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The following posts provide a snapshot of the principal U.S., European and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

  • European Securities and Markets Authority Renews Notification Requirement for Net Short Positions at or Exceeding 0.1%
    09/18/2020

    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, extending it for a further three months on June 17, 2020. ESMA's latest decision means the measure will now apply from September 18, 2020 until December 18, 2020.

    Read more.
    TOPICS: COVID-19Securities
  • Financial Stability Board Further Delays Implementation Deadlines for Minimum Haircut Standards for Uncleared SFTs
    09/07/2020

    The Financial Stability Board has announced delays to the implementation of minimum haircut standards for non-centrally cleared securities financing transactions. 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. In 2015, the FSB published its regulatory framework and recommendations for haircuts on uncleared SFTs, which included timelines for the implementation of the recommendations by FSB member jurisdictions. The deadline for implementation was extended in July 2019 by the FSB because of the delay to implementation of the Basel III framework, including the minimum haircut standards on bank-to-non-bank SFTs, which was postponed to January 2022. In March 2020, a further delay to the implementation of the Basel framework to 2023 was announced, with the objective of relieving the operational burden on banks impacted by the coronavirus pandemic. The FSB has decided to delay its framework again because it is expected to be implemented by many jurisdictions through the Basel III framework.

    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 Technical Standards Supplementing the Securitization Regulation
    09/03/2020

    Several EU Technical Standards supplementing the EU Securitization Regulation have been published in the Official Journal of the European Union. The Securitization Regulation has applied directly across the EU since January 1, 2019. It 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 amendments to the EU Capital Requirements Regulation set out the regulatory treatment of exposures to securitizations that are deemed to be STS securitizations.

    Read more.
  • EU Draft Technical Standards Published for Further Delaying Securities Settlement Discipline Rules to 2022
    08/28/2020

    The European Securities and Markets Authority has published a final report and final draft Regulatory Technical Standards to further postpone the securities settlement discipline rules under the Central Securities Depositories Regulation to February 2022. ESMA announced on July 28, 2020 that it was preparing the draft RTS in response to a request from the European Commission to consider whether a further delay was needed due to the impact of COVID-19. The EU has already postponed the application date of the settlement discipline rules from September 13, 2020 to February 1, 2021 due to industry feedback that more time was needed to put in place the operational requirements for implementation of the rules. The draft RTS published today by ESMA would further delay the application date by a year from February 1, 2021 to February 1, 2022.

    View the final report and final draft RTS.

    View details of the amending RTS delaying the rules to February 2021.
    TOPICS: COVID-19Securities
  • EU Delays Securities Settlement Discipline Rules to 2021
    08/24/2020
     

    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 September 13, 2020 to February 1, 2021, by amending the existing RTS (Commission Delegated Regulation (EU) 2018/1229). 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.

    Read more.
    TOPIC: Securities
  • EU Considering Further Delaying Securities Settlement Discipline Rules to 2022
    08/24/2020

    The European Securities and Markets Authority has announced that it is preparing new Regulatory Technical Standards to further postpone the securities settlement discipline rules under the Central Securities Depositories Regulation. The move follows a request from the European Commission for ESMA to consider whether a further delay is needed in light of the impact of COVID-19. The Commission has adopted the draft RTS prepared by ESMA that will delay the application date of the settlement discipline rules from September 13, 2020 to February 1, 2021. Those RTS are now subject to scrutiny by the European Parliament and Council of the European Union and will only come into force once published in the Official Journal of the European Union. ESMA's announcement relates to a proposal for an additional delay until February 2022.

    Read more.
    TOPICS: COVID-19Securities
  • International Organization of Securities Commissions Reports on Liquidity Provision in the Equity Secondary Markets
    08/11/2020

    The International Organization of Securities Commissions has published a report on liquidity provision in the secondary markets for equity securities. The report sets out common themes for regulators to consider as the main elements of market making programs that promote liquidity provision enhance investor confidence and facilitate fair and efficient markets. These key elements are: (i) registration of market makers; (ii) obligations imposed on market makers; (iii) balancing the obligations and benefits of the programs; (iv) monitoring program compliance; and (v) public disclosure.

    View the report.
    TOPIC: Securities
  • 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. 

    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.
  • 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.

