Regulation to make permanent the lower notification threshold for notifying national regulators of net short positions held in the shares of companies traded on EU regulated markets. The threshold for notification will be 0.1% of the issued share capital of the company in question and each 0.1% above that. The lower threshold will apply from January 31, 2022.

    Read more.
  • UK Regulator Issues Statement on Extension of Exemption for UCITS From PRIIPs Disclosure Requirements
    12/29/2021

    The U.K. Financial Conduct Authority has published a statement in which it confirms that it will amend the Technical Standards and related Handbook provisions to align with the extended exemption from the requirements of the U.K. Packaged Retail and Insurance-based Investment Products Regulation for investment companies and persons advising on, or selling, units in UCITS from December 31, 2021, to December 31, 2026. The FCA states that it will not take enforcement action against firms that offer UCITS funds to U.K. retail investors and that provide either a key information document under the PRIIPs Regulation or a UCITS key investor information document. Following the government's announcement in June 2021, the Financial Services Act 2021 extended the exemption for UCITS.
  • EU Amending Technical Standards Improve PRIIPs Regulation Requirements
    12/20/2021

    An EU Commission Delegated Regulation (2021/2268) amending the Regulatory Technical Standards supplementing the EU Packaged Retail Investment and Insurance-based Products Regulation has been published in the Official Journal of the European Union. The amending RTS include provisions to:
    • Introduce new methodologies to calculate appropriate performance scenarios and a revised presentation of these scenarios.
    • Revise the summary cost indicators and changes to the content and presentation of information on the costs of PRIIPs.
    • Modify the methodology to calculate transaction costs.
    • Clarify the rules for PRIIPs offering a range of options for investment (known as MOPs), in particular, to identify the products' full cost implications.

    Read more.
  • 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.
  • HM Treasury Identifies Areas for Improving the UK Securitization Framework
    12/13/2021

    Following its call for evidence earlier this year, HM Treasury has published its report on the review of the U.K. Securitization Regulation. HM Treasury was required to conduct a review of the functioning of the Regulation and report to Parliament on its findings by January 2022. The Securitization Regulation provides the criteria for identifying which securitizations will be designated as "simple, transparent and standardized" (STS) securitizations, a system to monitor the application of those criteria as well as common requirements on risk retention, due diligence and disclosure. Related provisions under the Capital Requirements Regulation set out the regulatory treatment of exposures to securitizations that are deemed to be STS securitizations.

    Read more.
  • UK Finalizes Primary Markets Effectiveness Review Changes
    12/02/2021

    The U.K. Financial Conduct Authority has published a Policy Statement and final changes to the Listing Rules following its Primary Market Effectiveness Review consultation. The changes become effective on December 3, 2021 and mark a significant step in the reform of the U.K.'s listing regime. The amendments follow on from the changes to the listing rules made in August 2021 to remove from SPACs the automatic suspension of listing that they previously faced when undertaking their de-SPAC transaction. The amendments follow the Lord Hill Listing Review and Kalifa FinTech Review, both of which urged the U.K. Government implement significant reform to the U.K.'s listing regime, to make it more attractive to issuers (especially tech startups) and investors and to bring it into line with recent changes and the capital markets flexibility that its competitors - in Asia and the U.S. - already offer. We discussed the broad range of the Listing and FinTech Reviews' proposals in our UK Listing Regime Reform briefing.

    Read more.
    ATTORNEY : Michael Scargill
    TOPIC : Securities
  • European Securities and Markets Authority Issues Statement on Investment Recommendations on Social Media
    10/28/2021

    The European Securities and Markets Authority has issued a statement on the requirements under the EU Market Abuse Regulation for firms and individuals that make investment recommendations on social media.  ESMA is concerned about the potential harm to retail investors who may base their investment decisions on information made available on social media sites, in particular in situations such as the Gamestop case.  The EU rules, which are designed to prevent the misleading of investors, apply to anyone based in or outside the EU that distributes information proposing an investment decision about EU financial instruments listed in the EU or financial instruments that depend on or effect the price or value of a listed financial instrument. 

