Posts by: Bethan Saunders

Permanent Representatives Committee Approves Delay to New Securities Market Rules

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On May 18, 2016, the Permanent Representatives Committee approved, on behalf of the Council of the EU, an agreement with the European Parliament for a one-year delay to the dates of transposition and application of the MIFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (“MIFIR”). This was announced in a press release of the Council of Europe.

Under the new approach the deadline for member states to transpose MIFID II into national legislation will be July 3, 2017, and the date of application of both MIFID II and MIFIR will be January 3, 2018.

EBA Publishes Decision on Unsolicited Credit Assessments

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On May 17, 2016, the European Banking Authority published a decision confirming that the unsolicited credit assessments of certain external credit assessment institutions (“ECIAs”) do not differ in quality from their solicited credit assessments with regard to the Capital Requirements Regulation (Regulation 575/2013).

The published decision annexes 22 ECIAs and confirms that in respect of those listed, the quality of the unsolicited credit assessments does not differ from the solicited credit assessments.

The decision will enter into force 20 days after publication in the Official Journal of the EU.

ECB Publishes Public Consultation

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The European Central Bank (“ECB”) has published a Public Consultation on a draft Addendum to the ECB Guide on options and discretions available in Union law.

The consultation document sets out the ECB’s approach to the exercise of options and discretions provided for in Regulation 575/2013 (on prudential requirements for credit institutions and investment firms) and Directive 2013/36/EU (on access to the activity of credit institutions and the prudential supervision of credit institutions and investments firms).

This publication is the second phase of the ECB’s project on options and discretions.

European Commission Issues Call for Advice on Own Fund Requirements for Market Risk

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On April 22, 2016, the European Banking Authority published a call for advice it had received from the European Commission regarding revisions to the own fund requirement for market risk as part of the CRR review.

The call for advice sets out that the EC is undertaking a review of the Capital Requirements Regulation and is considering the impact of implementing the agreed Basel Committee on Banking Supervision framework detailed in the document “Minimum capital requirements for market risk.” The EC notes that to date there has been no EU-specific assessment of the convenience and impact of updating these rules in the ways proposed by the BCBS.

Insurance Europe Raises Concerns over Misunderstanding of Ultimate Forward Rate

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On April 21, 2016, Insurance Europe, the European insurance and reinsurance federation, released a press releaseraising concerns over how Solvency II liabilities are currently calculated, including discount rates. This press release was published in response to the consultation carried out by the European Insurance and Occupational Pensions Authority and it discusses whether the Ultimate Forward Rate should be calculated by reference to the discount rate, or whether it may be adjusted to reflect changes in long-term expectations.

ECB Offers Opinion on Proposed Regulation to Establish a European Deposit Insurance Scheme

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On April 20, 2016, the European Central Bank (ECB) published an opinion on a proposal for a regulation amending Regulation (EU) No. 8.6/2014 in order to establish a European Deposit Insurance Scheme (EDIS).

The ECB notes that an EDIS is a necessary third pillar to complete the Banking Union, having established a Single Supervisory Mechanism and the Single Resolution Mechanism and overall welcomes the system proposed. However, the opinion notes risks in terms of scope and governance of the scheme.

The opinion appends a technical working document containing drafting proposals as proposed amendments to the text released by the European Commission.

EBA Publishes Final Report on Provision of Information in Summary or Collective Form

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On April 19, 2016, the European Banking Authority published its final report providing guidelines on the provision of information in summary or collective form for the purposes of Article 84(3) of Directive 2014/59/EU. This relates to general rules in relation to professional secrecy and confidentiality requirements when dealing with confidential information.

The report includes a summary of responses to the consultation and the EBA’s own summarized analysis.

ESMA Q&A on Application of the AIFMD

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On December 2, 2015 the European Securities and Markets Authority (ESMA) published an updated Question and Answer document in relation to the Alternative Investment Fund Managers Directive (AIFMD) which puts in place a comprehensive framework for the regulation of alternative investment fund managers within Europe.

The document provides responses to questions asked by the general public and is updated on a rolling basis in the place of a formal consultation process. The Q&A was last updated in July 2015 and the new additions to the document are highlighted in yellow; these primarily concern reporting to national competent authorities.

MiFID II Legislation Set For Further 1 Year Delay

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The European Parliament has agreed not to block requests from policy makers and regulators to postpone implementation of the Markets in Financial Instruments Directive. This delay pushes back the intended date of the new legislation to January 2018.

The legislation is still being drafted and market participants have pushed for a longer implementation period to allow for internal updating and training. The press release published on November 27, 2015 states that the “Commission and ESMA need to come up with a clear roadmap on the implementation work and especially for setting up the IT-systems”.

ESMA Announces European Swap Clearing to Start in June 2016

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In a press release dated December 2, 2015 the European Securities and Markets Authority (ESMA) announced that firms will have to clear certain classes of interest rate swaps starting from June 21, 2016. This marks an important milestone in implementing the EU’s post-financial crisis derivatives regulation – the European Market Infrastructure Regulation (EMIR) and follows the G20 commitment to clear all standardized OTC derivative contracts, where appropriate, through central counterparties.

The incoming obligation will cover the following classes of OTC interest rate derivatives denominated in the G4 countries:

  • Fixed-to-float interest rate swaps (also known as plain vanilla);
  • Float-to-float swaps (also known as basic swaps);
  • Forward rate agreements; and
  • Overnight index swaps.