EU Regulatory Update
Joint Committee of the European Supervisory Authorities Publishes 2018 Work Programme
On 15 November, the Joint Committee of the European Supervisory Authorities (“ESAs”) – the European Banking Authority (“EBA”), the European Securities and Markets Authority (“ESMA”), and the European Insurance and Occupational Pensions Authority (“EIOPA”) – published its 2018 Work Programme. Priorities for the ESAs include, among others: (i) enhancing consumer protection by reviewing the Packaged Retail and Insurance-Based Investment Products (“PRIIPs”) Regulation and working towards improving the “cross-border supervision of financial services”; (ii) assessing the potential risks and benefits of financial innovations for consumers; (iii) conducting risk assessments by producing a semi-annual report on risks and vulnerabilities; (iv) improving the regulation and supervision of financial conglomerates; and (v) developing draft regulatory technical standards (“RTSs”) for the Securitisation Regulation.
Implementation of G20/FSB Financial Reforms
On 8 November, the International Organization of Securities Commissions (“IOSCO”) published a report on the implementation of G20/Financial Stability Board (“FSB”) recommendations to strengthen securities markets. The report analyzes response data from the Implementation Monitoring Network’s (“IMN”) 2017 survey of FSB jurisdictions. The report covers recommendations related to: (i) hedge funds; (ii) structured products and securitisation; (iii) oversight of credit rating agencies (“CRAs”); (iv) measures to safeguard the integrity and efficiency of markets; and (v) commodity derivatives markets. In total, “11 changes in implementation were observed in 10 jurisdictions,” and “[i]mplementation [was] most advanced in relation to hedge funds, structured products and securitisation, and the oversight of CRAs, with most jurisdictions having implemented reforms since 2014.”
On 8 November, the FSB published a report on the implementation of the G20/FSB recommendations that summarized key findings of the 2017 Implementation Monitoring Network (“IMN”) survey. Recommendations assessed by the report include those relating to: (i) hedge funds; (ii) securitisation; (iii) enhancing supervision; (iv) building and implementing macroprudential frameworks and tools; (v) improving oversight of CRAs; (vi) enhancing and aligning accounting standards; (vii) enhancing risk management; (viii) strengthening deposit insurance; (ix) safeguarding the integrity and efficiency of financial markets; and (x) enhancing financial consumer protection. The FSB also published a chart illustrating implementation progress across FSB jurisdictions by recommendation.
IOSCO Publishes Update to its Peer Review of Implementation of Incentive Alignment Recommendations for Securitisation
On 3 November, IOSCO published a report updating its “peer review of implementation of incentive alignment recommendations for securitisation.” The report “identif[ies] progress by IOSCO members in FSB jurisdictions in implementing IOSCO recommendations on incentive alignment for securitisations,” using the findings of two IOSCO reviews conducted in 2016 and 2017. The main findings of the 2016 and 2017 reviews are “also included in the Second and Third Annual Reports on Implementation and Effects of the G20 Financial Regulatory Reforms, published on 31 August 2016 and 3 July 2017, respectively.”
European Commission Launches Consultation on Institutional Investors and Asset Managers' Duties Regarding Sustainability
On 13 November, the European Commission published a consultation document on the duties of institutional investors and asset managers' regarding sustainability. An interim report, published in July 2017 by a group appointed by the European Commission, recommended that the Commission “explicitly integrate material environmental, social and governance (“ESG”) factors and long term sustainability” into the fiduciary duties of institutional investors and asset managers. In line with the recommendation, “the Commission has decided to start work on an impact assessment to assess whether and how a clarification of the duties … could contribute to a more efficient allocation of capital, and to sustainable and inclusive growth.” The consultation period closes on 22 January 2018.
IOSCO Publishes Report on Good Practices for the Voluntary Termination of Collective Investment Schemes
On 23 November, IOSCO published a report on good practices for the voluntary termination of collective investment funds and other fund structures. The report contains fourteen good practices categorized by: (i) “disclosure at time of investment”; (ii) “decision to terminate”; (iii) “decision to merge”; (iv) activities “during the termination process”; and (v) issues relating to “specific types of investment funds.” As noted in the report, “the good practices do not override national or regional legal or regulatory requirements and/or insolvency regimes … [but] serve as useful guidance to the investment funds industry.”