    Read more.
  • 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 Systemic Risk Board Announces Further Actions to Combat Impact of COVID-19
    06/08/2020

    The European Systemic Risk Board has announced a series of further actions designed to combat the impact of COVID-19 on European financial markets. The actions relate to the five priority areas already identified by the ESRB as requiring particular focus in the context of the COVID-19 pandemic, as follows:
    • Implications for the financial system of guarantee schemes and other fiscal measures to protect the economy: the ESRB has published a Recommendation introducing minimum requirements for national monitoring of the financial stability implications of the various debt moratoria and guarantee schemes introduced by Member States to support economies through COVID-19 (Recommendation A); national regulators are also advised to regularly report information on these schemes to the ESRB in accordance with reporting templates to be published by the ESRB by June 30, 2020 (Recommendation B); national regulators implicated by the Recommendation should communicate the actions they have taken, or intend to take, in response to the Recommendation A by July 31, 2020 and Recommendation B by December 31, 2020;
    Read more.
  • EU Extends Period for Lower Short Sale Disclosures
    06/03/2020

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

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

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

    Read more.
    TOPICS: COVID-19Securities
  • EU Call for Transparency in Financial Reports of EU-Listed Issuers
    05/20/2020

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

    View ESMA's statement.
    TOPICS: COVID-19Securities
  • European Systemic Risk Board Actions on Five COVID-19 Priority Areas
    05/14/2020

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

    Read more.
  • EU Consultation on STS Framework for Synthetic Securitization
    05/06/2020

    The European Banking Authority has published a report on the feasibility of developing a framework for simple, transparent and standardized synthetic securitization that is limited to balance-sheet securitization under the EU Securitization Regulation.

    The EBA is recommending:
    • The establishment of a cross-sectoral framework for STS synthetic securitization that is limited to balance-sheet securitization;
    • To be eligible for 'STS' status, a synthetic securitization must comply with the proposed STS criteria, including the criteria adapted appropriately for synthetic securitization;
    • The European Commission should consider the potential for a differentiated capital treatment for STS balance-sheet synthetic securitization; and
    • Any proposal for STS synthetic securitization should include a mandate to the EBA to monitor the functioning of the STS synthetic market.

    The European Commission will consider the report and recommendations in preparing its own report and, if appropriate, legislative proposal.

    View the EBA's report on a STS framework for synthetic securitization.
  • EU Consultation on SME Growth Markets
    05/06/2020

    The European Securities and Markets Authority has launched a consultation on the functioning of the small and medium-sized Growth Markets regime under the Markets in Financial Instruments Directive II and on draft technical standards for the promotion of the use of SME Growth Markets to be developed under the Market Abuse Regulation. SME Growth Markets were a new sub-category of multilateral trading facility introduced by MiFID II in January 2018 to facilitate access to capital for SMEs. The consultation closes on July 15, 2020.

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

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

    View ESMA's statement.

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

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

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

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

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

    Read more.
    TOPICS: COVID-19Securities
  • International Organization of Securities Commissions Publishes Report on Global Stablecoins
    03/23/2020

    The International Organization of Securities Commissions has published a report analyzing the regulatory issues arising from the use of global stablecoins and setting out how the existing IOSCO principles would apply to a global stablecoin, depending on its structure. IOSCO states that global stablecoins, depending on how they are set up, share features with regulated securities and other regulated financial instruments and services. Using a hypothetical global stablecoin case, the report analyzes how the IOSCO Principles and Standards would apply and also considers some of the broader implications. The report also includes an analysis, jointly conducted by IOSCO and the Committee on Payment and Market Infrastructures, of the applicability of the CPMI-IOSCO Principles for Financial Market Infrastructures. The conclusion is that the PFMI will apply to global stablecoin arrangements involving the performance of systemically important payment system functions or other FMI functions.

    View IOSCO's report on global stablecoin initiatives.
  • COVID-19: UK Financial Conduct Authority Confirms No Short Selling Ban (Yet)
    03/23/2020

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

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

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

    Read more.
  • EU Lowers Short Sale Disclosure Threshold
    03/16/2020

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

    Read more.
    TOPICS: COVID-19Securities
  • UK Regulator Consults on Enhancing Climate-Related Disclosures by Certain Issuers
    03/06/2020

    The U.K. Financial Conduct Authority has published a consultation paper on proposals to enhance climate-related disclosures by listed issuers and to clarify the existing disclosure obligations of issuers in relation to climate, environmental, social and governance matters. The FCA proposals would implement the disclosure recommendations of the Financial Stability Board's Taskforce on Climate-related Financial Disclosures. Responses to the consultation may be submitted until October 1, 2020. 