    Read more.
  • 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.

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  • European Supervisory Authorities Launch Call for Evidence on the EU's Packaged Retail and Insurance-based Investment Products Regulation
    10/21/2021

    The European Supervisory Authorities have launched a call for evidence on the EU's Packaged Retail and Insurance-based Investment Products Regulation. The PRIIPs Regulation requires manufacturers of PRIIPs to produce a standardized Key Information Document in an official language of all EU countries into which offerings are made. It also requires those advising on or selling PRIIPs to provide retail investors with KIDs in good time before the investor enters into the investment. The call for evidence closes on December 16, 2021.

    Read more.
  • UK Conduct Regulator Calls for Changes to Regulatory Perimeter
    10/21/2021

    The U.K. Financial Conduct Authority has published its annual Perimeter Report. The report discusses the FCA's existing remit and highlights areas where potential consumer harm could be mitigated if the regulatory perimeter is amended. The FCA cannot amend the perimeter, this can only be achieved through legislation.

    Read more.
  • UK Secondary Capital Raising Review Launched
    10/12/2021

    HM Treasury has announced the U.K. Secondary Capital Raising Review, requesting recommendations on improving the U.K. capital raising process for publicly traded companies. The Review stems from Lord Hill's recommendations in the U.K. Listing Review, published in March 2021, which proposed that consideration should be given to improving the efficiency of further capital raisings by listed issuers, including by re-establishing the Rights Issue Review Group and assessing capital raising models used in other jurisdictions.

    A Call for Evidence has been issued, as the first step in the Review, calling for feedback on the key themes of the Review, including:
    • Reduction of the overall duration and cost of the existing U.K. rights issue process and how that could be achieved.
    • The role that new technology plays in the process to ensure that shareholders receive relevant information in a timely fashion and can exercise their rights.
    • Fund-raising models in other jurisdictions that should be considered for use in the U.K.
    • Improved transparency introduced by the Short Selling Regulation.
    • The potential for refining the undocumented secondary capital raising process.

    Responses to the Call for Evidence may be submitted until November 16, 2021.
  • 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.
  • Proposed Amendments to the EU Short Selling Regulation
    09/21/2021

    The European Securities and Markets Authority is consulting on proposed amendments to the EU Short Selling Regulation. ESMA is reviewing the SSR provisions following two occurrences of market volatility. The first is the market reactions to the impact of the COVID-19 pandemic and the related regulatory response where numerous and varied short sale bans were imposed by various EU member states. The second is the market turmoil in the U.S. markets and elsewhere for so-called meme stocks, such as Gamestop. Responses to the consultation may be submitted by November 19, 2021, and ESMA is expected to publish its report to the European Commission early in 2022.

    Read more.
  • UK Listings Regulator Consults on Tightening Diversity Requirements for Listed Companies
    07/28/2021

    The U.K. Financial Conduct Authority has opened a consultation on proposals to amend the requirements on diversity and inclusion on listed company boards and executive committees. The proposals include changes to the Listing Rules and the Disclosure and Transparency Rules, including guidance. The consultation closes on October 20, 2021. The FCA intends to publish final rules before the end of 2021 and for the new requirements to apply to accounting periods starting on or after January 1, 2022. This means that annual financial reports published for 2022 in spring 2023 would include the reporting changes.

    Read more.
  • UK Conduct Regulator Consults on Changes to Listing Rules For SPACs
    07/27/2021

    Following its consultation earlier this year, the U.K. Financial Conduct Authority has published final changes to its listing rules for special purpose acquisition companies that will come into effect on August 10, 2021. SPACs are companies set up for the purpose of raising money from investors to fund the acquisition of an operating business. They have attracted much attention over the last year as an alternative way for target companies to go public without going through the traditional initial public offering process. The initial decision to adjust the U.K. approach to SPACs was one of the recommendations made by Lord Hill in the U.K. Listings Review.