On 6 November, the EOIPA published a consultation paper on “EIOPA’s second set of Advice to the European Commission on specific items in the Solvency II Delegated Regulation” (EU) 2015/35. According to the press release, “this consultation focuses on the remaining elements in the review of the [solvency capital requirements] standard formula not covered by the Advice submitted to the European Commission on 30 October 2017.” The consultation period closes on 5 January 2018. EIOPA intends to submit the second set of Advice to the European Commission by the end of February 2018.
Insurance Distribution Directive
On 9 November, the Council of the EU decided not to object to two Delegated Regulations supplementing the Insurance Distribution Directive (EU) 2016/97 (“IDD”):
- Commission Delegated Regulation (C(2017) 6218 final), dated 21 September 2017, regarding “product oversight and governance requirements for insurance undertakings and insurance distributors.”
- Commission Delegated Regulation (C(2017) 6229 final), dated 21 September 2017, regarding “information requirements and conduct of business rules applicable to the distribution of insurance-based investment products.”
The Delegated Regulations will enter into force on the twentieth day following their publication in the Official Journal and apply beginning 23 February 2018.
On 16 November, the European Parliament’s Committee on Economic and Monetary Affairs (“ECON”) published a letter addressed to the European Commission, urging the Commission to adopt a “legislative proposal to postpone the application date of the IDD to 1 October 2018.” As explained in the letter, the ECON argues that the proposal is necessary “to enhance legal certainty … and to allow for the necessary organisational and technical changes needed to comply with these provisions that are introduced by” Commission Delegated Regulation (C(2017) 6218 final) and Commission Delegated Regulation (C(2017) 6229 final), listed above.
EIOPA Publishes Report with Survey Result Analyzing Trends in the Investment Behavior of European Insurers
On 16 November, EIOPA published a report containing the results of a survey conducted in the first quarter of 2017 to “identify changes and trends in the investment behaviour of insurers over the last 5 years including the identification, where possible, of a potential ‘search for yield’ given the persisting low yield environment.” Key observations include: (i) “a trend towards lower credit rating quality fixed income securities”; (ii) “a trend towards more illiquid investments such as non-listed equity and loans excluding mortgages”; (iii) an overall increase in “the average maturity of the bond portfolio for the majority of the sample … in the past 5 years”; (iv) a “tendency … to invest into new asset classes”; (v) “a small decrease in the debt portfolio … against a small increase in ‘other investments’ between 2015 and 2016” while “[e]quity allocation … remained unchanged”; and (vi) only marginal “changes in all three main investment categories from 2011 to 2016” “when looking at the developments in the investment allocation on an aggregate level.”
International Association of Insurance Supervisors – Insurance Core Principles
On 8 November, the International Association of Insurance Supervisors (“IAIS”) published a number of draft revised Insurance Core Principles (“ICPs”). The draft revised ICPs were “released for information purposes only and subject to further changes before being presented for adoption by the general membership at the 2019 Annual General Meeting.” The draft revised ICPs published include: (i) draft revised introduction and assessment methodology; (ii) draft revised ICP 1, relating to the “objectives, powers, and responsibility of the supervisor”; (iii) draft revised ICP 2, relating to the operational independence and responsibilities of supervisors; (iv) draft revised ICP 3, relating to “information sharing and confidentiality requirements”; (v) draft revised ICP 9, relating to “supervisory review and reporting”; (vi) draft revised ICP 10, relating to “preventive measures, corrective measures, and sanctions” (the name of this ICP changed relative to the November version); (vii) draft revised ICP 12, relating to “exit from the market and resolution” (the name of this ICP also changed relative to the November version); and (viii) draft revised ICP 25, relating to “supervisory cooperation and coordination ... to facilitate supervision of insurers operating on a cross-border basis.”
On 8 November, the IAIS also published updated adopted ICPs, dated November 2017, on the ICP webpage. The updated document includes changes that have been made to: (i) ICP 13, related to “reinsurance and other forms of risk transfer”; (ii) ICP 18, related to “the conduct of insurance intermediaries”; and (iii) ICP 19, related to the “conduct of business” by insurers and intermediaries.