    Read more.
  • Bank of England Announces LIBOR Initiatives and Publishes Discussion Paper on Risk-Free Rates Transition
    02/26/2020

    Andrew Hauser, the Executive Directive of Markets at the Bank of England, today announced the launch of two significant initiatives to boost the U.K.’s transition away from sterling LIBOR. Firstly, the BoE intends to begin publishing a compounded Sterling Overnight Index Average index from July 2020, enabling market participants to construct compounded SONIA rates which can be used as a replacement reference rate for term LIBOR-linked instruments. Secondly, from October 2020, the BoE will progressively increase the haircuts applied to LIBOR-linked collateral placed with the BoE as security against central bank loans, with a final haircut of 100% by the end of 2021.

    Read more.
  • EU High-Level Forum Sets Out Vision for European Capital Markets
    02/20/2020

    The European Commission’s High-Level Forum on the Capital Markets Union has published an interim report setting out its vision for the future of European capital markets. The CMU is an EU initiative which aims to enhance integration of EU capital markets, further safeguard financial stability, strengthen the international role of the euro and diversify sources of finance for small- and medium-sized enterprises. The High-Level Forum was established in November 2019 and consists of experienced industry executives and international experts who will work together to propose policy recommendations designed to contribute to the CMU.

    Read more.
    TOPIC: Securities
  • International Organization of Securities Commissions Reports on Risks and Regulatory Considerations for Crypto-Asset Trading Platforms
    02/12/2020

    Following its consultation last year, the International Organization of Securities Commissions has published a report on the key issues and risks related to trading of crypto-assets on crypto-asset trading platforms (referred to as CTPs). The report aims to assist IOSCO member jurisdictions to assess the issues and risks relating to CTPs and sets out key considerations to be taken into account, including related toolkits for regulators. The considerations are: (i) access to CTPs; (ii) safeguarding assets; (iii) conflicts of interest; (iv) operations of CTPs; (v) market integrity; (vi) price discovery; and (vii) technology. IOSCO states that where a regulator has determined that a crypto-asset is a security, the provisions on securities trading and regulation apply.

    Read more.
    TOPICS: FinTechSecurities
  • European Commission Confirms Scope of Securities Financing Transactions Regulation for Non-EU Funds
    02/10/2020

    In a letter published by the International Securities Lending Association, the European Commission confirms that the reporting obligations of the EU Securities Financing Transactions Regulation will not apply to non-EU Alternative Investment Funds, even if the manager is an EU AIFM, except for SFTs concluded in the course of the operations of the non-EU AIF’s EU branch.

    View the letter.
    TOPICS: FundsSecurities
  • Amended EU Guidelines for National Regulators on Enforcing Financial Information Publication by EU Issuers
    02/04/2020

    The European Securities and Markets Authority has published amended Guidance for national regulators on the enforcement of financial information that issuers listed on regulated markets are required to publish under the EU Transparency Directive. The amended Guidelines will apply from January 1, 2022. ESMA is making the amendments following the peer review exercise it conducted in 2017. The amendments focus on the methods that regulators use to select issuers for financial information examination and the procedures applied during such examinations.

    View the amended Guidelines.
    TOPIC: Securities
  • EU Moves to Delay Securities Settlement Discipline Rules to 2021
    02/04/2020

    The European Securities and Markets Authority has published draft amending Regulatory Technical Standards to delay the implementation of the settlement discipline requirements under the EU's Central Securities Depositories Regulation. The draft RTS would postpone the application date of the settlement discipline rules from September 13, 2020 to February 1, 2021, by amending the existing RTS (Commission Delegated Regulation (EU) 2018/1229). 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. ESMA has acted amid calls from industry associations and other stakeholders to delay the application date so that systems, procedures and measures can be put in place properly.

    View the draft RTS.
    TOPIC: Securities
  • European Securities and Markets Authority Consults on Pre-Trade Transparency Regime
    02/03/2020

    The European Securities and Markets Authority has launched a consultation to collect the views of market participants on the pre-trade transparency regime applicable to systematic internalizers for “non-equity instruments” (which include bonds, structured-finance products, emission allowances and derivatives) under the Markets in Financial Instruments Regulation. A consultation on the transparency regime for equity and equity-like instruments has been launched separately.

    Read more.
  • EU Debate on Usefulness of Equivalence Regime Under the Prospectus Regulation
    01/31/2020

    The European Securities and Markets Authority has published a letter it addressed to the European Commission about the technical advice that the Commission requested from ESMA on the general equivalence criteria to guide future equivalence assessments for prospectuses prepared under the laws of third countries. The Prospectus Regulation allows national regulators of EU member states to approve a prospectus for an offer of securities to the EU public or for admission to trading on an EU exchange, prepared in accordance with the laws of a third country, provided the disclosure laws of the third country are equivalent to those of the Prospectus Regulation. The Commission is empowered to adopt legislation setting out general equivalence criteria and may also adopt a decision determining that the laws of a specific third country are equivalent.

