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.

BCBS Publishes Report on Outcome of February 2019 Meeting


From the February 27 to 28 meeting, the Basel Committee on Banking Supervision (BCBS) has published this press release with the outcome.

At the meeting the Committee:

  • Agreed to publish high-level supervisory expectations related to crypto-assets considering the high degree of risks associated with such exposures. These expectations will be published in March.
  • Reiterated its support for reforms of interest rate benchmarks and approved a work plan to look at the interactions with supervisory requirements.
  • Agreed to publish, in March, a summary of the different practices used by jurisdictions to proportionately apply the global minimum prudential standards.
  • Announced it would publish, in March, a joint statement with the International Organization of Securities Commissions (IOSCO) clarifying certain implementation aspects of the margin requirements framework.

ECB Revised Assessment Methodology For Payment Systems


The European Central Bank (“ECB“) published a revised assessment methodology for payment systems on June 15, 2018.

The principles for financial market infrastructures (“PFMIs“) developed by the Committee on Payments and Market Infrastructures (“CPMI“) and the Technical Committee of the International Organization of Securities Commissions (“IOSCO“) were adopted in June 2013 as a basis for the conduct of Eurosystem oversight in relation to all types of financial market infrastructures (“FMIs“). For payment systems, the PFMIs are implemented through the ECB Regulation on oversight requirements for systemically important payment systems (Regulation 795/2014) (SIPS Regulation) and the revised oversight framework for retail payment systems.

The updated assessment methodology covers the requirements introduced by the Revised SIPS Regulation, which entered into force in December 2017. It also references the Eurosystem’s cyber resilience oversight expectations, which are based on the CPMI-IOSCO guidance on cyber resilience for financial market infrastructures published in June 2016.

The ECB previously updated the assessment methodology in February 2016.

ECB Speech on Eurosystem Cyber Resilience Strategy for FMIs


The Director General Market Infrastructure and Payments of the European Central Bank (“ECB“), Marc Bayle de Jessé, gave a speech on the ECB’s views on the regulation of cyber security on November 21, 2017.

In his speech, Mr. Bayle de Jessé provided an overview of the Eurosystem cyber resilience strategy for financial market infrastructures (“FMIs“). The strategy was approved by the ECB’s governing council in March 2017 and is intended to implement the June 2016 joint guidance (Guidance) of the Committee on Payments and Market Infrastructures (“CPMI“) and the International Organization of Securities Commissions (“IOSCO“) on cyber resilience for FMIs.

The strategy is based on three pillars:

  • Pillar 1. Working with financial firms and FMIs to ensure that they build defenses and enhance their level of cyber maturity. The Eurosystem is developing a harmonized approach to assessing payment systems in use in the Eurozone against the CPMI-IOSCO guidance. It is also developing tools for use by FMI operators to enhance their cyber resilience maturity. These tools include a cyber survey, which has been sent by the ECB to all payment systems in the Eurosystem, and a “European Red Team Testing Framework”, which involves testing FMIs’ cyber resilience without prior warning by mimicking the tactics of real cyber attackers.
  • Pillar 2. Strengthening the resilience of the sector. The ECB is working on cross-regulatory collaboration, information sharing, improved threat intelligence, close collaboration with European law enforcement agencies, market-wide exercises based on cyberattack scenarios, and a deeper understanding of third parties and the supply chain.In particular, the ECB is developing an analytical framework and methodology for sector mapping with the aim of producing sector and network maps that will be used to understand key risk areas and improved crisis communication procedures. The ECB also calls for cross-authority collaboration to be enhanced to ensure that authorities have a similar approach and focus on cyber resilience and for the efficient sharing of information on threats by market participants and regulators.

Pillar 3. Establishing strategic dialogue between the industry and regulators. The ECB is in the process of establishing the Euro Cyber Resilience Board. The aim of this board is to provide a forum that brings together market participants, competent authorities and cyber-security service providers. The aim of the Forum is to raise awareness and catalyze joint initiatives for developing effective solutions for the market, as well as sharing best practices and fostering trust and collaboration.

Financial Stability Board Issues Asset Management-Related Policy Recommendations

On June 22, 2016, the Financial Stability Board (FSB) published for public consultation Proposed Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities. The document sets out 14 proposed policy recommendations to address the following structural vulnerabilities from asset management activities that could potentially present financial stability risks:

  1. Liquidity mismatch between fund investments and redemption terms and conditions for fund units;
  2. Leverage within investment funds;
  3. Operational risk and challenges in transferring investment mandates in stressed conditions; and
  4. Securities lending activities of asset managers and funds.

The key recommendations for liquidity mismatch and leverage focus on both public and private funds.

The FSB reported that it “intends to finali[z]e the policy recommendations by the end of 2016, some of which will be operationalized by the International Organization of Securities Commissions (IOSCO).”

Implementation of Non-Cleared Derivatives Margin Rules Deferred

March 18, 2015 – The Basel Committee on Banking Supervision and IOSCO have extended the implementation date for the Non-Cleared Derivatives Margin Rules, originally scheduled to start from December 1, 2015. Firms will now have until September 1, 2016 to prepare for the imposition of stricter rules for trading over-the-counter derivatives.

IOSCO Publishes Report on Post-Trade Transparency in the Credit Default Swaps Market

On November 17, the International Organization of Securities Commissions (IOSCO) published a report (CR08/2014) on post-trade transparency in the credit default swaps market. The report analyzes the potential impact of mandatory post-trade transparency in the credit default swaps market and identifies certain potential benefits and costs to mandatory post-trade transparency.  Comments are invited on the report by February 15, 2015.  Report.

IOSCO and CPMI Report on Recovery of Financial Market Infrastructures

On October 15, following a consultation launched in August 2013, the International Organization of Securities Commission (IOSCO) and the Committee on Payments and Market Infrastructure (CPMI) issued a joint report on the recovery of financial market infrastructures (FMIs).

The report supplements the international standard for FMIs published by IOSCO and CPMI in April 2012 and contains guidance to FMIs on the means of developing plans to enable recovery from threats to viability and financial strength which could prevent them from providing critical services to their participants and the markets they serve.  The report also provides guidance to relevant authorities on carrying out their responsibilities in connection with the development and implementation of recovery plans.  Report.

IOSCO Publishes Consultation Paper on Risk Mitigation Standards for Non-Centrally Cleared OTC Derivatives

On September 17, the IOSCO published a consultation paper on risk mitigation standards for non-centrally cleared OTC derivatives (CR06/2014).

The standards have been developed in consultation with the Basel Committee on Banking Supervision and the Committee on Payments and Market Infrastructures and propose nine standards whose objectives are to increase financial stability, facilitate the management of counterparty credit and other risks and promote legal certainty.

Comments are invited before the closing of the consultation on October 17.  Consultation.

IOSCO Launches Public Information Repository for Central Clearing Requirements

On August 5, IOSCO unveiled its new information repository for central clearing requirements relating to over the counter derivatives.

The purpose of the IOSCO repository is to provide both regulators and market participants with consolidated information on the clearing requirements applicable in different jurisdictions, many of which have been recently revised.  Repository.  News Release.