On 8 November, the IAIS launched a consultation on revisions to its ICPs and IAIS Common Framework for the Supervision of Internationally Active Insurance Groups (“ComFrame”) materials integrated into the ICPs. The consultation covers revisions to: (i) revised ICP 15, related to investment requirements for solvency purposes and additional ComFrame material integrated with ICP 15; (ii) revised ICP 16, related to “enterprise risk management (‘ERM’) for solvency purposes” and additional ComFrame material integrated with ICP 16; (iii) proposed definitions of ERM-related terms to be added to the IAIS glossary; and (iv) revised ICP 8, related to “risk management and internal controls and additional ComFrame material integrated with ICP 8. The consultation on ICP 8 “focuses on changes aimed at removing overlaps and duplications between ICP 8 and ICP 16,” but the “ComFrame material integrated with ICP 8 … is not open for additional consultation at this stage [as] it is still under review based on the comments received during [the March 2017] consultation.” New ComFrame material that has been integrated with ICP 8 since the March 2017 consultation is subject to public consultation. The consultation period for ICP 8 and additional ComFrame material integrated with ICP 8 closes on 15 January 2018. The consultation period for ICP 15 and 16, additional ComFrame material integrated with ICP 15 and 16, and the proposed definitions of ERM-related terms closes on 31 January 2018.
IAIS Publishes Approach to Implementation of International Capital Standards Version 2.0
On 2 November, the IAIS published its plan for the implementation of the International Capital Standard (“ICS”) Version 2.0. In its plan, the IAIS announced that the implementation of ICS Version 2.0 will be conducted in two phases: (i) a “monitoring period” that will last for 5 years, during which “ICS Version 2.0 will be used for confidential reporting to group-wide supervisors and discussion in supervisory colleges…[but] will not be used as a [prescribed capital requirement (‘PCR’)]”; and (ii) the “implementation of the ICS as a group-wide PCR.” Additionally, the implementation of ICS Version 2.0 will have “two equally important components”: (i) “mandatory confidential reporting by all [internationally active insurance groups (‘IAIGs’)] of a reference ICS which is based on market-adjusted valuation” (“MAV”); and (ii) “additional reporting, at the option of the group-wide supervisor, of ICS based on [generally accepted accounting principles (‘GAAP’)] Plus valuation and/or an internal model-based capital requirement calculation.” Furthermore, the IAIS noted that it will collect data from interested jurisdictions to support the development of an aggregation method to a group capital calculation method being developed by the U.S. National Association of Insurance Commissioners, the Federal Reserve Board, and the Federal Insurance Office. The IAIS intends to assess, by the end of the monitoring period, whether the aggregation method “will be considered an outcome-equivalent approach for implementation of ICS as a PCR.”
IAIS Publishes Application Paper on Group Corporate Governance
On 9 November, the IAIS published an application paper on group corporate governance. The paper aims to provide “good supervisory practices and examples to address challenges specific to the governance of insurance groups…[and] to create a common understanding among supervisors on how to assess or evaluate the governance frameworks of insurance groups.” Specifically, the application paper aims to provide good practices related to: (i) “the supervision of the corporate governance framework, Board composition and the allocation of responsibilities between the Board at the head of the group and Boards at the level of the insurance legal entities (ICP 7)”; (ii) “the supervision of the risk management system and the reporting lines between control functions within the insurance group (ICP 8)”; (iii) “the allocation of responsibilities between the group-wide supervisor and other involved supervisors (ICP 23)”; and (iv) “cooperation and coordination between involved supervisors with regard to groups (ICP 25)”.
FSB Decides not to Publish New List of Global Systemically Important Insurers
On 21 November, the FSB, in consultation with the IAIS, announced its decision not to publish a new list of global systemically important insurers (“G-SIIs”) for 2017. As explained in the announcement, “the policy measures set out in the FSB’s 2016 communication on G-SIIs, as updated in February 2017 as concerns the higher loss absorbency (‘HLA’) standard, will continue to apply to the firms listed in the 2016 communication.” Additionally, the FSB welcomed and encouraged “the work being undertaken by the IAIS to develop an Activities-Based Approach to systemic risk in the insurance sector…that may have significant implications for the assessment of systemic risk in the insurance sector and hence for the identification of G-SIIs and for G-SII policy measures.” According to the release, in November 2018 the FSB will review the IAIS’s progress with respect to developing an Activities-Based Approach “to systemic risk in the insurance sector.”
