Europe

Rating Agency Developments – Week of January 23, 2012

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On January 18, Fitch updated its short-term rating criteria for non-financial corporates. Fitch Release. Fitch Report.

On January 17, S&P requested comment on proposed changes to methodologies and assumptions used to rate fully and partially credit-enhanced multiseller ABCP conduits. Comments must be submitted by March 31. S&P Release.

On January 17, S&P requested comment on its European SME CLO methodology and assumptions. Comments are due by February 24. S&P Release.

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SEC Guidance on European Sovereign Debt Exposure

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On January 6, the SEC Division of Corporation Finance Staff issued guidance on disclosures relating to SEC registrants’ exposures to European sovereign debt. The SEC Staff issued this guidance to correct inconsistencies in disclosures from registrant to registrant, requesting in part that a registrant: (i) disclose the basis for the countries selected for disclosure; (ii) provide disclosures separately by country, segregated between sovereign and non-sovereign exposures, and by financial statement category; and (iii) provide information regarding hedges in order to detail net funded exposure. SEC Guidance.

European Financial Transaction Tax Developments

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On January 3 2012, Denmark, who assumed the rotating EU presidency on January 1 2012, initiated a technical review of the European Commission’s proposal for a European financial transaction tax (FTT). Meanwhile, on 23 January France and Germany are expected to present a joint FTT proposal with a view of moving towards implementation across Europe in 2013. The proposed FTT is also on the agenda for the January 30 EU Summit. European Commission Proposal COM (2011) 594 final.

ESMA Launches Two New MiFID I Consultations

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On 22 December 2011, ESMA published two new Consultation papers: one on the MiFID I suitability requirements (ESMA Consultation Paper 2011/445), the other on the MiFID I compliance function requirements (ESMA Consultation paper 2011/446). The draft guidelines on stability requirements focus on firm policies and procedures in relation to recommending suitable investment choices. The draft guidelines on the compliance function addresses the MiFID I organisational requirements and are also aimed at reinforcing the importance of the compliance function. Responses to the two consultation papers may be submitted for consideration by ESMA in Q1 2012. The final report and guidelines are expected in Q2 2012.

ESMA Publishes Final HTF Guidelines

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On 22 December 2011, the European Securities and Markets Authority (ESMA) published its Final Report on Guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities. The guidelines will become effective one month after the publication by the relevant national competent authority. According to this schedule, market participants should ensure that they are compliant with the guidelines from 1 May 2012. ESMA Final Report 2011/465.