    Read more.
    TOPIC: Securities
  • Bank for International Settlement Says Buy-Side Firms Need to Adopt Global FX Code
    01/30/2020

    The Chair of the Markets Committee of the Bank for International Settlements has written to the Chair of the Global Foreign Exchange Committee providing a brief assessment of the effectiveness of the FX Global Code. The FX Global Code was first published by the GFXC in May 2017. It superseded and substantively updated existing guidance for participants in FX markets previously provided by the Non-Investment Products (NIPs) Code. The Code comprises a set of global principles of good practice for the FX market, covering a broad range of areas, including ethics, governance, execution, information-sharing, risk management, compliance, trade confirmation and settlement. The Global FX Committee committed to reviewing the code every three years.

    In the letter, the BIS Markets Committee sets out its assessment of and recommendations for improving the effectiveness of the FX Global Code. In particular, the Committee recommends that additional action is taken by the Global FX Committee to ensure that more of the large buy-side firms sign up to the Code.

    View the letter.
  • International Organization of Securities Commissions Priorities for 2020
    01/30/2020

    The International Organization of Securities Commissions has published its annual work program, setting out its priorities for 2020. IOSCO will continue to focus on the five areas identified by its Board in 2019 as well as one new issue. The areas of focus are:
    • Crypto-assets: following its consultation last year, in February 2020, IOSCO will publish a final report on issues, risks and regulatory considerations relating to crypto-asset trading platforms. IOSCO will also publish the outcome of its review of the regulatory risks relating to investment funds exposures to crypto-assets. Finally, a report will be issued in early 2020 on issues relating to Global Stablecoins.
    Read more.
  • Proposed EU Guidelines for Securitization Repositories Assessing Data Completeness and Consistency
    01/17/2020

    The European Securities and Markets Authority has launched a consultation on proposed guidelines on securitization repository data completeness and consistency thresholds. The proposed guidelines would apply to EU securitization repositories that are registered with and supervised by ESMA. The consultation closes on March 16, 2020.

    Read more.
  • UK Regulators Push For More Action on LIBOR Transition
    01/16/2020

    The Bank of England, U.K. Prudential Regulation Authority, U.K. Financial Conduct Authority and the Working Group on Sterling Risk-Free Reference Rates have published a set of documents outlining priorities and milestones for 2020 on LIBOR transition.

    Read more.
  • New EU Regulation Enhances European Supervisory Authorities' Powers
    12/27/2019

    An EU Regulation has been published amending the European Supervisory Authorities' powers under various pieces of EU legislation. The Regulation grants ESMA additional powers to monitor market data and authorize benchmark administrators under the Markets in Financial Instruments Regulation and the Benchmarks Regulation, respectively. It also amends the legislation founding the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, granting them additional powers to facilitate their supervisory duties. The Regulation will enter into force on December 30, 2019. The provisions regarding ESMA's enhanced supervisory powers over market data and benchmarks will apply from January 1, 2022. All other provisions regarding the European Supervisory Authorities' enhanced powers will apply from January 1, 2020.

    Read more.
  • Consultation on Credit Adjustment Spread Methodologies for Fallbacks in Cash Products Referencing GBP LIBOR
    12/19/2019

    The Working Group on Sterling Risk-Free Reference Rates has opened a consultation on credit adjustment spread methodologies for fallbacks in cash products referencing GBP LIBOR. The consultation focuses on cash products, including, but not limited to, syndicated loans, floating rate notes, retail loans, bilateral corporate loans and securitizations.  It only covers GBP LIBOR and credit adjustment spreads to be applied to a SONIA-derived rate. Responses to the consultation can be submitted until February 6, 2020.

    Read more.
  • Financial Stability Board Assesses Financial Stability Implications of Expanding Leveraged Loans and Collateralized Loan Obligations Markets
    12/19/2019

    The Financial Stability Board has published a report on the vulnerabilities associated with leveraged loans and collateralized loan obligations. In the report, the FSB assesses how the leveraged loan and CLO markets have developed and analyzes the potential implications for global financial stability.