EIOPA Publishes Report on a Common Supervisory Culture
On 22 November, EIOPA published a report on building “a common supervisory culture.” The report aims to “establish a European approach towards risk-based supervision by defining a common supervisory culture,” particularly to “identify and describe the key characteristics of high-quality and effective supervision.”
Markets in Financial Instruments Regulation
On 17 November, the European Commission adopted a Delegated Regulation supplementing the Markets in Financial Instruments Regulation (EU) 600/2014 (“MiFIR”) “with regard to [RTS] on the trading obligation for certain derivatives.” According to the Delegated Regulation, the RTS, published by ESMA on 29 September 2017, identified “certain standardised fixed-to-float [interest rate swaps] denominated in EUR, GBP and USD and two CDS indices…as appropriate for being subject to the trading obligation,” which is further detailed in the Annex of the Delegated Regulation. Unless the European Parliament or Council of the EU object, the Delegated Regulation will enter into force on the day following its publication in the Official Journal and the trading obligation for the derivatives identified in the RTS will take effect from the later of 3 January 2018 or “the date referred to in Article 3 of Delegated Regulation (EU) 2015/2205 or Article 3 of Delegated Regulation (EU) 2016/592 for that category of counterparties.”
On 9 November, ESMA published a consultation paper on proposed amendments to Commission Delegated Regulation (EU) 2017/587 (“RTS 1”) supplementing MiFIR, regarding “transaction execution obligations in respect of certain shares on a trading venue or by a systematic internaliser.” As explained in the consultation paper, ESMA is primarily proposing an amendment to RTS 1 to clarify that, “for equity instruments subject to the minimum tick size regime under RTS 1, [systematic internaliser] quotes would only be considered to reflect the prevailing market conditions where those quotes reflect the price increments applicable to EU trading venues trading the same instruments.” Additionally, ESMA is proposing a number of amendments to some provisions in RTS 1 “that had been marginally amended in the version published in the Official Journal compared to the initial ESMA proposal sent to the Commission in September 2015.”
On 15 November, the Council of the EU published a compromise proposal (COD/2017/0090) for a proposed regulation amending European Market Infrastructure Regulation (EU) 648/2012 (“EMIR”) regarding “the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for [over-the-counter (“OTC”)] derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories.”
On 17 November, ESMA published a consultation paper on its proposed guidelines on the calculation of derivatives positons by trade repositories under EMIR. According to the consultation paper, “ESMA has observed divergent and inconsistent approaches to position calculations by [trade repositories], which hinder the successful aggregation of data across repositories for the purposes of monitoring of systemic risks to financial stability.” The paper includes the proposed guidelines and states that ESMA is seeking comments on “the guidelines…to ensure consistency of position calculation across [trade repositories],” particularly with regards to: (i) “the time of calculations”; (ii) “the scope of the data to be used in calculations”; and (iii) “calculation methodologies.” ESMA notes that “these guidelines will [also] ensure a consistent methodology is used to calculate collateral relating to positions.” The consultation period closes on 15 January 2018 and ESMA intends to publish the final guidelines in the first half of 2018.
On 10 November, the Council of the EU decided not to object to four Delegated Regulations supplementing the Benchmarks Regulation (EU) 2016/1011. The Delegated Regulations will enter into force on the twentieth day following their publication in the Official Journal:
- Commission Delegated Regulation (C(2017) 6464 final), dated 29 September 2017, “specifying how the nominal amount of financial instruments other than derivatives, the notional amount of derivatives and the net asset value of investment funds are to be assessed.”
- Commission Delegated Regulation (C(2017) 6469 final), dated 29 September 2017, “specifying how the criteria of Article 20(1)(c)(iii) [of the Benchmarks Regulation] are to be applied for assessing whether certain events would result in significant and adverse impacts on market integrity, financial stability, consumers, the real economy or the financing of households and businesses in one or more Member States.”
- Commission Delegated Regulation (C(2017) 6474 final), dated 29 September 2017, “specifying technical elements of the definitions laid down in paragraph 1 of Article 3 of the [Benchmarks] Regulation.”