    Read more.
  • UK Regulator Consults on Scope of PRIIPs
    07/20/2021

    The U.K. Financial Conduct Authority has published proposals to amend the scope of the rules governing packaged retail and insurance-based investment products (or PRIIPs). The FCA's proposals are designed to bring legal certainty to the scope of the PRIIPs regime, as it applies to corporate bonds. The consultation also addresses issues of misleading performance scenarios and summary risk indicators and concerns about the transaction costs calculation methodology. It is hoped that the amendments will promote liquidity and improve choice in the retail corporate bond market and also reduce the complexity of key information documents (or KIDs), the key information disclosure documents that must accompany PRIIPs when they are made available to retail investors.

    Responses to the FCA's PRIIPs consultation should be submitted by September 30, 2021. The FCA is aiming to finalize the amendments by the end of this year and for the changes to take effect on January 1, 2022.

    Read more.
  • UK has established a new Green Technical Advisory Group
    07/09/2021

    HM Treasury has announced a new independent group, called the Green Technical Advisory Group, to help tackle “greenwashing” and create a U.K. green taxonomy. “Greenwashing” refers to unsubstantiated or exaggerated claims that an investment is environmentally friendly. GTAG’s main remit is to advise HM Treasury on developing and implementing a U.K. green taxonomy, comprising technical screening criteria. GTAG consists of financial services industry representatives, non-financial services representatives, taxonomy and climate experts. HM Treasury, the U.K. Financial Conduct Authority and the Bank of England will be observers. GTAG is expected to provide initial recommendations to HM Treasury as early as September of this year.

    View the GTAG Terms of Reference
  • UK Listing Regulator Proposes Changes to UK Listings Regime
    07/05/2021

    The U.K. Financial Conduct Authority has launched a consultation on changes to the U.K. listing regime. This consultation follows the recommendations made by Lord Hill in the U.K. Listing Review as well as the Kalifa Review of FinTech. Responses to the consultation may be submitted until September 14, 2021.

    The U.K. government is currently consulting on changes to the U.K. prospectus regime, having launched the U.K. Prospectus Review last week.

    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 Government Opens Review of Securitization Regulation
    06/24/2021

    HM Treasury has opened a Review of the U.K. Securitization Regulation with the issue of a call for evidence. The Review is required under the Regulation, and HM Treasury must report to Parliament on its findings by January 2022. Responses to the consultation may be submitted until September 2, 2021. HM Treasury also asks respondents to consider whether any changes are needed that are time-sensitive so that consideration can be given to whether a change is implemented through legislation or regulator rules. In the context of the Future Regulatory Framework Review, the responsibility for making and implementing rules will be transferred to the regulators. The FRF Review is ongoing, with a second consultation expected later this year.

    The Securitization Regulation provides the criteria for identifying which securitizations will be designated as "simple, transparent and standardized" (STS) securitizations, a system to monitor the application of those criteria as well as common requirements on risk retention, due diligence and disclosure. Related provisions under the Capital Requirements Regulation set out the regulatory treatment of exposures to securitizations that are deemed to be STS securitizations.

    Read more.
  • UK Conduct Regulator Consults on Enhancing Climate-Related Disclosures for Listed Companies and Certain Regulated Firms
    06/22/2021

    The U.K. Financial Conduct Authority has published two consultation papers that set out new proposals on climate-related disclosure rules for listed companies and certain regulated firms. The proposals follow the introduction of climate-related disclosure rules for the most prominent listed commercial companies in December 2020 that are aligned with the recommendations of the global Taskforce on Climate-related Financial Disclosures. Responses to the consultations may be submitted until September 10, 2021. The FCA is aiming to publish its final rules and policy statements for these proposals by the end of the year.

    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 Government Proposes Power to Block Listings on National Security Grounds
    06/07/2021

    Following the commitment by the government in its 2019 Economic Crime Plan to investigate the links between listings and national security, HM Treasury has launched a consultation in which it proposes to introduce a power for it to block listings on national security grounds. The government has assessed that there is a "remote but possible risk" that a company listing in the U.K. could harm the nation's security and that this risk needs to be addressed. Responses to the consultation may be submitted until August 27, 2021.

