Posts by: Luke Steele

European Commission Adopts Delegated Regulation That Supplements the MiFIR on the Treatment of Package Orders


On August 14, 2017, the European Commission has published the draft text of a Delegated Regulation supplementing the Markets in Financial Instruments Regulation (Regulation 600/2014) (“MiFIR“) with regard to the treatment of package orders.

Currently, Article 9(1)(e) of MiFIR provides that, where certain conditions apply, a waiver is given for both pre- and post-trade transparency requirements for packaged orders. This waiver is, however, limited where the package order is considered “liquid”.

Pursuant to the power of the Commission to adopt a Delegated Regulation establishing a clear methodology for determining package orders for which there is a “liquid market,” the Commission has introduced this Delegated Regulation. Article 1 of the Delegated Regulation sets out general methodology for establishing which for package orders there is a “liquid market.” Articles 2 to 5 then go on to specify the conditions under which a package order can fulfill asset-specific criteria set out in Article 1(b).

Following the introduction of the draft text of the Delegated Regulation, the Council of the EU and European Parliament will consider it. Subject to any objections, it will then enter into force 20 days after its publication in the Official Journal of the EU and apply from January 3, 2018.

To see the draft text of the Delegated Regulation, please click here.

European Commission Adopts Delegated Regulation on Waiver of Own Funds Requirements for Certain Covered Bonds Under the CRR


On August 21, 2017, the European Commission published the text of a Delegated Regulation that amends the Capital Requirements Regulation (Regulation 573/2013) (“CRR“). The main amendment pertains to Article 496(1) of the CRR. Currently, Article 496(1) allows competent authorities to waive, for certain covered bonds, the threshold of 10% referred to in Article 129 CRR until December 31, 2017.

The Commission has stated, however, that, given that some institutions rely in their business models on the use of this threshold waiver, it is appropriate for legal certainty to amend Article 496(1) to make the waiver permanent without the time limitation.

The Commission adopted the Delegated Regulation on August 11, 2017, and it is now for the Council of the EU and European Parliament to consider the Delegated Regulation. If neither objects, it will be published in the Official Journal of the EU and enter into force 20 days after its publication in the same. It will then start to apply from January 1, 2018.

To see the Delegated Regulation in full, please click here.

CMA Publishes Finalized Versions of Regulated Payment System Appeals Rules and Guide


On August 18, 2017, the Competition and Markets Authority (“CMA“) published the final version of its rules of procedure (CMA65) which governs appeals made under section 79 of the Financial Services (Banking Reform) Act 2013 (“FSBRA“) in respect of certain decisions made by the Payment Systems Regulator (“PSR“) under the same Act.

The FSBRA states that, in relation to decisions made by the PSR that:

  • require the granting of access to a payment system; or
  • require the variation of certain agreements relating to payment systems; or
  • require a person who has an interest in the operator of a regulated payment system to dispose all or part of that interest;

these can be appealed to the CMA by any person who is affected by the decision.

This ground is broad, and so the CMA will only allow appeals where it is satisfied that the PSR’s decision was wrong on the basis that:

  • the PSR failed properly to have regard to, or give appropriate weight to, the matters the PSR must have in regard to carrying out its functions under Part 5 FSBRA; or
  • the decision was based, either wholly or partly, on an error of fact or;
  • the decision was wrong in law.

Under the rules of procedure, any person who wishes to make an application to appeal a decision must first send a notice, marked “Notice of Payment Systems Appeal,” directly to the CMA within the two months following the date the appellant was notified of the decision or the date of publication of the decision (whichever is earlier). The CMA also has discretion to extend the two month time period where it concludes that there were exceptional circumstances for any appeal beyond this time.

To see the full draft of the rules, please click here.

ECB Publishes Interview Transcript on the Preparatory Work of Banks and Supervision as a Result of Brexit


The European Central Bank (“ECB“) has published a transcript of an interview, given by Sabine Lautenschlager (ECB Executive Board Member and Supervisory Board Vice-Chair), on the kind of preparation affected banks will have to undertake following the UK’s decision to leave the European Union. The interview is wide ranging, but includes the following pertinent points:

  • The ECB wants euro-area banks to be proactive and well prepared and is currently in discussion with all euro-area banks under its supervision that will be affected by Brexit.
  • The ECB has suggested that all affected banks should prepare for a hard Brexit. It has also recommended that all affected banks create their strategies for Brexit quickly and pass these on to the ECB, as they only have an extremely narrow time frame in which to assess plans and applications.
  • The ECB has itself set up a project to prepare for Brexit. It will need to increase its staff as it expects a significant increase in the number of internal model applications, qualifying holding procedures and licensing applications.