- Commission Delegated Regulation (C(2017) 6537 final), dated 3 October 2017, regarding “the establishment of the conditions to assess the impact resulting from the cessation of or change to existing benchmarks.”
On 17 November, ESMA published its final report updating its “guidelines on the application of the endorsement regime” under Article 4(3) of the Credit Rating Agency Regulation (EC) 1060/2009 (“CRA Regulation”). The report contains an update to May 2011 guidelines that includes new requirements from Regulation (EU) No 462/2013, also known as “CRA 3,” which amended the CRA Regulation. These new requirements, as the report explains, “will enter into force for the purposes of endorsement [on] 1 June 2018.” The updated guidelines “aim to provide additional clarity on the obligations of EU CRAs and third-country CRAs, the notion of ‘objective reasons’ and ESMA’s supervisory powers.”
On 17 November, ESMA published its final report containing technical advice on CRA regulatory equivalence under CRA 3. As explained by the report, ESMA has “re-assessed those third country legal and supervisory frameworks … that had previously been deemed as meeting the objectives of the EU regime for the regulation of CRAs” to assess whether their “legal and supervisory framework is meeting the objectives of the additional equivalence requirements of CRA 3 Regulation.” Jurisdictions that were re-assessed include: (i) Argentina; (ii) Brazil; (iii) Mexico; (iv) United States; (v) Canada; (vi) Hong Kong; (vii) Singapore; (viii) Japan; and (ix) Australia.
European Commission Publishes Proposed Delegated Regulation Supplementing the Securities Financing Transaction Regulation for Consultation
On 16 November, the European Commission published for consultation a proposed Delegated Regulation (Ares(2017)5597698), and an annex of the proposed Delegated Regulation, supplementing the Securities Financing Transaction Regulation (EU 2015/2365) (“SFTR”) with regards to “fees charged by [ESMA] to trade repositories.” The SFTR mandates that ESMA “shall charge fees to trade repositories and those fees shall fully cover ESMA’s necessary expenditure relating to the registration, recognition and supervision of trade repositories.” The proposed Delegated Regulation would specify “the types of fees, the matters for which fees are due, the amount of the fees and the manner in which they are to be paid” by trade repositories. The consultation period closes on 14 December 2017.
Council of the EU Adopts Securitisation Regulation and Capital Requirement Amending Regulation
On 20 November, the Council of the EU adopted two legislative proposals as part of the development of the Capital Markets Union:
- Regulation (COD 2015/0226), “laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation,” and amending the Undertakings for the Collective Investment in Transferable Securities (“UCITS”) Directive (2009/65/EC), Solvency II (2009/138/EC), Alternative Investment Fund Managers Directive (“AIFMD”) (2011/61/EU), CRA Regulation, and EMIR.
- Regulation (COD 2015/0225), amending the Capital Requirements Regulation (“CRR”) (EU/575/203) on prudential requirements for credit institutions and investment firms.
PRIIPs – ESAs Publish Q&As on Key Information Document Requirements
On 20 November, the three ESAs – the EBA, ESMA, and EIOPA – published its third set of Q&As on the key information document (“KID”) requirements for the Packaged Retail and Insurance-Based Investment Products (“PRIIPs”) established in the Commission Delegated Regulation (EU) 2017/654 supplementing the PRIIPs Regulation (EU) 1286/2014. The new publication includes nine Q&As regarding: (i) whether a KID is “always required when an investment product is listed on a regulated market”; (ii) whether the terms “biometric risk premium” and “insurance premium” have the same meaning; (iii) the treatment of credit-linked notes; (iv) the “correction for risk neutrality in Annex II, 22(c) of the Delegated Regulation”; (v) how “the number of trading periods to use [should] be calculated”; (vi) how “the term “rolling” in Point 10(c) of Annex IV [should] be applied”; (vii) whether it is “possible to alter the prescribed wording in the KID template for OTC derivatives”; (viii) the provision of “information on the underlying options of a [multi-option product]”; and (ix) the reflection of cost information in the generic KID, “in the case of Article 10(b) of the Delegated Regulation.” According to the press release, the three ESAs “do not expect to publish further guidance before the application of the rules on 1 January 2018, [but] they will continue to assess whether further guidance is needed in the future, in particular based on additional questions received.”
