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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 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
  • 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.

    Read more.
  • International Organization of Securities Commissions Consults on Combating Conduct Risks in Debt Capital Raising
    12/16/2019

    The International Organization of Securities Commissions has launched a consultation on methods of addressing potential conflicts of interest and other conduct risks that arise from market intermediaries’ participation in the debt capital raising process. Responses should be submitted by February 16, 2020.

    Read more.
  • European Securities and Markets Authority Publishes Information on Pending Applications for Benchmark Administrators
    12/13/2019

    The European Securities and Markets Authority has published a list of the entities that are awaiting their national regulator’s approval for authorization and registration as EU benchmark administrators. Under the EU Benchmark Regulation, existing EU and third country benchmark administrators are entitled to apply for authorization to continue as administrators.

    Read more.
  • Committee on Payments and Market Infrastructures Publishes Report on Wholesale Digital Tokens
    12/12/2019

    The Committee on Payments and Market Infrastructures has published a report on wholesale digital tokens. The report focuses on how digital tokens might be used to effect settlement in wholesale transactions, replacing existing systems where such transactions are settled by updating balances in account records on a centralized register. The CPMI confirms that any wholesale digital token arrangement would need to comply with the applicable regulatory requirements, including, if the arrangement is systemically important, the Principles for Financial Market Infrastructure.

    Read more.
  • New EU Regulation on Promotion of Small- and Medium-Sized Enterprise Growth Markets
    12/11/2019

    A new Regulation amending the revised Markets in Financial Instruments Directive, Market Abuse Regulation and Prospectus Regulation has been published in the Official Journal of the European Union, introducing changes to support small- and medium-sized enterprise growth markets as trading venues. 

    Read more.
  • European Securities and Markets Authority Publishes Amendments to Eligible Collateral Standards Under Capital Requirements Regulation
    12/11/2019

    The European Securities and Markets Authority has published draft Implementing Technical Standards amending the existing ITS that establish the standards for the main indices and recognized exchanges that can hold securities eligible as collateral under the revised Capital Requirements Regulation (or “CRR II”).

    Read more.
  • UK Conduct Regulator Publishes Consultation on Proposed Miscellaneous Changes to Rules
    12/06/2019

    The U.K. Financial Conduct Authority has published a consultation on its proposed changes to various aspects of the FCA Handbook.

    Read more.
  • European Banking Authority Publishes Action Plan on Sustainable Finance
    12/06/2019

    The European Banking Authority has published an action plan on sustainable finance, setting out how it intends to deliver on its aims to help combat environmental, social and governance risks and providing clarity on the direction of its policy in this area. The EBA has been mandated to contribute to work on ESG risks under various pieces of EU legislation and will focus on environmental factors and climate change in its initial phase of work. The action plan also sets out the EBA’s projected timelines and milestones on sustainable finance.

    Read more.
  • International Swaps and Derivatives Association Seeks Clarity on Implications of Potential "Non-Representative" LIBOR Statement
    12/04/2019

    The International Swaps and Derivatives Association has published a letter in which it responds to the Financial Stability Board's November 15, 2019 letter on pre-cessation triggers. The co-Chairs of the FSB's Official Sector Steering Group requested ISDA to include a "pre-cessation trigger" alongside the cessation trigger in its standard language in derivatives contracts, via either definitions for new contracts or in a single protocol (without embedded optionality) for outstanding contracts. The pre-cessation trigger would cause a LIBOR-based contract to fall back to an alternative reference rate in the event that the U.K. Financial Conduct Authority, as the regulator of LIBOR, deemed that LIBOR was no longer representative.

    Read more.
  • UK FICC Market Standards Board Consults on Draft Statement of Good Practice for Sovereign and Supranational Fixed Income Markets Auctions
    12/02/2019

    The U.K. FICC Market Standards Board is consulting on its draft Statement of Good Practice for Participation in Sovereign and Supranational Auctions in Fixed Income Markets. The FMSB is a standards setting body operated by wholesale market participants that was established in 2015. It is mandated to issue Standards that improve conduct in the wholesale Fixed Income, Currencies and Commodities markets. FMSB Member Firms are expected to consider their practices in light of the Standards, but the Standards are not binding and non-compliance will not affect whether a firm is deemed to have met its regulatory obligations.

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

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

    Read more.
  • UK Conduct Regulator Publishes Feedback and Final Rules on Proxy Advisors Regulations
    11/25/2019

    The U.K. Financial Conduct Authority has published a Policy Statement incorporating its response to the feedback it received on its proposals for the implementation of the Proxy Advisors (Shareholders' Rights) Regulations 2019, together with the final rules. The final rules make amendments to the FCA's Decision Procedure and Penalties Manual and Enforcement Guide, reflecting the new Regulations that came into force on June 10, 2019.

    The Regulations implemented new obligations imposed upon proxy advisors by the revised EU Shareholder Rights Directive into the U.K. statutory regime. The FCA has the power to discipline and investigate proxy advisors under the Proxy Advisors Regulations and changes were therefore required to the FCA's rules to take account of these powers. The following new provisions have been included in the Decision Procedures and Penalties Manual:
    • the FCA will publish a statement about a proxy advisor who has breached a relevant requirement; it will impose a public censure in contested cases and allow decision makers to use executive powers to decide on settled cases;
    • the FCA will decide when to impose a financial penalty on a proxy advisor; and
    • the FCA will decide when to impose a restitution requirement.

    The FCA has also included a new section in its Enforcement Guide explaining how it will use its powers under the Regulations. The intended approach will broadly mirror that taken by the FCA in conducting investigations, sanctioning and using its regulatory powers under FSMA.

