Posts by: Luke Steele

ESMA Publishes Final Report on Technical Advice Under Prospectus Regulation (EU) 2017/1129


European Securities and Markets Authority (“ESMA“) has, on April 3, 2018, published its final report relating to technical advice under the Prospectus Regulation.

Within the report, ESMA states that the new Prospectus Regulation is designed to simplify the structure of the prospectus itself, and to reduce costs of issuing capital (alongside investor protection). ESMA also notes that the High-Level Expert Group on Sustainable Finance (“HLEG“) recommended the strengthening disclosure of all information relating to sustainability issues that integrate all environmental, social and governance (“ESG“) aspects.

The report has now been delivered to the European Commission (“EC“) whereupon, subject to its approval, the technical advice will form the basis for the delegated acts to be adopted by the EC by, at the latest, January 21, 2019.

To see the final report and press release, please click here.

ESMA Confirms That Canada and South Africa Will Continue to Meet All CRA Regulation (Regulation 1060/2009) Requirements From June 2018


The European Securities and Markets Authority (“ESMA“) has on April 4, 2018 published a press release which confirms that Canada and South Africa will continue to meet all requirements for endorsement under Art 4(3) of the Credit Rating Agencies Regulation (“CRA Regulation“).

In the release, ESMA confirms that the legal and supervisory frameworks of Canada and South Africa will continue to meet the requirements for endorsement under the CRA Regulation from June 1, 2018. This was confirmed following an assessment based on the methodological framework applicable under the CRA Regulation. As a result of this confirmation, any CRAs registered in the EU to endorse credit ratings from Canada and South Africa will not be disrupted from June 1, 2018.

To view the press release, please click here.

EC Publishes Report on the Application of Title III of the Solvency II Directive (2009/138/EC)


The European Commission (“EC“) has published a report on the application of Title III (of the Solvency II Directive) on April 5, 2018.

The EC has commented that, given the need for the Solvency II Directive to be generally evaluated in 2020, only one area of the group supervision regime within Article 242(2) of the Directive requires any legislative amendments at this point in time. This relates to group internal models, and as member states have often diverged on this point, the EC has stated that the European Insurance and Occupational Pensions Authority (“EIOPA“) will need enhanced powers to bring about convergence.

A proposal to reform the European System of Financial Supervision (“ESFS“) by the EC, published in September 2017, contains proposals to amend the Directive in order to do this, and to generally mitigate any potential divergences in the approval and supervision of group internal models.

Finally, the report also confirms that the EC will report on the transition period for institution for occupational retirement provisions (“IORPs“) that are operated by relevant life insurers. Pending a further extension of the decision, the EC states that the legislative proposal relating to this could be imposed before the end of 2022.

To view the report, please click here.

EC Publishes Results of Public Consultation on a Revision of EU Consumer Law Directives

The European Commission (“EC“) has published a summary of the results from a public consultation it held relating to a revision of the EU consumer law directives.

Launched on June 30, 2017, the consultation aimed to gather relevant opinions from consumers and businesses on how to improve EU consumer law and ran until October 8, 2017.

In total, 414 responses were received in the consultation, with a mix of individual citizens, companies, business and consumer associations, public bodies and member states responding. The highest number of responses came from Germany.

A summary document of the responses (available here) groups the responses into a number of categories.

The Commission plans to take the results of the consultation into account in preparation of its Impact Assessment on a targeted revision of the relevant EU consumer law directives. This Impact Assessment will primarily consider legislative amendments to the current consumer law framework and will aim to, inter alia:

  • Extend consumer rights to contracts where consumers provide data rather than pay with money;
  • Simplify certain rules and requirements;
  • Provide further transparency on whom consumers conclude contracts with when buying online and whether relevant EU consumer rights are applicable to such contracts; and
  • Improve potential remedies for consumers that have been harmed by unfair commercial practices.

EC Sends Letter to the EBA on RTS Regarding Customer Authentication Under the Revised Payment Services Directive ((EU) 2015/2366) (“PSD2”)

The European Banking Authority (“EBA“) has published a letter (dated February 13, 2018) from Olivier Guersent (European Commission Director-General, DG FISMA) to Andrea Enria (EBA Chairman) that relates to the regulatory technical standards (“RTS“) on strong customer authentication (“SCA“) as well as common and secured communication under PSD2.