MARKETS – ESMA Q&As
MiFID II/MiFIR – ESMA Updates Q&As on Investor Protection and Intermediaries Topics
On 10 November, ESMA updated its Q&As on investor protection and intermediaries topics related to the Markets in Financial Instruments Directive (2014/65/EU) (“MiFID II”) and MiFIR. The updated document includes four new Q&As regarding: (i) whether securities financing transactions are within the scope of MiFID II requirements for order record keeping; (ii) whether the “obligation…to report on the overall value of a client’s portfolio depreciating by a 10% threshold on a particular business day apply only to retail clients”; (iii) whether “Article 24(9) of MiFID II also appl[ies] to payments made by investment firms to a third party in relation to the provision of the investment service of investment advice provided on an independent basis or of portfolio management”; and (iv) “the legal status of a fee, commission or monetary benefit, after it has been received by an investment firm [providing investment advice on an independent basis or portfolio management services] from a third party or a person acting on behalf of a third party as an inducement, and prior to it being transferred in full by the investment firm to the client.”
MiFID II/MiFIR – ESMA Updates Q&As on Commodity Derivatives under MiFID II/MiFIR
On 14 November, ESMA updated its Q&As on commodity derivatives under MiFID II and MiFIR. The updated publication includes 12 new Q&As, including: (i) whether there will be “different position limit for options and futures,” and if so, “how should options be converted into futures for the application of position limits”; (ii) how the “position limits regime [will be] applied to the various underlyings listed in Annex I, Section C(10) of MIFID II”; (iii) whether a non-financial entity, that trades only, or partly, for hedging purposes, can report every transaction as being for speculative purposes; (iv) whether “an investment firm acting as broker and using a matched principal model [should] be subject to position reporting”; (v) whether “end-of-day zero positions need to be reported”; (vi) whether “position reporting pursuant to Article 58(2) [can] be outsourced to another entity”; (vii) whether “positions in C(10) instruments with an underlying which is not a commodity as defined in Article 2(6) of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 need to be reported”; and (viii) which contracts “ESMA expect to receive weekly reporting data from trading venues under Article 58(7) of MiFID II in conjunction with ITS 4 and 5.”
MiFID II/MiFIR – ESMA Updates Q&As on MiFID II/MiFIR Transparency Topics
On 15 November, ESMA updated its Q&As MiFID II/MiFIR transparency topics. The updated Q&As include a number of changes to existing Q&As and 13 new Q&As regarding: (i) whether “trading venues, [approved publication arrangements] and [Consolidated Tape Providers are] required to make data available free of charge for any length of time 15 minutes after publication”; (ii) “the scope of the trading obligation where there is a chain of transmission of orders”; (iii) how “the concept of ‘class of bonds’ [is] to be understood in respect of the temporary suspension of transparency”; (iv) whether the “temporary suspension of transparency requirements [would] apply to all the venues on which the class of instruments is traded or rather on venue-by-venue basis”; (v) “what arrangements … trading venues [should] put in place to ensure the proper calculation of indicative pre-trade prices in relation to Article 8(4) of MiFIR”; (vi) “the timeline for approving connections of [approve reporting mechanisms] to [competent authorities]”; and (vii) how “transactions with a third country dimension [are to be] treated for the purpose of the transparency requirements…and for the systematic internaliser regime.”
MiFID II/MiFIR – ESMA Updates Q&As on MiFID II/MiFIR Market Structure Topics
On 15 November, ESMA updated its Q&As on MiFID II/MiFIR market structure topics. The updated publication includes four new Q&As regarding: (i) whether direct electronic access (“DEA”) clients “accessing an EU trading venue through sub-delegated DEA [can] benefit from the exemption offered under Article 2(1)(d) of MiFID II”; (ii) whether “a firm need[s] to be authorised as an investment firm under MiFID II to provide DEA to an EU trading venue”; (iii) whether “the mandatory tick size regime appl[ies] to both orders and quotes”; and (iv) whether “a client relationship exist[s] between two counterparties that trade on a trading venue.”
