On June 11, the European Securities and Markets Authority (ESMA) published its final report (ESMA70-156-1035) following a call for evidence on frequent batch auctions, a type of periodic auction trading system for equity instruments under the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (600/2014) (MiFIR). READ MORE
European Securities and Markets Authority
ESMA Updates Q&As on BMR: May 2019
On May 23, the European Securities and Markets Authority (ESMA) published an updated version (ESMA70-145-11) of its Q&As on the Benchmarks Regulation ((EU) 2016/1011) (BMR), which were previously updated in January 2019. The updated Q&As can be found here.
The Q&As have been updated to include:
- A new Q&A 7.4 on the relevant time to determine the member state of reference in an application for recognition under Article 32(4) of the BMR.
- A new Q&A 7.5 on the information on which national competent authorities may rely on in an external audit report of compliance with the International Organization of Securities Commission (IOSCO) principles for oil reporting agencies under Article 32(2) of the BMR.
- A new Q&A 8.5 on the type of information that should be included in the field “contact info” of ESMA’s register of benchmark administrators.
ESMA Establishes New CNS
On May 23, the European Securities and Markets Authority (ESMA) published a press release which announced the establishment of a new coordination network on sustainability (CNS), which will be chaired by Ana María Martínez-Pina Garcia for two years with immediate effect. The CNS will:
- Develop the coordination of national competent authorities’ (NCAs) work on sustainability.
- Be responsible for the development of policy in this area, with a strategic view on issues related to integrating sustainability considerations into financial regulation.
The work will support the European Commission’s sustainability action plan in the areas of investment services and investment funds. The EU envisages a shift towards a more sustainable finance system in the medium and long term and securities regulators must therefore make sustainable finance a key part of their supervisory and enforcement activities.
ESMA Publishes Consolidated Guidelines on the Application of the Endorsement Regime Under CRA Regulation
On March 20, the European Securities and Markets Authority (ESMA) published the official translations of its consolidated guidelines on the application of the endorsement regime under Article 4(3) of the Credit Rating Agencies Regulation (Regulation 1060/2009) (CRA Regulation) (ESMA33-9-282). READ MORE
ESMA Announces Recognition of UK CSD in Event of No-Deal Brexit
On March 1, the European Securities and Markets Authority (ESMA) published a press release announcing that in the event of a no-deal Brexit, it will recognize Euroclear UK and Ireland Ltd, the UK central securities depository (UK CSD), as a third country CSD under the Central Securities Depositories Regulation (909/2014) (CSDR).
ESMA has adopted this recognition decision in order to allow the UK CSD to serve Irish securities and to avoid any negative impact on the Irish securities market. ESMA has previously communicated that its board of supervisors supports continued access to the UK CSD.
The UK CSD will be recognized to provide its services to the EU, having been assessed as meeting the recognition conditions under Article 25 of the CSDR.
The recognition decision would take effect on the date following Brexit date, under a no-deal Brexit scenario.
European Commission Letter to ESMA on Share Cancellation Under MMF Regulation
On July 20, the European Securities and Markets Authority (“ESMA“) published a letter it has written to the European Commission about share cancellation under the Regulation on money market funds ((EU) 2017/1131) (“MMF Regulation“).
The letter responds to a January 2018 letter from the Commission in which it agreed with ESMA’s analysis that the practice of share cancellation is not compatible with the MMF Regulation.
ESMA calls on the Commission to make public the text of an opinion of the Legal Service of the Commission on the compatibility of the reverse distribution mechanism or share cancellation with the MMF Regulation. It appears the opinion has been shared with some market participants, but not all. ESMA is of the view that the Commission needs to make its interpretation clear to ensure a proper and consistent interpretation and implementation of the MMF Regulation.
The MMF Regulation started to apply from July 21, 2018.
Benchmarks Regulation Q&As Updated by ESMA
On July 17, 2018, The European Securities and Markets Authority (“ESMA“) published an updated version of its Q&As on the implementation of the Regulation on indices employed in financial instruments and financial contracts or to measure the performance of investment funds ((EU) 2016/1011) (Benchmarks Regulation or BMR) (ESMA70-145-11, version 8).
Two key amendments include the definitions of calculation agent and regulated data benchmark.
The Q&As were first published by ESMA in July 2017 and were previously updated in May 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.
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.