European Securities and Markets Authority

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.

ESMA Updates MiFID II Q&As on Transparency Topics

 

On February 7, the European Securities and Markets Authority (“ESMA”) published an updated version of its questions and answers (Q&As) on transparent topics under MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014). The Q&As were last updated in December 2017.

The two new Q&As are in relation to pre-trade transparency waivers.

ESMA Updates Q&As on Benchmark Regulation

 

On February 5, the European Securities and Markets Authority (“ESMA”) published an updated version of its Q&As on the implementation of the Regulation on indices used in financial instruments and financial contracts or to measure the performance of investment funds (Regulation (EU) 2016/1011) (Benchmarks Regulation or BMR). The Q&As were first published in July 2017 and were last updated in December 2017.

The two new Q&As relate to commodity benchmarks (how the threshold in the exemption under Article 2(2)(g) of the BMR should be calculated – Q&A 4.4) and the definition of a benchmark and investment funds (what types of investment funds are considered to be using an index for the purpose of “tracking the return of [an] index” – Q&A 5.3).

ESMA 2018 Regulatory Work Program

 

On February 8, the European Securities and Markets Authority (“ESMA”) published its 2018 regulatory work program, which provides a detailed breakdown of the individual work streams outlined in the 2018 work program. The areas covered in the regulatory work program include the following initiatives: European Social Entrepreneurship Funds (EuSEF) Regulation, European Venture Capital Funds (EuVECA) Regulation, EMIR, MiFID II, Market Abuse Regulation (MAR), Securities Financing Transactions Regulation (SFTR) and Proposed Regulation establishing a framework for the recovery and resolution of central counterparties (CCPs).

The 2018 regulatory work program can be found here.

ESMA has Published a Further Version of its Q&As on the MAR

 

The European Securities and Markets Authority (“ESMA“) published a further version of its Q&As on the Market Abuse Regulation (“MAR“) on November 21, 2017.

The two new questions and answers are on the following topics:

  • ESMA states that the insider dealing prohibition in Article 14 of MAR applies during closed periods referred to in Article 19(11) of MAR in the same way as it does at any other time. Therefore a person discharging managerial responsibilities (“PDMR“) must also comply with Article 14. When an issuer allows a PDMR to trade under Article 19(12) of MAR, the PDMR must always give consideration as to whether or not the relevant transaction would constitute insider dealing.

ESMA states that the types of transaction by a PDMR prohibited during a closed period under Article 19(11) of MAR are the same as those types of transaction subject to the notification requirements set out under Article 19(1) of MAR, although Article 19(11) of MAR only applies to a PDMR when conducting transactions on its own account or for the account of a third party, whereas the notification of transactions required under Article 19(1) of MAR also applies to persons closely associated to a PDMR.