MiFIR – ESMA Updates Q&As on MiFIR Data Reporting
On 14 November, ESMA updated its Q&As on MiFIR data reporting. The updated publication includes four new Q&As regarding: (i) how to report transactions where the transactions’ portfolio management has been outsourced; (ii) the reporting obligations for a “typical primary issuance (‘IPO’)”; (iii) certain reporting obligations relating to “corporate events”; and (iv) whether “both legs of a swap … when one leg contains an index such as LIBOR or EURIBOR” are reportable.
EMIR – EMSA Updates Q&As on the Implementation of EMIR
On 20 November, ESMA updated its Q&As on the implementation of EMIR. Updated Q&As address: (i) “[legal entity identifier (“LEI”)] changes due to mergers and acquisitions” and an “update of identification code to LEI”; and (ii) “[t]ransition to the new EMIR [technical standards] on reporting.” A new Q&A regarding “which point in time is relevant for the determination of the buyer and seller” for “FX swaps and cross-currency swaps, where multiple exchanges of currencies take place” was also added.
Benchmark Regulation – ESMA Updates Q&As on the Implementation of the Benchmark Regulation
On 8 November, ESMA updated its Q&As on the implementation of the Benchmarks Regulation. The updated Q&As include two new Q&As regarding: (i) whether “the provision of and contribution to benchmarks that are used outside the European Union only fall within the scope of the [Benchmarks Regulation]”; and (ii) the meaning of the phrase “where the benchmark is already used in the Union” in Article 51(5) of the Benchmarks Regulation.
CSDR – ESMA Updates Q&As on the Implementation of the CSDR
On 17 November, ESMA updated its Q&As on the implementation of the Central Securities Depository Regulation (EU) 909/2014 (“CSDR”). The updated publication includes five new Q&As regarding: (i) “[w]hich authorities should be considered as relevant authorities of the home Member State and of the host Member State”; (ii) whether “a [central securities depository (“CSD”) should] assess the risks borne by the participants, issuers, linked CSDs or market infrastructures which are already using the CSD”; (iii) whether “a CSD [may] maintain different types of securities accounts enabling participants to segregate the securities of any of the participants’ clients”; (iv) “when a CSD offers different types of individually segregated securities accounts…[whether] CSD participants [should] offer…the same types of individually segregated securities accounts to their clients”; and (v) whether “central banks providing cash settlement in central bank money for CSDs qualify as critical service providers referred to in Article 68 of the RTS on CSD Requirements.”
CRA – ESMA Updates Q&As on the Application of the CRA Regulation
On 20 November, ESMA updated its Q&As on the application of the CRA Regulation. The updated Q&As include a new Part VI on “operational requirements,” which includes one Q&A regarding the rotation periods of CRA analysts.
MAR – EMSA Updates Q&As on MAR
On 21 November, ESMA updated its Q&As on the Market Abuse Regulation (EU) 596/2014 (“MAR”). The updated publication includes two new Q&As regarding: (i) how “permission to trade in a closed period [should] be considered in the context of Article 14 of MAR”; and (ii) whether “the types of ‘transaction’ by a [person discharging managerial responsibilities] prohibited during a closed period under Article 19(11) of MAR [are] the same as those types of transaction subject to the notification requirements set out under Article 19(1) of MAR.”
UPCOMING EVENTS AND DEADLINES
- 30 November: ESMA consultation of guidelines for non-significant benchmarks closes.
- 14 December: European Commission consultation on proposed Delegated Regulation supplementing the Securities Financing Transaction Regulation with regard to fees charged by ESMA to trade repositories closes.
- 5 January 2018: EIOPA consultation on the second set of advice to the European Commission on specific items in the Solvency II Delegated Regulation close.
- 15 January 2018: ESMA consultation on proposed guidelines on the calculation of derivatives positons by trade repositories under EMIR closes.
- 15 January 2018: IAIS consultation on ICP 8 and additional ComFrame material integrated with ICP 8 closes.
- 22 January 2018: IOSCO consultation on institutional investors and asset managers' duties regarding sustainability closes.
- 31 January 2018: IAIS consultation on ICP 15 and 16, additional ComFrame material integrated with ICP 15 and 16, and the proposed definitions of ERM-related terms closes.