    Noting that there are data gaps, the FSB makes the following conclusions:
    • there are indications that weaknesses in the leveraged loan and CLO markets have increased since the 2008-09 global financial crisis;
    • banks have the largest direct exposures to leveraged loans and CLOs. These exposures are concentrated among a limited number of large global banks and have a significant cross-border dimension; and
    • non-bank investors, such as investment funds, insurance companies, pension funds, broker-dealers and holding companies, also have exposures to leveraged loans and CLOs.

    The FSB intends to consider whether there is scope to close data gaps, but will continue to analyze the financial stability risks and will examine the regulatory and supervisory implications related to leveraged loans and CLOs.

    View the report.
    TOPIC: Securities
  • International Swaps and Derivatives Association Consults on Fallbacks Based on Alternative Risk-Free Rates For Derivatives Referencing EUR Libor and EURIBOR
    12/18/2019

    The International Swaps and Derivatives Association has launched a consultation in which it proposes to amend its standard documentation to implement fallbacks based on alternative risk-free rates for certain key Interbank Offered Rates - EUR LIBOR and EURIBOR. ISDA states that the back-ups will apply if the relevant IBOR is permanently discontinued, based on defined triggers. Responses to the consultation should be submitted to ISDA by January 21, 2020.
    Read more.
  • UK Prudential Regulatory Authority Responds on Prudential Impediments for Banks Arising from the LIBOR Transition
    12/18/2019

    The Prudential Regulation Authority has published a letter addressed to the Chair of the Working Group on Sterling Risk-Free Reference Rates. The letter responds to the Working Group's letter in October 2019 requesting regulatory forbearance or clarification from regulators on the impact that the LIBOR transition is likely to have on the prudential requirements for banks. The main issues raised by the Working Group include: (i) the potential for certain capital instruments to no longer qualify as regulatory capital; (ii) the potential for securitizations and MREL-eligible instruments to be considered as "new contracts" as a result of changes to contractual terms, leading to the need to insert bail-in or other bank recovery contractual terms; and (iii) that many banks will need to obtain regulatory approvals for alterations to the models used to determine their regulatory capital arising from their exposures and risks.

    Read more.
  • Financial Stability Board Calls for Sustained Efforts to Migrate From LIBOR
    12/18/2019

    The Financial Stability Board has published a progress report on reforms to major interest rate benchmarks. The report provides the FSB's annual update on progress taken by the official sector and market participants to move from interbank offered rates to overnight risk-free rates by the end of 2021 in line with the FSB's 2014 recommendations. The FSB highlights that the continued reliance by global financial markets on LIBOR poses significant financial stability risks and urges all participants to continue with their efforts to transition to the alternative risk-free rates. The FSB also warns regulated firms to expect increased examination from regulators of their efforts to transition as the end of 2021 approaches.

    View the report.
  • EU Regulation and Directive on Covered Bonds Published
    12/18/2019

    A new Regulation and Directive amending certain provisions of the Capital Requirements Regulation on covered bonds and introducing standards on the issuance of covered bonds and covered bond public supervision has been published in the Official Journal of the European Union. The Regulation and Directive will both enter into force on January 7, 2020. The Regulation will apply directly in all Member States from July 8, 2022, while Member States must publish national legislation implementing the Directive by July 8, 2021 and must apply that legislation from July 8, 2022.

    Read more.
    TOPIC: Securities
  • Financial Stability Board Publishes 2020 Work Program
    12/17/2019

    The Financial Stability Board has published its work program for 2020. The FSB confirms that it will continue to monitor developments to identify and manage new and emerging risks, work to finalize the outstanding components of the post-crisis reforms and assess the implementation of reforms as well as their effects. Key areas of focus will be:
    • LIBOR transition: the FSB will monitor implementation of the benchmark reforms and report on outstanding issues.
    • Global stablecoins: the FSB will launch a consultation on global stablecoins in April 2020.
    • Global payment systems: the FSB will work with other international bodies to develop and deliver a roadmap for using digital innovations to improve global cross-border payments.
    • FinTech: the FSB will report on the perspective of emerging market and developing economies.

    View the FSB work program for 2020.
  • UK Financial Policy Committee Highlights Risks of Open-Ended Funds and Global Stablecoins
    12/16/2019

    The Financial Policy Committee of the Bank of England has published its latest financial stability report. The report sets out the FPC's view of the resilience of the U.K. financial system and the main risks to the U.K.'s financial stability as well as the work being carried out to address those risks. The FPC states that the 2019 annual cyclical scenario stress test indicates that the U.K. banking system would be resilient to deep simultaneous U.K. and global recessions. Furthermore, the U.K. financial system is resilient to and prepared for any disruptions that may arise from a disorderly Brexit.

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