    It is proposed that the scope of this power will include all initial equity listings and admissions on U.K. public markets. The power would not apply to secondary trading and would not include listed debt, other than certain convertible securities. Therefore, the power could be applied to: (i) shares, securities representing equity such as Global Depositary Receipts and convertible securities; (ii) regulated markets and MTFs, including the SME Growth Markets, that allow primary equity listings; and (iii) initial public offerings and non-traditional listings structures, such as introductions and Special Purpose Acquisition Companies (SPACs). The power would also not apply to delisting already listed companies.

    Read more.
    TOPIC : Securities
  • EU Technical Experts Make Recommendations on Improving Access for SMEs to Capital Markets
    05/25/2021

    The EU's Technical Expert Stakeholder Group on SMEs has published a report, including a set of recommendations to improve the capacity of SMEs to access the capital markets. It remains to be seen how much of these the Commission and other legislative bodies will take on board. Some of the recommendations echo those of the report by Lord Hill on the U.K. Listings Review, the focus of which was how to amend the U.K.'s listing regime to ensure the continued attractiveness of the U.K. as a capital markets hub (rather than focusing on SME's).

    Read more.
    TOPIC : Securities
  • 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.
  • UK Conduct Regulator Consults on Changes to Listing Rules for SPACs
    04/30/2021

    The U.K. Financial Conduct Authority has launched a consultation on proposed changes to its listing rules for special purpose acquisition companies. SPACs are companies set up for the purpose of raising money from investors to fund the acquisition of an operating business. They have attracted much attention over the last year as an alternative way for target companies to go public without going through the traditional initial public offering process.

    Read more.
    TOPIC : Securities
  • UK Government Announces Boost to UK FinTech and Financial Services
    04/19/2021

    The U.K. Government has announced plans to boost the U.K.'s fintech and financial services sectors. Chancellor of the Exchequer Rishi Sunak outlined the plans at U.K. FinTech Week, describing the government's vision for a greener and more technologically advanced financial services sector. The Government's announcement builds on the recommendations in the recent Kalifa Review of U.K. Fintech and Lord Hill's Review of the U.K. Listing Regime.

    Read more.
    TOPICS : FinTechSecurities
  • HM Treasury Statement on UK Listing Review
    04/19/2021

    Chancellor of the Exchequer Rishi Sunak has published a statement responding to Lord Hill's Review of the U.K. Listing Regime. Lord Hill's U.K. Listings Review was published in March 2021 and assessed how, following Brexit, the existing U.K. listing regime could be reformed to attract more companies, particularly technology and life sciences companies, to raise capital in London. The Review made 14 specific recommendations, including some requiring consultations by the U.K. Financial Conduct Authority and HM Treasury. 

    Read more.
    TOPIC : Securities
  • HM Treasury Launches Consultation on Regulation of Non-Transferable Debt Securities
    04/19/2021

    HM Treasury has launched a consultation on the regulation of non-transferable debt securities, colloquially known as "mini-bonds". The consultation was prompted by the collapse of London Capital & Finance PLC, an FCA- regulated issuer of bonds which stated on their face that they were non-transferable, issued primarily to retail investors, which fell into administration in January 2019. An investigation into regulatory failings in the supervision of LC&F was subsequently launched and chaired by Dame Elizabeth Gloster, culminating in a report that was highly critical of the U.K. Financial Conduct Authority's supervision of LC&F and included policy recommendations for HM Treasury. HM Treasury is now consulting on possible changes to the regulatory regime governing NTDS. Responses to the consultation should be submitted by July 12, 2021.

    Read more.
  • Financial Stability Board Publishes FAQs on Securities Financing Data Collection and Aggregation
    04/12/2021
    The Financial Stability Board has published a series of FAQs to assist FSB member jurisdictions in their implementation of standards for the handling of securities transactions financing data.