The letter is broad but, inter alia, states the following:

  • The Commission has amended the ‘final’ version of the RTS, and these amendments took on board concerns that were raised by the EBA and member state officials;
  • The Commission would welcome the participation of the EBA in group meetings that will evaluate application programming interface (API) standards;
  • Neither the EBA nor the Commission can reasonably anticipate all the problems with APIs, nor can they specify in the RTS how these should be addressed. As such, the EBA and the Commission will rely on relevant market players to develop APIs that work for all sides (i.e., third-party providers, banks and payment service users); and
  • The prior differences discussed between the EBA and the Commission with regards to the RTS were about processes rather than other more substantive matters. The extent to which any of these processes might be burdensome for the EBA and relevant national authorities depends on the behavior of market players.

To see the letter, please click here.

ESMA Publishes Consultation Papers on Technical Standards Implementing the Securitisation Regulation

The European Securities and Markets Authority (ESMA) recently published three consultation papers on technical standards that implement the Securitisation Regulation (“SR“).

The SR is a European initiative designed to create a framework for simple, transparent and standardised (“STS“) securitisation. As part of the SR, certain information must be reported about securitisations to repositories, including the securitisation structure itself, its cash flow and information on underlying risks and exposures.

Where STS status is sought for a securitisation, it must fulfil further criteria, as well as notify ESMA as to how these criteria have been fulfilled. The consultation papers seek relevant stakeholder views on, amongst other points:

  • Application requirements for any non-securitisation (i.e. third party) entities that seek authorisation to be providers of STS verification services;
  • The general format and content of underlying exposures and investor report templates (that must aim to meet the SR’s reporting requirements); and
  • The general content of the notification that must be sent to ESMA to establish a securitisation’s STS status.

ESMA will use the feedback from the consultation (which is open until March 19, 2018) to finalise its draft technical standards. ESMA will publish its final report in July 2018 (for STS notification and non-securitisation entity application requirements) and will publish ancillary elements by the end of 2018 (for reporting requirements and operational standards).

Please find the ESMA press release here, and the SR webpage here.

ESMA Publishes Consultation Paper Containing Draft Guidelines on Anti-Procyclicality Margin Measures for Central Counterparties (CCPs)

On January 8, 2018, the European Securities and Markets Authority (“ESMA“) published a consultation paper containing draft guidelines on anti-procyclicality margin measures for central counterparties (“CCPs“) (ESMA70-151-1013).

Actions by CCPs such as margin calls and ‘haircutting’ collateral are known to have procyclical effects. Under Article 41 of the European Market Infrastructure Regulation (“EMIR“), CCPs are required to monitor and, where necessary, revise margin levels to reflect market conditions. Under Article 28 of Commission Delegated Regulation (EU) No 153/2013 (which itself contains various regulatory technical standards (“RTS“) on requirements for CCPs), CCPs must adopt (at least) one of three anti-procyclicality (“APC“) margin measures to address the above issues.

The draft guidelines seek to clarify how EMIR is applied within the context of the procyclicality of margins. They aim to achieve a consistent application of Article 41 EMIR and Article 28 of the RTS, and cover how margin procyclicality is monitored, how APC margin measures are implemented, and help govern disclosures that are intended to facilitate margin predictability.

The deadline for responses on the draft guidelines is February 28, 2018, and  ESMA expects to publish the final guidelines by the first half of 2018.

To view the draft guidelines, please click here.


European Central Bank (“ECB”) Publishes Recommendation on Dividend Distribution Policies and a Letter on Variable Remuneration Policy



The ECB has published a recommendation and a letter on dividend distribution policies and variable remuneration policy.

Both the recommendation and letter relate to the payment of dividends in 2018 for the financial year 2017 by any credit institutions in the single supervisory mechanism. The contents of the recommendation, as well as the letter, are largely unchanged from the versions of the same published in December 2016.


To view the recommendation in its entirety, please click here. For the letter, please click here.





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.