    View the FCA's Feedback and final rules.
  • UK Conduct Regulator Sets Out Conduct Expectations of Firms For LIBOR Transition
    11/19/2019

    The U.K. Financial Conduct Authority has published a statement on conduct risk during the LIBOR transition, which is due to be completed by the end of 2021. The statement is in the form of questions and answers and sets out the FCA's expectations of firms relating to governance and accountability, replacing LIBOR with alternative rates in existing contracts, offering new products with alternative rates, communicating with customers about the transition from LIBOR and best practice for firms investing on behalf of clients.

    View the FCA's statement.
  • Working Group on Euro Risk-Free Rates Makes Recommendations for €STR Fall-Back Arrangements
    11/12/2019

    The European Central Bank has published a report by the working group on euro risk-free rates on €STR fall-back arrangements. The EU Benchmark Regulation requires regulated entities to have put in place written plans on the steps that they would take should a benchmark used in their contracts be materially amended or ceases. The Working Group recommends that instead of selecting an alternative rate, regulated entities should take into account the ECB's regular review of €STR's methodology and the policies and procedures for the possible cessation of €STR, together with the use of contractual fallbacks.

    View the report.
  • European Commission Publishes EU Delegated Regulation Aligning KID Publication Requirements under PRIIPS Regulation
    11/08/2019

    A Commission Delegated Regulation amending secondary legislation supplementing the Packaged Retail and Insurance-Based Investment Products Regulation has been published in the Official Journal of the European Union. 

    Read more.
    TOPICS: FundsSecurities
  • European Commission Publishes Commission Delegated Regulation Amending Auctioning Allowances Rules
    11/08/2019

    A Commission Delegated Regulation amending the EU Auctioning Regulation has been published in the Official Journal of the European Union. The Delegated Regulation will apply directly in all EU Member States from November 28, 2019. The EU Auctioning Regulation provides for EU emission allowances to be auctioned and specifies key aspects of the auctions, including their design, timing and eligibility requirements. 

    Read more.
  • Working Group on Euro Risk-Free Rates Recommends Fallback Provisions Contracts Referencing EURIBOR
    11/06/2019

    The European Central Bank has published a report by the working group on euro risk-free rates providing high-level recommendations for fall-back provisions in contracts for cash products and derivatives transactions referencing EURIBOR. The recommendations are not legally binding and market participants can decide whether, and to the extent to which, they wish to adopt them. EURIBOR were identified as critical benchmarks for the purposes of the EU Benchmarks Regulation  and the methodology for calculating EURIBOR has been revised to be Benchmark Regulation-compliant, to be implemented by the end of 2019.

    Read more.
  • EU Recommendations on Financial Accounting Implications of Transition to €STR
    11/05/2019

    The European Central Bank has published a report by the working group on euro risk-free rates on the financial accounting implications of the transition from EONIA to €STR and the introduction of €STR-based fallbacks for EURIBOR. 

    Read more.
  • IOSCO Confirms That Stablecoins Are Potentially Within the Securities Regulatory Perimeter
    11/04/2019

    The International Organization of Securities Commissions has issued a statement confirming that it is possible, depending on their structure, for stablecoins to fall within the scope of securities market regulation. IOSCO has undertaken an in-depth study (not published) of stablecoins and has concluded that each proposed stablecoin, the manner in which it is intended to operate and the rights and obligations conferred on participants needs to be analyzed to assess the risks and benefits of the particular stablecoin. The statement is widely considered to be in response to Facebook's announcement about its proposed stablecoin, Libra. According to IOSCO, certain stablecoins may have features that are similar to securities and accordingly will be within the regulatory perimeter of some countries. IOSCO calls on entities that wish to launch stablecoins to engage with regulators so that any risks associated with the operation of the stablecoin might be mitigated.

    View IOSCO's statement.
    TOPICS: FinTechSecurities
  • UK Conduct Regulator Publishes Feedback on Regulatory Framework for Stewardship Discussion Paper
    10/24/2019

    The U.K. Financial Conduct Authority has published a feedback statement on the discussion paper, “Building a regulatory framework for effective stewardship” that it published in January 2019 together with the Financial Reporting Council. The discussion paper called for input on how best to encourage the capital markets community to engage more actively in “stewardship” of the assets in which they invest. 

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

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

    Read more.
  • Working Group on Sterling Risk-Free Reference Rates Asks Regulators to Act on Prudential Impediments to LIBOR Transition
    10/23/2019

    The Working Group on Sterling Risk-Free Reference Rates has written to the Prudential Regulation Authority raising issues in the banking prudential regulation regime that, in its view, will require changes and/or regulatory forbearance if a smooth transition from LIBOR to SONIA is to be achieved. Although the letter focuses on the U.K. regime, the issues are likely to be relevant globally.

    Read more.
  • G7 Working Group Reports on the Impact of Global Stablecoins
    10/18/2019

    The G7 working group on stablecoins has published a report investigating the impact of global stablecoins. The working group is comprised of senior officials from the G7 central banks, the International Monetary Fund, the Bank for International Settlements and the Financial Stability Board, and is chaired by Benoît Cœuré (Chair of the Committee on Payments and Market Infrastructures). 

    Read more.
  • Financial Stability Board to Assess Potential Risks of Stablecoins
    10/18/2019

    The Financial Stability Board has published a report on regulatory issues arising with respect to so-called stablecoins. The FSB defines a stablecoin as "a crypto-asset designed to maintain a stable value relative to another asset (typically a unit of currency or commodity) or a basket of assets" which may be "collateralised by fiat currency or commodities, or supported by algorithms".

    Read more.
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