    The FSB introduced its SFT Data Standards in 2015 for the collection and aggregation of data on SFTs. The Standards were intended to improve understanding on trends and developments in the SFT markets given the risks they pose to global financial stability. The FAQs offer technical guidance for FSB members on the reporting and collection of information regarding SFTs.

    View the FSB's FAQs.
    TOPIC : Securities
  • UK Listings Review Recommends Major Overhaul of the UK’s Listing and Capital Markets Rules
    03/03/2021

    The U.K. Government has published the report by Lord Hill on the U.K. Listings Review.  The report assesses how, following Brexit, the existing U.K. listing regime could be reformed to attract more companies, particularly innovative technology and life sciences companies, to raise capital in London.  In the context of Brexit, the U.K. is considering the challenges to London's position as a global capital markets hub. The Review makes 14 specific recommendations to address these challenges, including changes to the Financial Conduct Authority's premium and standard segment listing rules on which the FCA will be asked to consult and more general changes in relation to prospectuses on which HM Treasury will need to consult. In addition, the Review identifies longer- term areas for reform, such as secondary capital raises and the greater empowerment of retail investors. 

    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.

    Read more.
  • 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.
  • Final Draft EU Technical Standards Amending Requirements for PRIIPs Key Information Document
    02/03/2021

    The European Supervisory Authorities have published a final report and final draft amending Regulatory Technical Standards on amendments to the RTS on the presentation, content, review and revision of a standardized "key information document" and the conditions for fulfilling the requirement to provide a KID (Commission Delegated Regulation (EU) 2017/653). 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.

    The ESAs were asked to review the RTS and present proposals for amending the RTS. In July 2020, the ESAs wrote to the European Commission to explain that agreement among them had not been reached on all of the proposed changes and that, therefore, the final draft amending RTS could not be submitted to the Commission. The Board of the European Insurance and Occupational Pensions Authority did not approve with qualified majority all of the proposals.

    Read more.
    TOPIC : Securities
  • 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.
  • EU Delays Securities Settlement Discipline Regime to February 2022
    01/27/2021

    EU Regulatory Technical Standards postponing the implementation deadline of the settlement discipline regime under the Central Securities Depositories Regulation have been published in the Official Journal of the European Union. The RTS delay the application date of the settlement discipline rules from February 1, 2021 to February 1, 2022, by amending the existing RTS (Commission Delegated Regulation (EU) 2018/1229). The settlement regime was originally due to apply from September 13, 2020. However, that date was changed to February 1, 2021, amid calls from industry associations and other stakeholders to delay the application date so that systems, procedures and measures could be put in place. The latest delay arises from the impact of the COVID-19 pandemic on the financial services industry. The RTS cover measures for preventing settlement fails through automated matching, a hold and release mechanism and partial settlement. The RTS also provide measures for monitoring and addressing settlement fails, such as a mechanism for cash penalties and a buy-in process.

    View the amending Delegated Regulation.
    TOPICS : COVID-19Securities
  • European Securities and Markets Authority Publishes Guidelines on Reporting Securities Financing Transactions
    12/21/2020

    The European Securities and Markets Authority has published guidelines on the reporting obligations under the EU Securities Financing Transactions Regulation. SFTs involve the use of securities to borrow cash or other higher investment-grade securities, or vice versa. Such transactions can include repurchase transactions, securities lending and sell/buy backs. The reporting obligation applies from January 11, 2021 for Non-Financial Counterparties. It has applied since July 13, 2020 for banks and investment firms (delayed from April 13, 2020 due to COVID-19), CCPs and central securities depositories and from October 12, 2020 for other Financial Counterparties.

    The guidelines will apply to counterparties to SFTs, trade repositories and relevant EU financial regulators from the day after publication or the day from which the relevant obligation applies.

    The guidelines cover:
    • the reporting start date when it falls on a non-working day;
    • the number of reportable SFTs;
    • the population of reporting fields for different types of SFTs, for margin data and for reuse, reinvestment and funding sources data;
    • the approach used to link SFT collateral with SFT loans;
    • the generation of feedback by trade repositories and its subsequent management by counterparties, in the case of rejection of reported data and reconciliation breaks; and
    • the provision of access to data to authorities by trade repositories.