To see the full interview, please click here.

European Parliament Will Consider Money Market Fund Regulation in April 2017 Plenary Session


The European Parliament has announced that it will consider the MMF regulation during its upcoming plenary session, currently scheduled to be held April 3-6, 2017.

The MMF regulation is intended to introduce new framework requirements to more effectively regulate money market funds, as well as increase their stability and general liquidity. In particular, the regulation (introduced by the European Commission) is intended to more tightly regulate the shadow banking sector.

The plenary session will allow debate and potential amendment to the scope of the MMF regulation.

European Parliament Publishes Report on Fifth Money Laundering Directive Proposal


On March 9, 2017, the European Parliament published a report on the Fifth Money Laundering Directive (MLD5), this being the same report adopted by the Parliament’s Economic and Monetary Affairs Committee (ECON), as well as Parliament’s Civil Liberties, Justice and Home Affairs Committee (LIBE).

The report focuses on draft EP legislation resolutions and also contains opinions from the Committee on Legal Affairs (JURI), Development (DEVE) and International Trade (INTA).

Following publication of the report, the EP must now permit MEPs to start discussions with the European Commission and the Council to begin the process of amending and potentially implementing the directive so that it can be integrated by Member States.

EPC Publishes Updated White Paper on Mobile Payments in the SEPA


On March 7, 2017, the European Payments Council (“EPC“) published version 5 of a white paper that evaluates mobile payments across Single Euro Payments Area (“SEPA“). The white paper, the result of a collaborative effort between the EPC and expert groups in the area, is designed to help evolve an integrated payment market across the SEPA. It focuses primarily on mobile remote payments and mobile proximity payments and suggests ways in which these could improve in order to further support and develop SEPA card payments and credit transfers, for businesses and consumers alike.

It is the intention of the EPC to further consult industry bodies in order to develop interoperability between different mobile payment systems, to then be used by all interested parties.

Transparency International Publishes “Top Secret: Countries Keep Financial Crime Fighting Data to Themselves”


On February 15, 2017, Transparency International (“TI“) published the above report, recommending that national authorities engage to a greater level in making public disclosure of their countries’ anti-money laundering (“AML“) statistics.

TI’s report investigated leading EU nations (notably the UK, France, Italy and Germany) as well as the U.S. and found, in particular, that AML work was only partially available as a matter of public record and that it was largely only available from international AML institutions, rather than by any national bodies themselves.

TI made a number of recommendations in its report, chief among them being a desire to see the publishing of yearly AML statistics as a standard recommendation by international AML institutions such as the Financial Action Task Force (FATF).

Vladis Dombrovskis Gives Speech on the International Financial System


The European Commission has published a speech given by Vladis Dombrovskis, European Commissioner for Financial Stability, Services and Capital Markets Union, on February 10, 2017. Amid general concerns about the state of both European and international financial regulation, Mr. Dombrovskis placed emphasis on cooperation among international financial communities in finding a holistic and common approach to financial regulation. Mr. Dombrovskis stressed, in particular, the importance of a common standard of financial conduct, suggesting that the creation of low‑level regulations in one country with little oversight could trigger a contagion affect across other countries, therefore bringing fundamentally inadequate regulatory framework across the globe.

On this latter point, Mr. Dombrovskis highlighted what he thought might be the impact of different financial epicenters (notably New York, Paris, London and Frankfurt) having widely divergent rules. In particular, Mr. Dombrovskis thought this would create far greater scope for varying financial institutions to engage in regulatory arbitrage and would in fact cause the same institutions further costs to comply with each jurisdiction’s different rules.

In concluding, Mr. Dombrovskis stressed that international cooperation in the area was vital and should at present underpin the ever-evolving relationship between the UK and the EU.

Find the speech here.

European Parliament Publishes Provisional Version of Resolution It Has Adopted on Its 2016 Report on Banking Union


The European Parliament has published a draft of the text of the resolution it has adopted on its annual report on banking union. The Parliament’s resolution is divided into themes, these being resolution, supervision and deposit insurance. The Parliament notably encourages all states that have yet to join the Euro currency to do so or to join the banking union, so as to align the internal market with the same.

It also expresses concern at the growth of the shadow banking sector and highlights that the UK’s Brexit referendum result now requires a substantive assessment of EU-wide financial supervision, with particular focus on ensuring that exit negotiations played out between the two parties should not lead to an uneven playing field between non-EU and EU financial institutions. In particular, the Parliament stands by the current levels of regulation and suggests that the exit vote and negotiations should not be used to generally promote deregulation of the financial markets across the EU as this may have dire economic consequences internationally.

The resolution can be found here.