Posts by: Editorial Board

EMMI Provides Update on EURIBOR Development


The European Money Markets Institute (“EMMI“) has provided an update on its development of EURIBOR through a press release, available here.

EMMI previously stated that it was working on the development of a hybrid methodology for EURIBOR which will be composed of a three-level waterfall and which will leverage on market transactions whenever available, in line with regulatory regulations.

EMMI stated that it will conduct an in-depth data analysis under a number of scenarios and assess all methodological parameters. Furthermore, the three-level waterfall with allow EMMI to assess Level 1 and Level 2 submissions, whilst allowing EMMI to develop a deeper understanding of Level 3.

It was announced that following the testing stage, there will be a stakeholder consultation in the second half of 2018.

ESMA Publishes First Liquidity Assessment for Bonds


In response to the introduction of pre and post trade transparency requirements under the Markets in Financial Instruments Regulation (“MiFIR“), the European Securities and Markets Authority (“ESMA“) on May 2, 2018 published its first liquidity assessment for bonds. This was published on its Financial Instruments Transparency System, found here.

Alongside the assessment was a press release, available here. The press release explained that in the first quarter of 2018, 220 bonds out of 71,000 which were assessed were sufficiently liquid to be subject to the real-time transparency requirements of MiFID II.

The bonds deemed sufficiently liquid following the assessment will need to comply with the transparency requirements under MiFIR and MiFID II from May 16, 2018 to August 15, 2018, when the next quarterly assessment will become applicable.

Interestingly, the press release highlighted that the quality of the data in the review is dependent on the data submitted to ESMA. ESMA stated that due to the lack of completeness and other quality issues in relation to the data, the number of liquid instruments was lower than that produced through previous calculations.

Framework for Cyber-Attack Testing Published by ECB


On May 2, 2018, the European Central Bank (“ECB“) published the “TIBER-EU” framework, a document which outlines the process for European and national authorities to work with financial institutions to put in place a program to test and improve resilience against cyber-attacks.

The TIBER-EU introduces intelligence-led red team tests to mimic the tactics, techniques and procedures of threat-actors, which will allow a financial institution to assess its protection, detection and response capabilities.

The framework, available here, details the key phases, activities, deliverables and interactions involved in a test.

The tests are not mandatory and it is for relevant authorities and institutions to decide if the tests are required, however the ECB has encouraged relevant authorities within jurisdictions to engage with each other in deciding how to adopt the framework, whilst financial institutions are encouraged to work closely with relevant authorities in order to enhance cyber-resilience.

Regulatory Risks Facing Cryptocurrency Trading Platforms

What does it mean for a cryptocurrency trading platform to be compliant with U.S. laws? The answer is not as clear as some may expect and hinges on such questions as how tokens on the platform are legally categorized and how trading is conducted. Orrick’s Jason Somensatto, Of Counsel to our White Collar, Investigations, Securities Law and Compliance Practice, recently explored this issue in Bloomberg Law’s Securities and Regulation Report™.

What is clear from recent developments is that multiple U.S. regulators are scrutinizing whether trading platforms are complying with various regulatory schemes. Most notably, token trading platforms risk enforcement for not following law applicable to money transmission and to securities and commodities trading. Although enforcement against cryptocurrency businesses in these areas has thus far been minimal, trading platforms should expect that to change in light of the increasing attention being paid by regulators to these issues.

To view the full article, please visit Bloomberg’s website.

Rating Agency Developments


On January 25, 2018, Moody’s Analytics Research reported that despite tax law changes, high-yield bond issuance is thriving. Release.

On January 27, 2018, Moody’s updated its homebuilding and property development industry rating methodology. Release.

On January 31, 2018, Fitch reported that loan growth for the full-year 2017 was well below historical average. Due to the Tax Cuts and Jobs Act, it is not clear if there will be an uptick in lending. Release.

On January 31, 2018, Fitch released a statement that the US Capital Markets Quarterly Report showed strong investment banking and weak trading results during the 2017 fourth quarter. Release.

On January 31, 2018, Moody’s issued an announcement proposing updates to its methodology for debtor-in-possession lending. Release.

On January 31, 2018, DBRS published updated methodologies for rating CLOs and CDOs of large corporate credit and cash flow assumptions for corporate credit securitizations. Release.

CFTC Files Eight Anti-Spoofing Enforcement Actions against Three Banks (Deutsche Bank, HSBC & UBS) & Six Individuals


On January 29, 2018, the Commodity Futures Trading Commission (“CFTC“), along with the Department of Justice and FBI’s Criminal Investigation Division, announced both criminal and civil enforcement actions against three banks and six individuals for commodities fraud. The banks involved in the action include Deutsche Bank, USB and HSBC. Release.

ESMA Provides Further Information on Transitional Transparency Calculations

ESMA has recently provided a number of updates to its frequently asked questions as well as a press release in relation to the transitional transparency calculations (“TTCs“) which are relevant to MiFid II and MiFIR. The TTCs are required for equity and bond instruments under the aforementioned regulations.

ESMA has referred market participants to these updated FAQs, noting that the updates generally relate to the classification of instruments, whilst also including amendments and updates to some of the data referenced within the FAQs.