    View the guidelines on reporting under SFTR.

    View details of the delays to SFTR reporting due to COVID-19.
    TOPIC : Securities
  • European Securities and Markets Authority Renews Notification Requirement for Net Short Positions at or Exceeding 0.1%
    12/17/2020

    The European Securities and Markets Authority has renewed its decision requiring holders of net short positions in shares traded on an EU-regulated market to notify national regulators if the position reaches or exceeds 0.1% of issued share capital. ESMA originally introduced the requirement on March 16, 2020 for a period of three months and has extended it twice since then. This latest extension will apply the requirements from December 19, 2020 until March 19, 2021. The temporary transparency obligations are a response to perceived threats to market integrity arising from the COVID-19 pandemic. They apply to any natural or legal person, irrespective of their country of residence, but do not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making activities, or stabilization activities.

    The European Free Trade Association's Surveillance Authority published a decision on the same day renewing its decision imposing the same transparency obligations for shares admitted to trading on an EEA regulated market. The renewed requirements also apply from December 19, 2020 until March 19, 2021.

    View ESMA's decision.

    View the EFTA decision.
    TOPICS : COVID-19Securities
  • UK Central Securities Depository Granted Temporary Recognition by the European Securities and Markets Authority
    12/11/2020

    The European Securities and Markets Authority has announced that Euroclear UK & Ireland Limited, a central securities depository established in the U.K., will be granted recognition under the EU CSD Regulation. The recognition will allow Euroclear UK & Ireland Limited to continue to provide certain services to EU customers after the end of the Brexit transitional period until at least June 30, 2021. ESMA's recognition decision follows the November 2020 temporary equivalence decision granted to U.K. CSDs.

    View ESMA's announcement.

    View details of the EU's equivalence decision for U.K. CSDs.
  • UK Conduct Regulator Makes Permanent Ban on Marketing Speculative Illiquid Securities to Retail Investors
    12/10/2020

    The U.K. Financial Conduct Authority has made permanent its temporary ban on the marketing of speculative illiquid securities to retail investors. A temporary product intervention measure was introduced on January 1, 2020 for a period of one year while the FCA consulted on making the ban permanent. The measure restricted the mass-marketing of non-transferable bonds (sometimes colloquially termed "mini-bonds") and preference shares to retail investors and required improved disclosure to be made to high-net-worth and sophisticated investors.

    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.
  • EU Grants Temporary Equivalence for UK Central Securities Depositories
    11/26/2020

    An EU equivalence decision has been published in the Official Journal of the European Union granting temporary equivalence for U.K. central securities depositories from the end of the Brexit transitional period (on December 31, 2020). The equivalence decision applies to CSDs already established in the U.K. and will apply from January 1, 2021 until June 30, 2021.

    View the EU equivalence decision for U.K. CSDs.
  • 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.
  • Final Draft EU Technical Standards for SME Growth Markets Under Market Abuse Regulation
    11/05/2020

    The European Securities and Markets Authority has published its final report and final draft Technical Standards on the amendments to the Market Abuse Regulation for the promotion of SME Growth Markets. SME Growth Markets were a new sub-category of multilateral trading facility introduced by the revised Markets in Financial Instruments package in January 2018 to facilitate access to capital for SMEs. ESMA is mandated to prepare: (i) Regulatory Technical Standards on liquidity contracts; and (ii) Implementing Technical Standards on insider lists and to submit those to the European Commission by September 1, 2020. Due to the impact of the COVID-19 pandemic, the delivery of the final draft RTS and ITS have been delayed and ESMA acknowledges that it is unlikely that they will be adopted in time for the application of the amendments to MAR, which is January 1, 2021. The final report outlines ESMA's proposals and provides the final draft RTS and ITS that ESMA has submitted to the European Commission for consideration.

    Read more.
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